ARMED with the freedom to fix tariffs, general insurance companies have driven down auto insurance premiums by 20-40% in their scramble for a larger pie of the shrinking car market.
Insurers are being forced to increase business volumes by offering huge discounts, especially on policy renewals, with premium collection falling by around 60% due to fewer car sales and lower tariffs. New car sales have fallen by 15.5% in the quarter ended December 2008. Overall, car premium collections have fallen by 20-30%.
Sample this: A car owner who paid Rs 35,000 premium for a Honda Civic bought last year is required to pay only Rs 15,000 this year. Without a special discount of around 35% from a private insurer, he would have paid Rs 23,000. The renewal premium falls in subsequent years as insurers factor in depreciation in the car’s value.
Private insurers such as ICICI Lombard and Reliance General are among the players that offer lowest tariffs.
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