The Insurance Regulatory and Development Authority of India (IRDAI) has, on the request of the government, set up a working group to examine and recommend linking of
motor insurance premiums with
traffic violations. Insurance companies will have to undertake a pilot project in the National Capital Territory (NCT), Delhi to implement the
premium escalation formula, as per an order issued by
IRDAI on September 6.
As the working group is tasked with submitting its report within 2 months of the IRDAI order, bad drivers may face a double whammy soon as penalties for traffic violations have already gone up sharply.
The IRDAI order said that linking insurance premiums to traffic violations committed could reduce road accidents and change driver behavior. According to the IRDAI order, "The Government of India is focusing on Intelligent Traffic Management System in the Metropolitan and Smart Cities. In view of this, the Automated Traffic Enforcement and violations of the Motor Vehicles Act through e-Challan have been initiated to take action against Registered Owners/Drivers of Motor Vehicles involved in traffic offences. It is perceived that linking Insurance premium to traffic violations committed could reduce road accidents and change driver behaviour."
With the recent amendments to the Motor Vehicle Act effective from September 1, 2019, you already have to pay extremely high penalties for
driving errors. In such a situation, soon you may have to pay more motor insurance premium if you violate traffic rules. The working group will examine a system of linking of motor insurance premiums with traffic violations.
The terms of reference of the working group are:
- To recommend implementation framework and methodology to link insurance premium with traffic violations.
- To study international practices on the above subject and recommend best practices suitable to India.
- To evaluate the current point system for traffic violations implemented by states and evolve standard point system considering each traffic violations.
- To develop data fields required to implement traffic violations as rating factor in motor insurance.
- To suggest system of access to traffic violation history data of each vehicle and transfer of data from enforcement authorities to IIBI database.
- To suggest modalities for carrying out an immediate pilot project in the NCT, Delhi.
- To consider any other aspect relating to the subject.
According to IRDAI's order, "the high-powered committee for traffic management in the National Capital Territory (NCT) of Delhi under the chairmanship of Union Home Secretary requested Insurance Regulatory and Development Authority of India (IRDAI) to examine the issue of linking insurance premium with traffic violations. Subsequently, in a meeting held under the chairmanship of Special Commissioner of Police: Traffic, Delhi on Integration of Insurance and Traffic Prosecution Data, it was decided that a Working Group will be formed to take the idea forward. Hence, the working group is constituted to examine the establishing of a system of linking of motor insurance premium with traffic violations. The Insurance Companies have to undertake a pilot project in NCT, Delhi to implement the premium escalation formula,"
The nine-member group comprises officials of Delhi traffic police, IRDAI, Insurance Information Bureau of India (llBl) and various leading private sector general insurance companies. The working group will submit its report in eight weeks'time from the date of this order.