InsurTech in insurance
The road ahead for Telematics in India
Keywords:
information asymmetries, InsurTech, Telematics, pay-as-you-driveAbstract
The Indian insurance sector is characterised by the presence of information asymmetry and moral hazard. Resultantly, the adoption of InsurTech has become a necessity. While telematics, a form of InsurTech, is gaining significant impetus globally, it is still at a nascent stage in India. Against this backdrop, the present study analyses the role of Telematics in reducing information asymmetries in the Indian motor insurance sector, thereby improving the risk assessment process and ensuring that the insurance premium is reflective of the risk taken by the policyholder. The novelty of the study is that it is one of the very few studies that have explored the implementation of Telematics in the Indian context. The study is exploratory and uses a mixed-method approach by analysing the use of telematics in developed countries through document analysis followed by semi-structured interviews with Indian vehicle owners and industry experts. The study highlights that Telematics devices can assist companies in reducing information asymmetries and enable precise ascertainment of insurance premiums based on factors such as driving habits, distance travelled, and driving patterns of the policyholders.
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