Motor insurance in India is on the brink of a significant transformation. The recent overhaul by the Insurance Regulatory and Development Authority of India (Irdai) has brought about a series of changes that are set to reshape the motor insurance landscape in the country. From changes in policy tenure to an increase in the sum insured for private vehicles, the motor insurance space is undergoing a major facelift.

In this article, we will explore the key implications of the Irdai overhaul and delve into what the future holds for motor insurance in India. We will hear from experts in the field, who will shed light on the market’s readiness for product innovation, the need for greater insurance penetration, and the role of technology in shaping the future of motor insurance. So, let’s dive in and explore the exciting developments in the motor insurance space.

The Evolution of Motor Insurance in India

To understand the significance of the recent Irdai overhaul, it is important to take a step back and trace the evolution of motor insurance in India. Until 2007, the pricing of motor own damage was regulated under a tariff system. However, in 2007, the pricing of motor own damage was detariffed, allowing insurers more flexibility in determining premiums. This marked a significant milestone in the journey of motor insurance in India.

Fast forward to November 2018, and the Irdai established a working group to further examine the issue of motor own damage pricing. This step highlights the need to free up basic product structures that were previously left untouched. The market has evolved considerably since the detariffing of motor own damage, and it is now ripe for product innovation.

Market Readiness for Product Innovation

According to Raj Khosla, Founder and Managing Director of MyMoneyMantra, the motor insurance market in India is now ready for significant product innovation. Khosla points out that usage-based pricing, which is common overseas, could be a game-changer in the Indian market. By tailoring premiums based on an individual’s actual usage of their vehicle, insurers can offer more personalized and cost-effective coverage.

Moreover, there is a growing demand for higher deductible-based motor insurance. This approach allows policyholders to opt for a higher deductible, which in turn lowers their premium. It gives policyholders more control over their insurance costs while ensuring adequate coverage in case of an accident.

The online ecosystem has also expanded significantly in recent years, opening up new avenues for motor insurance distribution. To effectively reach online customers, existing motor insurance products need to be modified and suitably buttressed with attractive offers like lower premiums. The purchasing process should be streamlined to make it more convenient and less cumbersome for customers. By simplifying proposal forms and reducing the number of fields, insurers can make the online buying experience more user-friendly.

Increasing Insurance Penetration

Despite motor third-party insurance being mandatory by law, a significant number of vehicles on Indian roads remain uninsured. Tapan Singhel, Managing Director and CEO of Bajaj Allianz General Insurance, highlights the need to address the low penetration of motor insurance in India. Singhel suggests mapping the registered vehicles’ database from regional transport offices (RTOs) with the insured vehicles’ database from insurance companies. This data can be shared with the Insurance Information Bureau, which can then send notices to vehicle owners who are uninsured. The traffic police can also play a crucial role by developing a mobile application to identify uninsured vehicles on the ground.

Another step towards increasing insurance penetration is the recent increase in the sum insured of compulsory personal accident cover to ₹15 lakh. This provides additional cover to drivers in case of an accident and enhances the overall protection offered by motor insurance policies.

Technology-Driven Solutions

Tarun Mathur, Chief Business Officer – General Insurance at, emphasizes the role of technology in revolutionizing the motor insurance space. Mathur believes that the recent changes in motor insurance regulations are customer-friendly. For example, the mandatory term for the third-party liability component of policies has been increased to three years, ensuring that vehicles stay insured for a longer duration. Additionally, the increase in the minimum premium ensures that policyholders receive higher coverage in case of an accident.

Looking ahead, Mathur envisions the emergence of “pay as you go” insurance products. These products would leverage telematics devices installed in vehicles to measure driving behavior and offer customized insurance coverage. This approach allows policyholders to pay premiums based on their actual usage and driving habits, resulting in more personalized and cost-effective coverage.

Animesh Das, Head of Product Strategy at ACKO General Insurance, echoes the need for technology-driven solutions in the motor insurance space. Das emphasizes the importance of customizing insurance offerings, pricing, and services based on an individual’s vehicle usage. Currently, every customer pays a similar premium regardless of their actual usage. By introducing premiums based on usage, insurers can offer more tailored and cost-effective coverage. Additionally, Das suggests enhancing motor insurance products to cater to the expectations of current vehicle owners. Cashbacks, referral bonuses, and other benefits can be offered to incentivize better driving behavior and reward policyholders.


The recent Irdai overhaul has set the stage for a transformative period in the motor insurance space in India. With the market ready for product innovation, insurers have the opportunity to introduce usage-based pricing, higher deductible options, and other personalized offerings. Increasing insurance penetration, especially among uninsured vehicles, is crucial for ensuring a safer and more secure driving environment. Technology-driven solutions, such as telematics devices and mobile applications, will play a vital role in reshaping the motor insurance landscape.

As we look to the future, it is clear that motor insurance in India is poised for a period of rapid evolution. Insurers, regulators, and customers must embrace these changes and work together to create a more efficient, customer-centric, and technologically advanced motor insurance industry. By doing so, we can ensure that every vehicle on Indian roads is adequately protected and every driver can enjoy the benefits of comprehensive motor insurance coverage.

Remember, motor insurance is not just a legal requirement; it is a means of safeguarding oneself and others on the road. So, as the motor insurance space undergoes this exciting transformation, it’s time for all stakeholders to buckle up and embrace the changes ahead.