No claims during the Covid-19 days, can insurance companies share the benefit with customers?

gadadhar · 27th April 2020, 10:57

I am assuming Accidents, thefts and insurance claims will be next to Zero during the lock-down period. Automobile insurance companies should be benefited big time during this period with no payouts on the active policies. Can we expect some benefits to be passed to the customers through a discount on the next policy (probably as a stickiness bonus) or in some form.

Even for Health insurance, scenario can be similar with people keeping away from hospitals unless for a real emergency

I agree that new business will be also Zero during this period, but just a thought

ValarMorghulis · 27th April 2020, 11:23

I think insurance companies will have to think about survival first, with new sales precipitating and health insurance claims certainly rising exponentially, I don't think insurance companies will be able to share any benefits (if they get some, that is).

SmartCat · 27th April 2020, 11:32

Warren Buffett’s Geico offers $2.5 billion in credits as coronavirus cuts driving
https://www.cnbc.com/2020/04/08/warr...s-driving.html

Quote:

Geico said it will offer about $2.5 billion of credits to its 19 million auto and motorcycle policyholders, reflecting the decline in driving stemming from the coronavirus pandemic.

The insurer said it will offer a 15% credit on policies up for renewal between April 8 and Oct. 7, averaging about $150 per auto policy and $30 per motorcycle policy.

The announcement came one day after Allstate said it would return more than $600 million to policyholders, mostly through a “payback” of 15% of premiums for April and May on about 18 million policies.

gadadhar · 27th April 2020, 16:53

Quote:

Originally Posted by SmartCat

Warren Buffett’s Geico offers $2.5 billion in credits as coronavirus cuts driving

I wonder if Indian insurance companies will think on similar lines. Relieved that my proposal was not fully idiotic and out of mind

JithinR · 27th April 2020, 16:56

Quote:

Originally Posted by gadadhar

I wonder if Indian insurance companies will think on similar lines. Relieved that my proposal was not fully idiotic and out of mind

It's not idiotic. My team mates in Canada have already started receiving rebates for their car insurance policy.

But in India, I don't really expect us to get our money back to be honest. Happy to be proved wrong though.

KiloAlpha · 27th April 2020, 17:10

My car's insurance expired today. I renewed it couple of days back (my policy is with Acko). I got a Rs.1800 extra discount over and above the NCB as "Lockdown discount". This was for a policy on which renewal premium was about Rs.12,000 for comprehensive coverage.

gadadhar · 27th April 2020, 17:16

Quote:

Originally Posted by JithinR

It's not idiotic. My team mates in Canada have already started receiving rebates for their car insurance policy.

But in India, I don't really expect us to get our money back to be honest. .

Agreed that a cash back may never happen in our country. It can be discount during renewal if you stick to the same provider. That can be a win-win situation, but not sure if that is allowed legally

GTO · 28th April 2020, 07:58

Would customers pay more during a crisis month where the claims went up? I don't think so

. It would be nice to have, but I don't expect Indian insurance companies to offer any sort of benefit.

Axe77 · 28th April 2020, 10:06

I would have thought there should be no change. To my mind, insurance premiums work as follows: Regardless of the time the car spends on the road, your next year insurance premium / NCB depends on whether or not you make a claim in the previous year. I guess if you don't make a claim you will get your NCB. And even if your car was on the road only for 3 months of the year, and in that period if you made a claim you would lose NCB. Isn't that the only way to look at it?

gadadhar · 28th April 2020, 11:14

Insurance premium I understand is paid for transferring our risk to the insurer. In other words, it is calculated based on the risk an insurer is taking on your behalf. Certain risk components has reduced globally during the current period and this can result in a reduced risk and hence premium. This can be passed to customer if the company wishes to use that as an incentive to attract business (not enforced by a regulatory authority)

Agreed to GTO that we didn't pay more during a crisis situation like flood. But are not these elements factored in to the policy premium. Moreover, such events are generally limited to a region and will be neutralized to a large extent against the larger community.

Jeroen · 28th April 2020, 23:39

In the Netherlands : We have a few insurance companies who have started giving rebates on their car insurances to their customers. Less traffic/Driving less accidents and they show it in their premiums right away!

Dry Ice · 29th April 2020, 03:39

Wasn't there was a 2 month extension offered for policies expiring during the lockdown, if I am not mistaken?

Insurance is tricky business. When the companies like Tata AIG can refuse to renew insurance (Tata-AIG refuses to renew my insurance policy, due to accident claims!) after a claim, I don't think they will pass on any sort of benefit to the consumers.

pganapathy · 29th April 2020, 07:57

Quote:

Originally Posted by JithinR

It's not idiotic. My team mates in Canada have already started receiving rebates for their car insurance policy.

But in India, I don't really expect us to get our money back to be honest. Happy to be proved wrong though.

A part of that is also to do with the amount involved. In the UK for example, a 19 year old can pay amounts like 5000 pounds a year for a used hatchback. Assuming even a 10 percent rebate on that premium is 500 pounds, which is a lot of money. In India on the other hand, a basic car like that would probably cost 10 to 20 thousand rupees. A 10 percent discount on that is negligible.

gadadhar · 29th April 2020, 10:17

Quote:

Originally Posted by Jeroen

In the Netherlands : We have a few insurance companies who have started giving rebates on their car insurances to their customers. Less traffic/Driving less accidents and they show it in their premiums right away!

