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India's motor insurance sector is undergoing a significant transformation in its underwriting approach, shifting from static vehicle attributes to data-led risk assessment. For every Rs 100 earned in motor premiums, payouts and operating costs can exceed Rs 110-120 in several segments, highlighting the need for a more accurate risk assessment.
The traditional approach, which relied on broad classification and static variables such as engine capacity and location, is being replaced by usage-linked constructs like Pay-As-You-Drive.
This shift is enabled by advances in artificial intelligence and machine learning, which allow insurers to process larger datasets and identify patterns that more closely reflect real-world risk.
The regulatory framework has also supported this transition, with sandbox frameworks and approvals for new underwriting models.
Looking ahead, the industry is expected to continue its shift towards data-led risk assessment, with insurers investing in building data capabilities to improve portfolio quality and pricing accuracy. The court will resume hearing on the regulatory framework for motor insurance on Tuesday.