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Kotak General launches ‘Meter’, a 'pay-as-you-use' car insurance optional add-on

The rider benefit offers up to a 40 percent renewal discount or cash-back to policyholders with limited car usage. This is applicable to the own damage component, and not the mandatory third-party insurance element

November 22, 2022 / 11:36 AM IST
Representative image

Representative image

Now you can switch off your insurance cover if your car is not in use and save on premiums.

Private general insurer Kotak Mahindra General Insurance has rolled out ‘Meter’, a motor insurance add-on, or rider benefit, that allows policyholders to link their motor insurance premiums to their car usage.

Policyholders who do not use their cars often can accumulate ‘reward days’ that can then be converted into cashbacks or discounts on renewal premiums at the end of the policy period. According to the company, it is the first to offer such cashback option to policyholders.

“We want to treat all customers fairly and reward those customers who drive less. This we think will help in customer retention as well as help us understand and serve our customers better following their driving behaviour,” said Suresh Agarwal, Managing Director and CEO, Kotak General Insurance.

Also read: IRDAI permits insurers to launch 'innovative' motor insurance add-ons

Rewards for less-frequent usage

To earn these rewards, car owners opting for Meter (switch-on/off) add-on will have to download the Kotak Meter mobile app, which allows them to switch their car insurance coverage (for accidental damage to their vehicles) on and off based on usage. This is applicable to their comprehensive motor insurance policy’s own damage component, and not the mandatory third-party insurance element.

On the basis of their usage calculated via the app, policyholders are awarded a ‘reward day’ for every continuous 24 hours the cover is turned off and the vehicle is not in use. These accumulated reward days can be redeemed either by opting discount at renewal or cashback of up to 40 percent of own damage premium for unused days.

If the car remains unused for 20-60 days, the policyholder will be eligible for a discount of 15 percent, which can go up to 25 percent if it is not in use for 61-120 days. If the policyholder does not use her car for more than 121 days, the discount will go up to 40 percent.

“The choice is with the customer. Even if she decides to switch to another insurer at renewal, she can claim the cashback,” Agarwal said. This will be over and above the no-claim bonus (translating into discounts on renewal premiums) that all policyholders are entitled to during claim-free years. The rider benefit will carry an annual premium of Rs 250.

Also read: Choosing the right motor insurance policy add-on 

Move prompted by work-from-home trend, IRDAI rules

"Demand for need-based insurance cover has been on a rise particularly post Covid-19. Hybrid and work-from-home policies coupled with higher fuel prices and increasing inflation has led to a change in driving preferences by most vehicle owners,” Agarwal said.

In July this year, the insurance regulator allowed general insurance companies to offer new, add-on covers along with motor policies' own damage component. Policyholders can buy these optional covers along with their base policy by paying an additional premium. The objective, it said, was to facilitate deeper motor own damage penetration in the country.

In 2020, the IRDAI approved similar add-ons under the regulatory sandbox framework where companies could launch products in pilot mode. Post July 2022, they can launch full-fledged plans without prior IRDAI approval under the 'Use-and-file' regime.

Also read: IRDAI’s Use-and-file framework could mean better products, but policyholders should exercise caution

Pay-as-you-drive, motor floater other ‘innovative’ variants

The regulator has also permitted insurers to roll out pay-as-you-drive and motor floater policies.

So, an efficient driver who is a stickler for traffic rules can benefit from lower premiums under 'Pay-how-you-drive'.

A motor floater add-on will let car-owners cover multiple vehicles under a single product. They can choose the vehicle to be insured by intimating the insurance company every time it is used. This could mean lower premiums for policyholders who own more than one vehicle.
Moneycontrol PF Team
first published: Nov 22, 2022 11:36 am