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General insurance industry has been incurring losses due to their poor underwriting standards and fake third party motor insurance claims. Motor industry accounts for one third of the non-life industry premium. The problems associated with the motor insurance industry are being assessed here with the help of indicators claims ratio, solvency ratio. The steps taken by Insurance Regulatory and Development Authority (IRDA) have been in terms of declined risk pool and increase in Third party premium. Third party premium is calculated based on the past years claim data and a differential pricing mechanism have been adopted. Though different vehicle segments have been addressed by this approach, the individual customer needs are not addressed here. The next level of differentiation should be based on user behavior and insurance companies are now looking at rate differentiation using customer behavior.