Insurance claims fall 80 per cent in cars fitted with anti-theft devices

General insurers may push for a mandatory anti-theft device in motor vehicles as early experience shows that claims fall nearly four-fifths in those cars that are fitted with it.

While many high end models have this inbuilt facility, the introduction of anti-theft system by the nation's largest car maker Maruti Suzuki in many of its models has made a significant impact, say insurers.

Claims for Bajaj Allianz General fell by as much as 78% to just about 440 cases in 2012, from 2,600 cases a year ago.

"It is desirable that all manufacturers follow this," said Vijay Kumar head of motor insurance Bajaj Allianz General Insurance. "This device should be made mandatory in two-wheelers and commercial vehicles also."

Mandating the anti-theft system in all vehicles, including two-wheelers, could help reduce the cost of honouring insurance claims which at present is denting profits of general insurers.

This move along with limiting the claims on third party motor insurance will go a long way in helping them remain profitable and get higher valuation when they sell their shares to public.

The device is inbuilt into the car key and carries a secret code that communicates with the engine software through the electronic control module or the controller. But when the key is lost, even the anti-theft system cannot save a car from being stolen.

While the installation costs 3,000, one saves on the discount provided by insurance companies on using this device which could be as much as 3% of the total cost of annual insurance premium.

Most luxury cars have such devices in-built in them. But small and compact cars had been missing out on it. Other manufacturers like Toyota Motors, Honda Siel Cars and Ford Motors had this in-built device. Similarly, Mahindra have introduced this device in high-end models. "We should have this device and wherever possible make it compulsory," said Sanjay Datta head of underwriting and claims at ICICI Lombard.

Companies are offering 2.5% discount on premium to promote this device and reduce losses. More and more people are opting for this device, though specific data is not available, insurers say.

"Immobiliser has a positive impact on motor insurance premium," said Karan Chopra head of retail business at HDFC Ergo. "But pricing depends on different factors like make model, cost of spare parts and geography."

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