How Traffic Violations Could Increase Your Motor Insurance Premium?

With the recent surge in the traffic violation fees may have made the vehicle owners frown as the motor vehicles Amendment Act, aims at stricter punishment to vehicle owners for violation of traffic rules. The frown is just not for stricter punishment but also for higher motor insurance premium as the IRDA is planning to link motor insurance premium with traffic violations.  The Insurance Regulatory and Development Authority in India (IRDA) is planning a pilot project wherein they propose to link Motor Insurance Premium with Traffic Violations. This idea is proposed with an intention to minimize road accidents and they even think that this might help in decreasing the number of rash driving incidents and change the perception of drivers towards driving.

Currently, in India the motor insurance premium is linked to the type of motor and its engine capacity. The motor insurance premium is calculated depending upon the previous year’s claim history. Similarly, third-party motor insurance is a must for all vehicles in India. But the current motor insurance framework is about to undergo a major makeshift as a working committee from IRDA has submitted a detailed report which suggests the following break-through changes in the current framework. Following are the terms on which the working committee shall be representing the new changes in the motor insurance premium.

1. The working committee shall be submitting recommendations for implementation of the framework for linking motor insurance premium with traffic rules.
2. The working committee shall be putting up terms regarding the methodology and the manner in which IRDA might link motor insurance premium with traffic violations and traffic rules.
3. Lay down terms of this proposed idea by carrying out in-depth research and study of all international practices in the related subject.
4. Lay down strong and positive recommendations that are in the best interest of the vehicle owners and practices that are suitable to the Indian vehicle owner.
5. To carry out an in-depth evaluation of the current system in force responsible for registering ongoing traffic violations in the country. The committee shall be carrying out evaluation of every system implemented by all the states in India and based on it, it shall introduce a more evolved standard point system keeping in mind every traffic violations done.
6. To develop the framework and parameters that shall include data fields which shall be used for implementing traffic violations as one of the rating factors while linking it to the motor insurance premium.
7. To suggest a methodology and framework in order to access the traffic system and the historic data collection of a traffic violation for each vehicle running on Indian roads. Apart from accessing the committee shall also be looking into ways and means by which the traffic data and traffic violation data can be transferred from the authorities to the Insurance Information Bureau of India’s database.
8. The committee is focusing on running this pilot project at National Capital Territory of Delhi, India. So, the committee is entrusted with an important job of suggesting various modalities involved in this project.
9. To consider, cover and submit recommendations related to all aspects of this pilot project.

Thus, the detailed report submitted by a nine-member group comprising of officials from IRDA, Delhi Traffic Police, IIBI and leading private sector insurance companies, shall throw light on the above-mentioned terms. The IRDA feels the move towards linking motor insurance premium with a traffic violation is a positive move as it will substantially reduce road accidents and reckless driving by drivers.