IRDAI's committee asks to use Telematics to determine motor insurance premium: Sources

Telematics will be used to determine your motor insurance premium, soon. Sources aware to the development has informed Zee Business that a committee that was constituted to examine motor third party insurance pricing aspects has recommended that telematics should be used to determine the motor insurance premium in future. 

What is Telematics Insurance and its functionality?

Telematics is an interdisciplinary field that involves acquiring real-time data, using sensors fitted to the vehicle, and transmitting it wirelessly using telecom networks and other wireless mediums. The technology is mostly used in road safety, electrical engineering, and computers. It costs around Rs1,500-2,000 in India. 

Telematics insurance is vehicular insurance where a telematics device commonly known as a black box is fitted with the vehicle. The device is used to measure various aspects of how, when and where you drive. It also records data about the type of road/s the driver is driving the vehicle and how long he/she has been driving. 

जल्द 'ड्राइविंग पैटर्न से तय होगा मोटर इंश्योरेंस का प्रीमियम ? #IRDA की कमेटी ने दिया सुझाव: सूत्र@anuragshah710 pic.twitter.com/1aDkAjyMKM

— Zee Business (@ZeeBusiness) December 3, 2018

In short, telematics will be used to monitor driving habits, vehicle usage and distances covered to ascertain the insurance premium of the vehicle, for instance, the premium will be lowered for vehicles that run less at night. safe and responsible driving patterns will also help in lowering the premiums. 

Insurance regulator, Insurance Regulatory and Development Authority (IRDA), in July 2018 constituted a 16-member committee to examine motor third party insurance pricing aspects and make recommendations on the premium rates for 2019-20. The committee was also tasked to revisit the classification of vehicles, in view of the development in the industry.