Asset Insurance

People in the US of A believe that insurance in this country is a big money making racket! With the hundreds of options available, countless regulations (which vary by state and county), it is definitely complicated. I compare this to the insurance options available in India, and I have mixed feelings about what we have in India…

For one, India’s insurance industry has come of age and is way simpler than what the folks here have. Writing a policy in India is farily cookie-cutter and one of the agents can easily create one for you without offering any customization (not a whole lot exists anyways!). Given the number of people out there trying to beat the system (read insurance fraud), the claims process in India is fairly exhaustive and there are numerous checks in place before someone sees the money in their hands. So, while in India, getting an insurance policy is simple, the claims are fairly painful. The US is completely the reverse – the plethora of options makes a sane individual want to pull out their hair (ever hear the person ahead of you in a Starbucks line ask for grande caffe latte, double shot with egg-nolk and light cream made extra hot… you guys see a trend here?). Anyways, this post was intended to pick on some on the better aspects of the insurance industry in the US and see if we could adapt some of those in India… please note all this is for Auto insurance only:

1. Market value of asset; how about market value of individual? Insurance needs to be tied to the asset being insured and the past record of the individual using it. Currently, in India, an asset (vehicle) is solely dependent on its fair market value – it has no bearing on how the owner past record. Sure, there is the concept of no-claim bonus, but that falls very short of profiling an individual. Being able to do this tie back would potentially reduce the insurance premium for the “more careful” individuals. Why should all of us pay the same? Hasn’t the world decided socialism is headed south?
2. 360 Tie Back- Great – an individual has a sound record and gets a great premium on the auto insurance – does that mean, he/ she should continue to get this premium in the following years if nothing untoward is reported (reported, not happens)? In India, getting a car fixed after a crash is potentially cheaper than going to the insurance company for a claim and losing out on the no-claim bonus for the following year. So, what happens? People jump lights, drive dangerously or under the influence of alcohol – some get caught and challan’d (ticketed), some get caught and escape by bribing the police officer, some evade the police trap and stay under the radar and the unfortunate few get involved in accidents. For the first two categories, a loop back would involve the police informing their insurance company so their premiums can be suitable be bumped up.

Two simple concepts but they make a hell of a difference in the US of A. Sure there are other things at play in the US, but the ability of making a driver responsible and keeping them that way is a science that the Americans seem to have done a very good job at. Either we get to the bottom of fixing our chaotic traffic (not roads, but irresponsible drivers) or see this as one area we should be outsourcing to the US!

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