Traffic challans may up your insurance premia

Chennai: The insurance regulator, along with other agencies, is examining the need to link motor insurance premiums with traffic offences, in order to curb road accidents.

A high powered committee for Traffic Management in the National Capital Territory (NCT) of Delhi, headed by the Union Home Secretary, has requested the Insurance Regulatory and Development Authority of India (Irdai) to examine the issue of linking insurance premium with traffic violations.

This is part of the efforts taken by the government towards bringing in Intelligent Traffic Management System in the metropolitan cities and smart cities. It is perceived that linking Insurance premium to traffic violations committed could reduce road accidents and change driver behaviour.

The move comes close on the heels of 63 amended clauses of the Motor Vehicles Act kicking in from September 1, causing resentment among vehicle users. The tightened law provides for a steep penalty of Rs 10,000 fine for not giving way to emergency vehicles and Rs 10,000 for driving despite disqualification. It also stipulates a penalty of Rs 10,000 for drunken driving and Rs 5,000 for dangerous driving.

Now, in order to link insurance premia to traffic violations, at meeting held in Delhi, it has been decided that a working group will be formed to take the idea forward.

The insurance companies have to undertake a pilot project in the NCT to implement the premium escalation formula.

The working group comprises officials of the Delhi Traffic Police, Irdai, Insurance Information Bureau of India (IIBI) and general insurance companies.

The working group will recommend implementation framework and methodology to link insurance premium with traffic violations. It will study international practices and recommend best practices suitable to India.

The working group will also evaluate the current point system for traffic violations implemented by states and evolve a standard point system, considering each traffic violations.

The group will look into developing data fields required to implement traffic violations as a rating factor in motor insurance and suggest a system of access to traffic violation history data of each vehicle and transfer of data from enforcement authorities to the IIBI database.

It will suggest modalities for carrying out an immediate pilot project at the NCT. The working group has been eight weeks time to submit its report.