Go Back   Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 24th June 2011, 16:30   #1
BHPian
 
Join Date: Sep 2006
Location: Bangalore
Posts: 156
Thanked: 26 Times
Default Insurance on diesel cars to go up

After petrol and possibly a diesel price hike, get ready to pay more upfront for a diesel car. From insurer's point of view, this sure makes sense

Buying diesel cars? Get ready to pay more for cover - The Economic Times
tortoise is offline   Reply With Quote
Old 24th June 2011, 16:57   #2
Senior - BHPian
 
Swanand Inamdar's Avatar
 
Join Date: Jan 2011
Location: Chicago, IL
Posts: 1,648
Thanked: 573 Times
Default Re: Insurance on diesel cars to go up

A hike of 30% is a bit too much IMO.
It sure makes sense for insurer's to make up the losses, however, this would surely affect the auto sales even more.
Swanand Inamdar is offline   Reply With Quote
Old 24th June 2011, 17:04   #3
Senior - BHPian
 
Join Date: Apr 2008
Location: Dombivli
Posts: 2,626
Thanked: 1,191 Times
Default Re: Insurance on diesel cars to go up

@Swanand, if you see the bottom of the report, it talks of a 10% hike in the premium for diesel cars, and a 20% discount on petrol ones. Hence 30%.

Also there will be many other factors affecting this hike, so while some will have to pay more, others may not.

I personally don't buy the argument that people travelling long distances prefer diesel vehicles and therefore they should be charged more premium. I suspect it's yet another measure to make petrol cars more attractive.
honeybee is offline   Reply With Quote
Old 24th June 2011, 17:08   #4
Senior - BHPian
 
ghodlur's Avatar
 
Join Date: Sep 2009
Location: Thane
Posts: 5,039
Thanked: 2,075 Times
Angry Re: Insurance on diesel cars to go up

As per the article
Quote:
This will translate into customers in north India paying higher premium for damages and customers in the south paying more for third-party insurance.
Why is this discrepancy between North and South India customers. Does this mean that the Insurers find more damage claims up north.

There is also a note on the FM thinking of increassing the duty on the diesel cars. As if the premium on the diesel cars was not enough, this buden will push the cost more away from the customers who want to offset the petrol price rise by veering towards the Diesel options.
ghodlur is online now   Reply With Quote
Old 24th June 2011, 17:11   #5
Senior - BHPian
 
selfdrive's Avatar
 
Join Date: Apr 2010
Location: Pune
Posts: 2,696
Thanked: 2,111 Times
Default Re: Insurance on diesel cars to go up

Apparently the hike is 10%; and they would not get the 20% discount offered to petrol cars. In terms of pure logic, it may be correct for vehicles that accumulate high mileage.
But it doesnt make sense to cover all diesel cars in this category. After all, some cars would be exposed to more risk (by the roads they are used on) than others. That will definitely increase the risk exposure of the car than the type of fuel. It is just plain opportunism by the insurance companies to cover for the massive profit margins and fat commissions paid. If the situation is so bad, perhaps they should begin with reducing commission %. On second thoughts, they may have already done that!

Disclaimer: I am not a diesel consumer, just that I dont like the way this segregation is being made. Smacks of opportunistic business thinking
selfdrive is online now   Reply With Quote
Old 24th June 2011, 17:13   #6
BHPian
 
Join Date: Oct 2009
Location: Chennai
Posts: 81
Thanked: 7 Times
Default

Quote:
Originally Posted by ghodlur

There is also a note on the FM thinking of increassing the duty on the diesel cars. As if the premium on the diesel cars was not enough, this buden will push the cost more away from the customers who want to offset the petrol price rise by veering towards the Diesel options.
And rightly so. The diesel subsidy is meant for a completely different purpose altogether.

What the government is doing is very simply plugging the loop-hole.
Mubeen is offline   (1) Thanks Reply With Quote
Old 24th June 2011, 17:14   #7
Senior - BHPian
 
souravc's Avatar
 
Join Date: Sep 2010
Location: Kolkata
Posts: 1,088
Thanked: 427 Times
Default Re: Insurance on diesel cars to go up

Quote:
Originally Posted by tortoise View Post
After petrol and possibly a diesel price hike, get ready to pay more upfront for a diesel car. From insurer's point of view, this sure makes sense

