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The trend is a result of detariffing, under which insurance companies have been given complete freedom to decide the price.

Though the new regime has taken effect from this month, experts say insurers are still not distinguishing between bad policyholder and good. So, for those with a bad profile, this may the time to get a good deal, for sooner than later, insurance will start distinguishing good from bad.

B K Sinha, managing director of Vadodara-based Unison Insurance Brokers, says most insurance companies are offering discounts to procure business without considering the rating. “We have six risk engineers. But the discounts offered to the proposals we send are the same as those offered to another broker who is not taking risk into consideration. This tells me that the discounts are being offered to all without taking care of the risk profile of a person.”

“There is a 50-55% discount being offered on car insurance for most models, except an Indica or a Qualis, which are mostly used as taxis,” adds Sinha, but concedes that some private sector companies are quite choosy.

Yashish Dahiya, CEO of  policybazaar.com, also says there is mass discounting in the insurance space, of 48-55%. “Profiling of customers in the earnest has not started. A young rash driver is not being perceived any different from a civil driver. I haven’t seen evidence of profiling in the rates being offered.”

Rahul Aggarwal, CEO of Delhi-based Optima Insurance Brokers, says motor insurance rates are down to half for most car models. “Insurers are not pricing individually. The premium is different only as per the car model or to some extent the location, but not as per the risk profile of the car owner. Insurance companies are not checking whether the owner is a heavy drinker, which is a risky profile.”

Aggarwal says some insurers are discouraging people above 50 years to avoid the risk. “Ideally, insurance companies should be covering people in the higher age by charging higher premium. But the market is such that pricing high is not possible. In case the premium is hiked, the policyholders complain to the Insurance Regulatory and Development Authority and ministry, which then clamp down on insurers.”

Going by the brokers, insurance proposal forms too haven’t changed much “Health insurance forms right now are too basic. The number of questions has not increased since January 2009. Nothing has changed. In India, forms right now have 10-12 questions. When customer profile is taken into account, the number of questions will go up to 30-40 questions. In Germany, there are at least 20 questions asked before offering you a quotation,” says Dahiya of Policybazaar.

Optima’s Aggarwal says a few players have been asking more questions, but that information is not being put to use. “HDFC, Bajaj Allianz already had detailed forms. Though the additional data on customers was of no use in pricing, they had been building a data bank, so they can price the risk appropriately later by checking the data on the customer.”
Unison’s Sinha says, “Deep discounts will continue for 12-18 months, until the market matures.” According to him, new players are offering huge discounts to procure business, making it difficult for mature players to keep the rates high. The premium may be hiked when the policy comes up for renewal, but chances are new companies may still be willing to offer a cheaper policy.

Somewhat predictably, however, the entire discount isn’t being passed on to the customer. “The deepest discount may be 55%, but some agents offer only 48% to the customers,” says Dahiya.

This is why it helps to log on to websites such as policybazaar.com, click2insure.in and apnainsurance.com. One can compare the discounts being offered in the market to make an informed decision and to buy a cover. Usually, agents and banks have a tie-up with one insurance company and can’t quite tell what’s on offer elsewhere.

Aggarwal, however, is categorical that discounts should not be the sole criterion for selecting a cover. Claim servicing is important and should be done on time and without harassment, he adds.

Also, one should buy with caution, says Aggarwal. “Choose an agent or a broker who has been full-time into the profession for at least three years and who has got substantial business. A broker cannot arm-twist the insurance company if a rightful claim is denied unless he is generating a huge business.”

Much, though, would change as risk profiling gains currency. “Some insurers are depending on additional criteria such as profession. Doctors won’t drive fast, so they would get a better rate. CAs would get a better rate than traders. Others would take age into account, as youngsters drive more rashly vis-à-vis the elderly, etc,” says Aggarwal. Premium could change even based on the location, he adds.