Find How New Motor Vehicle Act Will Increase Insurance Premium
India is a country where not many are serious about traffic rules and tend to violate them resulting in sever road accidents every day. Drivers till recent days have never been serious about the traffic rule violations so in order to curb this move the ministry of road transport and highway jointly with the Insurance Regulatory and Development Authority of India (IRDA) have proposed a new amendment in motor vehicle act.
Recently, the government of India has introduced the latest amendment in motor vehicle act. This new amendment in the motor vehicle act has increased the penalties of traffic violations by multi-fold times. This revised motor vehicle act aims to decrease the number of road accidents caused due to irresponsible driving. The new riles of motor vehicle act focuses for stringent actions against traffic rule violators. Now the traffic violators would soon be dealing not only with higher traffic violation penalties but will also face the impact of motor insurance premium increase. These insurance rate increase proposed by the IRDA, the apex insurance regulatory body in India, is towards building a full-proof plan to bring in new rules of motor vehicle act in order that aims at bringing positive change in the Indian road safety scenario and similarly change the outlook of Indian Drivers.
The latest amendment in motor vehicle act 1988 has introduced stricter punishments for traffic offenses i.e. now you cannot get away by paying petty penalties not only this the IRDA has also proposed to use the historic record of traffic violation as a parameter for the insurance rate increase. This joint move by the IRDA and government is all set to change the perception of Indian drivers towards driving as it will discourage traffic violators from rash-driving, over speeding and encourage drivers having good driving sensibilities.
The linking of traffic violation historic database with motor insurance rate increase is a step ahead towards adopting global traffic practices and will encourage further innovative ideas in this sector. The IRDA has set up a nine-member committee that is responsible to develop a road-map and submitting recommendations, methodologies for the implementation and development of the framework.
This nine-member committee of IRDA has been given a timeframe of 2 months within which they have to submit the entire road-map, a framework of the proposed idea and submit in-depth research associated with it. With the latest amendment in the motor vehicle act 1988, India has only witnessed increased penalties related to traffic violations but if the proposed changes are incorporated then the revised motor vehicle act will surely incorporate the linking of traffic violations with insurance premium increase.
For the proposed changes the nine-member IRDA committee will be implementing this pilot project in the capital city – Delhi. However, the committee is still working on the insurance premium increase rate. The insurance rate increase is a new way forward as India is about to witness change and this model is to be created from scratch as there is no reference model available. Therefore, the committee will be able to put forth the premium pricing by carrying out the in-depth study of the traffic violation data. To make research simpler the e-challan system initiated by the government shall help them in collecting valid data regarding the entire details of traffic violations pertaining to a particular driver.
Though the proposed change will be difficult to implement as correlating traffic violation data with the motor insurance premium is a tedious task as a lot of data will be required to set the premium pricing model. However, in the long run this move will create a positive impact on customer behaviour. This proposed new amendment in motor vehicle act will reward and promote good driving behaviour amongst vehicle owners. Currently, the motor insurance premium is related to the vehicle make, car model and engine variant but the proposed amendment shall prove beneficial in changing the perception of vehicle drivers and make the roads a safe place to drive. This move shall promote good driving and offer discounts on motor insurance premium to drivers who have no record of traffic violation.
To conclude, it is important to note that once this proposed amendment comes into effect then the smallest traffic violation shall impact the motor insurance premium. Thus, this change will differentiate good drivers from persistent traffic violators and shall reward them accordingly. So, to sum it up if the proposed linking comes into effect the policyholders will have to be extra cautious about their driving skills else any violation shall create a big hole in their pockets.