Buying diesel cars? Get ready to pay more for cover - The Economic Times
This is written in such a wishy washy manner I am not sure how seriously it should be taken . While demographics, make , model , colour , tyres, modifications etc are used to decide premiums I think it would be stupid to differentiate due to the vehicle running on petrol or diesel. I am sure that the companies cannot come up with any data which can back an increase in premium due to higher riskiness associated with diesel car drivers as compared to petrol car drivers - it has to pass muster by the IRDA . Increasing premium because profits are under pressure is one thing but the discussed differentiation if introduced would surely be challenged . Diesel cars are anyways costlier and thus IDV would be higher which would bump up premium .
souravc is offline   Reply With Quote
Old 24th June 2011, 17:34   #8
Senior - BHPian
 
Join Date: Nov 2006
Location: Vizag
Posts: 1,982
Thanked: 1,338 Times
Default Re: Insurance on diesel cars to go up

Ok, so now it's turn of the insurance companies to loot common man. What next? Parking lot attendants asking more because yours is a diesel car? Then car wash guys? This is total nonsense. Every body seems to be looking for an opportunity to fleece people. Aren't the insurance companies already charging higher premium for commercial cab/taxis?
pgsagar is offline   Reply With Quote
Old 24th June 2011, 22:24   #9
BHPian
 
Join Date: Sep 2006
Location: Bangalore
Posts: 156
Thanked: 26 Times
Default Re: Insurance on diesel cars to go up

Quote:
Originally Posted by honeybee View Post

I personally don't buy the argument that people travelling long distances prefer diesel vehicles and therefore they should be charged more premium.
@honeybee - are you disagreeing with the notion that people prefer diesel cars ( which will include the taxis - indicas, sumos, qualis and innovas) for long distance travel or you are saying that should not be a reason to charge more premium?

Insurance companies ( or any business for that matter) will do cost benefit analysis of every move they make. The industry will adopt this in one shot unless challenged by IRDA. The industry so far has been running on cross subsidy model. This looks like an effort to breakaway from that model.

-tortoise
tortoise is offline   Reply With Quote
Old 25th June 2011, 08:28   #10
BHPian
 
Join Date: Mar 2008
Location: Hyderabad
Posts: 858
Thanked: 296 Times
Default

Charging higher premium for diesel vehicles is an interesting move, though not exactly desired for by diesel vehicle users. Logic that diesel vehicles are used for longer distance travels so they should be charges extra premium has some merit on face of it.

Travels and transport companies do use diesel vehicles but irrespective of fuel used, all taxi vehicles are charged higher premium for comprehensive insurance, which according to present rates exceeds the comprehensive insurance paid at the time of purchase of new vehicle.

Eg : Indica 2002 - Rs.1200.00 (third party)
Bolero Camper 2002 - Rs.7,000.00 (third party/taxi plate)
Rs.11,113.00 paid for comprehensive insurance for Camper at the time of purchase in 2002. In 2007 they quoted Rs.14,000.00 for the same after which I shifted to third party insurance.

The Insurance companies now plan to extend same method to diesel cars as well.

Quote:
Originally Posted by tortoise View Post
@honeybee - are you disagreeing with the notion that people prefer diesel cars ( which will include the taxis - indicas, sumos, qualis and innovas) for long distance travel or you are saying that should not be a reason to charge more premium?
-tortoise
Taxis, irrespective of fuel used (of course we find very less number of taxi registered petrol vehicle) are charged more already, as I have mentioned in my previous post.

Last edited by Eddy : 28th June 2011 at 21:06. Reason: Please use the edit / multiquote option instead of posting back to back posts within 30 mins. Thanks.
simplyself is offline   Reply With Quote
Old 25th June 2011, 10:44   #11
BHPian
 
Join Date: Sep 2006
Location: Bangalore
Posts: 156
Thanked: 26 Times
Default Re: Insurance on diesel cars to go up

Quote:
Originally Posted by simplyself View Post
Taxis, irrespective of fuel used (of course we find very less number of taxi registered petrol vehicle) are charged more already, as I have mentioned in my previous post.
I dont disagree with that. But, if someone is aware that their mileage is going to be high, they will definitely opt for diesel cars. A trend that is more evident with rising petrol prices. The waiting period of diesel dzires, ventos and vernas speak volumes.
tortoise is offline   Reply With Quote
Old 25th June 2011, 11:14   #12
Distinguished - BHPian
 
libranof1987's Avatar
 
Join Date: Sep 2010
Location: All over!
Posts: 3,721
Thanked: 2,806 Times
Default Re: Insurance on diesel cars to go up

I don't understand the rationale behind -
1) the increase in premium itself. I cannot believe the reasons mentioned in the article
2) differentiation between north and south Indian policy holders.

There is no record of north Indians claiming higher insurance figures.

There seems to be much more to it than what is disclosed.

