Chennai: With non-life insurers planning to move over to rating a motor vehicle based on the claims experience for models, engine capacity, the state in which the vehicle plies or is registered in and other factors from January 2007 onwards, Maruti Insurance, the insurance outfit of the car manufacturers Maruti Udyog Limited will have discussions with the four insurers to have the premium hike limited on its models.

Maruti Insurance has tied up with four insurers viz National Insurance Company Limited, New India Assurance Company Limited, Bajaj Allianz General Insurance Company Limited and Royal Sundaram to provide insurance services – issuance of cover notes, policies, processing and settlement of accident claims.

According to Jadish Khattar, Maruti Insurance mobilises over Rs1,600 crore premium for the insurers last year. And this is set to grow as the company is launching new models.

From January next the premium rates for vehicles will depend on the engine capacity, claims experience with that model, the state in which the vehicle plies or is registered in and others. As per the proposed classification, many of the Maruti Udyog's models have an engine capacity of over 1,000cc and this would entail a slight increase in premium.

"The claims experience in respect of damage to the vehicles is very favourable and we hope our models will not attract higher premium under the comprehensive insurance policy," says managing director Jadish Khattar. It should be noted that the cost of parts of new cars are high and the tendency of the dealers to go in for replacement of parts resulting in higher outgo for the insurers.

The four insurers are expected to heed Maruti Udyog as they together rakes in over Rs1,600 crore premium insuring over 20 lakh vehicles through Maruti Insurance. Almost all the new car buyers opt for Maruti Insurance. Moreover insurers have given strict instructions to their branch offices to ask the Maruti Insurance policyholders to renew their car policy through the car dealers.

For Maruti Udyog the tie-up is a win-win situation. On the one hand it will get an insurance commission of minimum 10 per cent on the premium procured and on the other the dealers get good number of vehicles for repairs. Repair is the major revenue generator for the dealers and vehicle service stations than selling new cars.

The four insurers might seek to limit the premium reduction and also a reduction in the labour costs for repairing the vehicles.