Car Insurance may depend on its colour and personality of driver

2009
Syed Akbar
Insurance companies are no more colour and personality blind. Some of the private players in the motor insurance sector have proposed to collect insurance premium for cars based on their colour and the accident record of the person behind the wheel. So the next time you go to pay your car insurance, the insurer may ask the colour of your vehicle and seek details about your driver.

Though the Insurance Regulatory and Development Authority has not yet cleared the
proposal, private motor insurance firms propose to give special discounts if the car driver has a clean track record. They also want to collect the premium based on the colour of the car. The special discounts range between five and 15 per cent.

It is a common practice in the USA, the UK and other developed countries to fix car
premium based on its colour and the personality of the driver. Those with no or fewer accidents get special discounts while those with a bad accident record will have to shell out more for the car insurance. Some motor insurance firms in these countries fix their premium based on the colour of the vehicle.

Private motor insurance companies in India like Royal Sundaram Alliance and Bharti AXA General Insurance want to introduce the concept here. But they find IRDA regulations a major stumbling block in executing their proposals.
Though the colour factor is yet to get the IRDA nod, all insurance companies in India offer discounts on motor insurance premium in case of no accident claims.

Says J Uday Kumar, zonal manager of National Insurance Company, "we have been giving
special no claims bonus for vehicles with no accident record. As far as the colour of the car is concerned, we do mention it in the insurance records but do not differentiate it when it comes to collection of premium. In Western countries insurance firms do it, but here we are guided by IRDA guidelines which do not permit different premiums for different car colours".

According to Ajay Bimbhet, managing director of Royal Sundaram Alliance Insurance,
insurance firms take into account the age of the driver before offering discounts. "We are thinking of bringing in more parameters like gender and the profession of the driver as also the colour of the car."

Some insurers, however, feel that it is difficult to fix premium based on the track
record of the driver, for the simple reason that many people in a family drive the same car. Points out N Eswaranatarajan, head of motor insurance division of ICICI Lombard General Insurance, "In USA there are 700 cars per 1000 people whereas the ratio is just 70 per 1000 in India. You can pinpoint who the driver is because car sharing is not much there. It is not the case in India. Profiling the driver is quite difficult."

While insurers differ on fixing different premium for different drivers and cars with different colours, psychologists are of the view that the colour of the vehicle indeed makes a difference. They identify red cars with rashness and white cars with serenity. Statistics show that black cars are more prone to accidents, followed by red cars. A study
conducted by Monash University Accident Research Centre in Australia revealed that blue or red vehicles were involved in seven per cent more accidents than white cars. In case of black cars it is 14 per cent.

"However, from an insurance point of view, we make no distinctions as far as colour is concerned," observes Eswaranatarajan.