News some weeks from now : Pay Rs. 50 for air at petrol pumps. True story!
libranof1987 is offline   Reply With Quote
Old 25th June 2011, 16:17   #13
BHPian
 
Poitive's Avatar
 
Join Date: Apr 2011
Location: 3rdRockFmTheSun
Posts: 850
Thanked: 280 Times
Default Re: Insurance on diesel cars to go up

The article in the OP says:
"A diesel car owner may be charged 10% loading on premium compared to a discount of 20% given on petrol-driven cars. This makes diesel motor insurance rates 30% costlier than for petrol cars. "Diesel cars are mostly used for commercial purposes and exposure to risk is higher," said Garg."

1. Most owners usually have a NCB. I presume this 20% will NOT be over and above that. So it may be a bit misleading.

2. Diesel cars being used for commercial purposes doesn't allow them to hike rates for private vehicles. If they are trying to say that cars are registered privately and used commercially, are they trying to charge more to honest private diesel owners, because they can't catch the culprits?

=========

Assumption made is that people who use cars more buy diesels.

One may buy a diesel based on it's cumulative use over the car's lifespan and not on annual usage, whereas the insurance premium is paid annually.

Financially, if one wants to choose a car for 2years/50k, one may choose (say) a Petrol Verna/Honda city (not enough usage, better resale etc). If one wants to choose one for say 6years/100k, one may choose a diesel Verna/Optra. Whereas 2 insurance premium's will be paid in the first case for 50k usage 3 will be paid for 50k usage in the latter. To top that the first case will have a 30% discount over the latter!!!

Now the example above wasn't perfect. It was just to highlight how it may be incorrect to assume diesel cars getting used more (per insurance premium).
Poitive is offline   (1) Thanks Reply With Quote
Old 25th June 2011, 17:48   #14
Senior - BHPian
 
Join Date: Apr 2008
Location: Dombivli
Posts: 2,626
Thanked: 1,191 Times
Default Re: Insurance on diesel cars to go up

Quote:
Originally Posted by tortoise View Post
@honeybee - are you disagreeing with the notion that people prefer diesel cars ( which will include the taxis - indicas, sumos, qualis and innovas) for long distance travel or you are saying that should not be a reason to charge more premium?
Both.

I own a petrol car, have owned one since about seven years. In all these years, except where either the car was not available or there were more than five people travelling, I don't remember renting out a diesel vehicle. Using your own vehicle still works out cheaper than renting out a diesel.

So unless you just don't own a vehicle, saying that people tend to rent diesel vehicles is a case of generalizations. And that automatically strikes out the other point. If the idea really were implemented, I would still be paying lesser premium inspite of clocking miles on my car, just because it's not a diesel one.

If the insurance industry wants to associate a higher premium with higher usage, why bring diesels into picture? Why not adjust the premium value based on the kilometers run in the whole year?
honeybee is offline   Reply With Quote
Old 25th June 2011, 21:33   #15
BHPian
 
Poitive's Avatar
 
Join Date: Apr 2011
Location: 3rdRockFmTheSun
Posts: 850
Thanked: 280 Times
Default Re: Insurance on diesel cars to go up

Quote:
Originally Posted by honeybee View Post
If the insurance industry wants to associate a higher premium with higher usage, why bring diesels into picture? Why not adjust the premium value based on the kilometers run in the whole year?
Implementation, my friend.

Would be almost impossible to implement such a policy. Even new cars get used as TD vehicles in showrooms with their odometers disconnected!

If at all they are to look at higher premiums based on more claims, it could come from a higher premium to start with and to compensate higher NCB. Or else some 'penalty' for claiming (surcharge) without a higher premium.

The limitation would be that it would only compensate for low value claims.

The other possibility would be have a higher rate of depreciation.

Am not really aware, but I don't think the insuurance sector is fully open and truly competitive. Making it more competitive with a watchdog (not a toothless one) may possibly be a way forward. Guys more aware of this sector may be able to add more value to it.
Poitive is offline   Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Insurance premiums vs claims - Would 'Self Insurance' be cheaper for you? GTO Indian Car Loans & Insurance 46 28th February 2016 15:38
Cashless Insurance - Only if insurance bought from dealer? sadnabrina Indian Car Loans & Insurance 9 16th July 2015 14:53
Insurance Claim with Maruti Insurance through MSM Chennai! ForeRunner Indian Car Loans & Insurance 10 18th September 2011 12:01
Beware of Fraud Insurance Agents - My experience with Reliance General Insurance panga007 Indian Car Loans & Insurance 4 17th February 2010 21:46


All times are GMT +5.5. The time now is 10:04.

Copyright 2000 - 2017, Team-BHP.com
Proudly powered by E2E Networks