Diesel cars buyers may have to spend more on cover
Immense rise in petrol prices are leading to an inclination of diesel cars in India and trend shows that petrol prices will continue to rise in coming future so future market is tend to bend more towards diesel cars. To benefit from the scenario insurance companies are planning to raise Insurance premium on diesel vehicles by 30% however this high rate of interest would impose burden to car sales in India.
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General insurance companies going through steep losses in motor policy claims, are deciding to segment market based on regional behavior on claims so as to finalize premium, as a consequence of which customers in North India will have to pay higher premium for damages and customers in the South will have to pay more for third-party insurance. Head of motor insurance at Bajaj Allianz General Insurance, Vijay Kumar said that due to low diesel prices, first choice of an individual travelling long distances would be a diesel vehicle, leading to higher exposure to risk thereby increasing the premium rate. Hike in petrol prices is making diesel cars to be the first preference of volumes.
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Automobile insurance companies justify the hike in premium rates by stating that the claims are disproportionate to the premium income. Companies say that Motor claims ratio is about 75% of the insured amount for the industry whereas claim ratio in third party motor insurance is as high as 180% due to which the regulator has allowed a rise. As the crowd is moving more towards the diesel version so as to escape the spiraling price of petrol, the finance ministry is also deliberating to raise the duty rates on diesel cars.Trends based on demographic behavior miles clearly show a decline in car sales growth to 7% in May, from the earlier record high of 30% in March. Maruti's sales rose to 1.9%, its lowest since July 2008.
Maruti Suzuki India dealer, Rajan Masurkar said that the difference in the premium charged by insurers on diesel cars as compared to that of petrol cars will govern the ratio of sales of diesel cars in India. Nilesh Garg , executive director, ICICI Lombard General Insurance said that companies are factoring based on features such as age, location and model and companies are also planning to factor based on demographic behavior of the driver and the miles driven. Factorisation based on location, age and model has already been done however for demographic behavior of driver and miles driven, company is creating a database and soon the strategy will be implemented.
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