Should Digit Insurance price pay-as-you-drive cover on self-declared kilometres or phone telematics?

Introduction

In 2022 IRDAI allowed general insurers to offer technology-enabled motor add-ons such as "pay as you drive" and "pay how you drive". Digit Insurance, with its digital-first motor business, is well placed to use them. The product team faces a design choice for a usage-based motor cover for private cars: price it on self-declared kilometre slabs (the customer chooses a slab, verified by odometer photos at renewal or claim) or on phone-based telematics (an app tracks distance and driving behaviour such as speeding and hard braking). Telematics allows more accurate, fairer pricing, but raises privacy concerns, battery and data worries, and lower adoption. Which should Digit choose?

Step 1

Clarifying Questions (3 minutes)

• Which customers? Private car owners buying comprehensive cover, especially low-mileage drivers such as work-from-home professionals and second-car households.
• Which channels? Direct digital and aggregators first; partner channels later because the product needs explanation.
• What is the goal? Win low-risk, low-mileage customers profitably and differentiate Digit in motor, its largest line.
• Regulatory constraints? Product must be filed with IRDAI; data collection must follow India's Digital Personal Data Protection Act, 2023, with clear consent and purpose limitation.
• What exists today? Assume Digit offers standard annual policies; no usage-based product at scale.
• Device constraints? Most customers use Android phones; some cars have connected-car features through OEMs.