The Insurance Regulatory and Development Authority of India (IRDAI) has proposed a “traffic violation premium” concept, which would be added to a vehicle’s insurance policy. This idea was put forward by IRDAI’s Working Group for Traffic Management. The concept revolves around the idea of charging an insurance premium depending on the traffic violations committed by the vehicle owner.
Introduction of Traffic Violation Premium
Instead of the previous four sections that comprise motor insurances – motor own damage insurance, basic third-party insurance, additional third party insurance, and compulsory personal accident premium – a fifth section, the “traffic violation premium,” has been recommended by the Working Group. This added section would make the insurance premium dependent on the frequency and severity of traffic violations committed by the vehicle owner.
Calculating the Premium
The calculation will be based on a point system, where different traffic offenses accrue varying numbers of points. For example, according to the table of offenses provided by the working group, drinking and driving will attract the highest penalty of 100 points, while the wrong parking will have a 10 point penalty. The premium amount will be directly linked to these accumulated penalty points.
The Role of Registered Owners
This novel approach will require the registered vehicle owner, whether an individual or an entity, to bear the responsibility of paying the traffic violation premium. The responsibility won’t depend upon who drives the vehicle but instead will solely focus on the registered owner.
Data Collection and Storage
In order to keep track of the penalty points, the National Informatics Centre (NIC) will store the data of traffic challans and share this with the Insurance Information Bureau of India (IIB) daily. The latter is charged with providing information support in a complete, consistent, and concise manner to all stakeholders associated with the insurance sector.
Working Mechanism of the Premium
It is important to note that the premium is attached to the vehicle and not the driver. Hence, when buying a new vehicle, it will start with a clean traffic violation history. Thus, the owner will not be required to pay any traffic violation premium when purchasing motor insurance, even if they have a past traffic violation history.
Transfer of Insurance After Vehicle Sale
In instances where a vehicle is sold and the insurance transferred, the traffic violation premium would start from scratch from the date of vehicle ownership transfer. The premium then builds up based on the traffic violations committed by the vehicle after ownership transfer.
Integration of Technology
The Insurance Information Bureau of India (IIB) is set to work in coordination with State Traffic Police and the National Informatics Centre. The goal here is to capture traffic violation data, calculate violation points for each violating vehicle and make this information available to insurers through IT system integration.
Road Accidents in India
India ranks first among 199 countries for road accident deaths as per the World Road Statistics 2018. The Road Accidents Report issued by the Ministry of Road Transport in 2018 revealed that India had 4.67 lakh road accidents causing the death of 1.51 lakh citizens.
Other Government Measures
The government, in its quest to mitigate traffic violations, has introduced heavy penalties under the amended Motor Vehicles Act 2019. The Government of India is also focusing on implementing an Intelligent Traffic Management System in metropolitan and smart cities.
Last Modified: February 10, 2024