Soon, you may need to pay higher motor insurance premium if you break traffic rules. The insurance regulator and the government have set up a working group to look at linking insurance premium with traffic violations.
Insurance Regulatory and Development Authority of India (IRDAI) said the working group has been constituted to examine a system of linking of motor insurance premium with traffic violations. The insurance companies have to undertake a pilot project in National Capital Territory (NCT), Delhi to implement the premium escalation formula.
This nine-member group has members from IRDAI, Insurance Information Bureau of India (IIBI), Delhi Traffic Police and insurance companies.
"It is perceived that linking Insurance premium to traffic violations committed could reduce road accidents and change driver behaviour," said IRDAI.
Currently, the insurance premium is linked to the type of vehicle and engine capacity. Premium is calculated depending on the claims history of each category in the previous year. Third-party motor insurance is mandatory for all vehicles running on Indian roads.
The central government is also focussing on intelligent traffic management system in the metropolitan and smart cities. Also, the Automated Traffic Enforcement and violations of the Motor Vehicles Act through e-Challan have been initiated to take action against owners/drivers of vehicles involved in traffic offences.
The working group will look at an implementation framework and methodology to link insurance premium with traffic violations.
Further, it will also evaluate the current point system for traffic violations implemented by states and evolve a standard point system considering each traffic violations.
This group will also develop data fields required to implement traffic violations as the rating factor in motor insurance. There could be a system of access to traffic violation history data of each vehicle and transfer of data from enforcement authorities to IIBI database.The final report on this will be submitted in eight weeks by the working group.
Published on: 06/09/2019Source: Money Control