United India Insurance, Tata AIG and ICICI Lombard will be among the first set of general insurance companies to introduce the much-awaited add-on covers in the motor insurance segment.
Sources close to the development said the three companies have sought permission from the Insurance Regulatory and Development Authority (Irda) for new motor insurance products and are expected to launch the add-on covers in the first week of January. Add-ons are expected to be in the form of a replacement vehicle or payment on a daily basis when the vehicle is out for repair, and reduced or zero depreciation.
All general insurers are gearing up to file add-ons to their existing motor products and offer more facility to their customers.
“The add-ons that are popular abroad and can be introduced here are loss of use, replacement car and extended warranty, which is an extension to the manufacturer’s warranty,” said Eswaranatarajan, Head of Motor Insurance at ICICI Lombard.
In November, Irda relaxed the terms for coverage of the motor, fire and engineering policies, which will be applicable from January 1, 2009. As a result, insurance companies can add features to existing covers if consumers are willing to pay additional premium.
Insurance sector experts expect the add-ons in fire and engineering segment to come by June 2009. “The companies will take time to dole out the add-ons in fire and engineering as more in-house techniques are required. The add-ons would include loss of profit in case of fire or machine transit in the engineering segment,” said Optima Insurance Broker Chief Executive Officer Rahul Aggarwal.
Industry sources said the move will also help companies lower the discounts they have been offering in the fire and engineering segment. Also, the insurance regulator has allowed general insurance companies to charge variations in deductibles.
“The deductibles are low when compared with the international market. Post January 1, we expect that insurers will have the freedom to charge a higher deductible with a suitable correction in the premium,” said Tata AIG General Insurance Managing Director Gaurav Garg.
