Vehicle insurance introduction
In some countries like the USA, the death of a third party in an accident can bring about an astronomical claim to the person responsible for a third party’s death. In case of major injury, the cost of damages, treatment, and rehabilitation of third parties can be enormous and may run into millions. It will be quite difficult for an average citizen of the country to get substantial amounts of money in a relatively short period. Many people have become bankrupt due to uninsured motor vehicle accidents involving the deaths of third parties.
Because of huge costs, the individuals and organizations engaged in the usage of vehicles should make sure that proper insurance is in place before driving the car. In some cases, due to governmental compulsion, the individuals and organizations owning vehicles are required to buy insurance for their cars. Due to advancements in technology and inflation, vehicle costs and the costs related to insurance claims are continually increasing. Despite greater awareness of motor insurance, many people do not insure their vehicles and get caught into the liabilities related to damages arising due to accidents.
Auto insurance service
A vast majority of general insurance companies usually offer motor insurance. One of the significant hurdles of motor insurance is that, like health insurance, it is considered as an attrition class of business. Hence the chances of making a loss in motor insurance are more. If the portfolio is not managed correctly, there are chances of erosion in the overall profit margins.
The insurance companies have to make a conscious and long-term deliberate decision to serve this class of business. Due to their competitive spirit and hunger for business, some insurance companies have lowered their prices to procure the motor insurance business. A few Direct Car Insurance companies offer very cheap car insurance with no deposit. The long fleet of companies gives a huge premium, and if the loss ratio is terrible, it may wipe out the insurance company itself. If motor insurance is done sensibly, then it is a lucrative and challenging class of business.
Like any other insurance, motor insurance benefits can only be available when one is in distress. Hence, the servicing of customers in motor insurance is more critical as the customer’s distress is too personal and challenging for an insurance company to remove it. The insurance company should be able to show empathy with the customer.
Types of auto insurance products
There are different types of motor insurance products available in different markets. The most straightforward product is motor third-party insurance. If the coverage is a mandatory requirement, then the coverage will be standard; there may be a small variation in pricing depending upon the insurance companies’ type. Non-mandatory motor insurance as a product can be sold in isolation. Sometimes, it is linked to other products or classes of insurance like health insurance, motor third party insurance, personal accident insurance, domestic insurance, etc.
Motor insurance provides varied opportunities for both the buyers and sellers in the market. You can even buy now and pay later car insurance because many insurance companies provide this type of plan to drivers with good driving records that meet certain requirements. Due to the availability of numerous insurance companies and motor insurance coverages, it becomes a bit difficult to get the right cover. Even the broker will be in a dilemma to prescribe the correct type of coverage and the insurance company. Hence understanding the motor insurance coverage and other aspects in the right perspective will help choose the proper coverage.
Auto insurance fraud and misconceptions
One of the areas plaguing the motor insurance industry is the fraud being committed by various parties involved in the insurances, including agents, garages, insurers’ employees, brokers, and customers. Companies are struggling to overcome the challenges of fraud. Most of the countries have some kind of major or minor regulations related to the motor insurance industry. The regulators are doing an excellent job in addressing the disputes, maintaining the insurance industry’s liquidity and overall functioning.
There are lots of misconceptions in the minds of the buyer in respect of motor insurance. Many insured are unaware of the insurers’ office location, as the covers are mostly sold by the agents either working near a road transport authority office, vehicle dealer office, supermarket, or an independent office. They presume that the minimum third-party coverage also provides coverage to the damage occurring to their vehicle, including the driver and passenger. The insurance companies have to remove all the misconceptions to have a better penetration in the market. They should take the responsibility of a fair and transparent way of dealing with the customers, educating them, making efforts to reach the unreachable customers, and removing the significant misconceptions.