That was my point, and it can be done here as well

Quote:

Originally Posted by Dry Ice

Wasn't there was a 2 month extension offered for policies expiring during the lockdown, if I am not mistaken?

.

Did you read it somewhere? I don't remember hearing anything similar.

Quote:

Originally Posted by pganapathy

In India on the other hand, a basic car like that would probably cost 10 to 20 thousand rupees. A 10 percent discount on that is negligible.

Size of the amount shouldn't matter, and it may not be small in all cases

pganapathy · 29th April 2020, 14:12

Quote:

Originally Posted by gadadhar

Size of the amount shouldn't matter, and it may not be small in all cases

It does. When you charge 10K for insurance, 1K is a lot to refund for the company, but miniscule for the owner to receive. On the other hand when you charge 5L then 50K is big for the owner but not so bad for the company. It basically comes down to high volume low margin vs low volume high margin

27th April 2020, 10:57	#1
gadadhar Senior - BHPian Join Date: Sep 2007 Location: Bangalore Posts: 1,342 Thanked: 1,117 Times View My Garage	No claims during the Covid-19 days, can insurance companies share the benefit with customers? I am assuming Accidents, thefts and insurance claims will be next to Zero during the lock-down period. Automobile insurance companies should be benefited big time during this period with no payouts on the active policies. Can we expect some benefits to be passed to the customers through a discount on the next policy (probably as a stickiness bonus) or in some form. Even for Health insurance, scenario can be similar with people keeping away from hospitals unless for a real emergency I agree that new business will be also Zero during this period, but just a thought
	(1) Thanks

27th April 2020, 11:23	#2
ValarMorghulis BHPian Join Date: Apr 2019 Location: Bangalore Posts: 371 Thanked: 3,086 Times	Re: No Insurance claims during the COVID days, can insurance companies share the benefit with custom I think insurance companies will have to think about survival first, with new sales precipitating and health insurance claims certainly rising exponentially, I don't think insurance companies will be able to share any benefits (if they get some, that is).
	(2) Thanks

27th April 2020, 17:10	#6
KiloAlpha Senior - BHPian Join Date: Mar 2010 Location: Cubicle Posts: 1,605 Thanked: 3,002 Times	Re: No Insurance claims during the COVID days, can insurance companies share the benefit with custom My car's insurance expired today. I renewed it couple of days back (my policy is with Acko). I got a Rs.1800 extra discount over and above the NCB as "Lockdown discount". This was for a policy on which renewal premium was about Rs.12,000 for comprehensive coverage.
	(8) Thanks

28th April 2020, 07:58	#8
GTO Team-BHP Support Join Date: Feb 2004 Location: Bombay Posts: 70,546 Thanked: 300,790 Times View My Garage	Re: No claims during the Covid-19 days, can insurance companies share the benefit with customers? Would customers pay more during a crisis month where the claims went up? I don't think so . It would be nice to have, but I don't expect Indian insurance companies to offer any sort of benefit.
	(15) Thanks

28th April 2020, 10:06	#9
Axe77 Team-BHP Support Join Date: Jun 2009 Location: Mumbai Posts: 6,928 Thanked: 20,676 Times	Re: No claims during the Covid-19 days, can insurance companies share the benefit with customers? I would have thought there should be no change. To my mind, insurance premiums work as follows: Regardless of the time the car spends on the road, your next year insurance premium / NCB depends on whether or not you make a claim in the previous year. I guess if you don't make a claim you will get your NCB. And even if your car was on the road only for 3 months of the year, and in that period if you made a claim you would lose NCB. Isn't that the only way to look at it?
	(1) Thanks

28th April 2020, 11:14	#10
gadadhar Senior - BHPian Join Date: Sep 2007 Location: Bangalore Posts: 1,342 Thanked: 1,117 Times View My Garage	Re: No claims during the Covid-19 days, can insurance companies share the benefit with customers? Insurance premium I understand is paid for transferring our risk to the insurer. In other words, it is calculated based on the risk an insurer is taking on your behalf. Certain risk components has reduced globally during the current period and this can result in a reduced risk and hence premium. This can be passed to customer if the company wishes to use that as an incentive to attract business (not enforced by a regulatory authority) Agreed to GTO that we didn't pay more during a crisis situation like flood. But are not these elements factored in to the policy premium. Moreover, such events are generally limited to a region and will be neutralized to a large extent against the larger community. Last edited by gadadhar : 28th April 2020 at 11:16.
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28th April 2020, 23:39	#11
Jeroen Distinguished - BHPian Join Date: Oct 2012 Location: Delhi Posts: 8,104 Thanked: 50,911 Times View My Garage	In the Netherlands : We have a few insurance companies who have started giving rebates on their car insurances to their customers. Less traffic/Driving less accidents and they show it in their premiums right away!
	(2) Thanks

29th April 2020, 03:39	#12
Dry Ice Distinguished - BHPian Join Date: Sep 2008 Location: -- Posts: 3,552 Thanked: 7,262 Times	Re: No claims during the Covid-19 days, can insurance companies share the benefit with customers? Wasn't there was a 2 month extension offered for policies expiring during the lockdown, if I am not mistaken? Insurance is tricky business. When the companies like Tata AIG can refuse to renew insurance (Tata-AIG refuses to renew my insurance policy, due to accident claims!) after a claim, I don't think they will pass on any sort of benefit to the consumers.
	() Thanks