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Insurance premiums for cars and bikes will soon be linked to traffic rule violations. The IRDAI (Insurance Regulatory and Development Authority of India) has set up a team to run a pilot project in the Delhi-NCR region to explore possibilities of linking insurance to violations.
The nine-member team has been given a period of two months to come up with solutions and implement them. Of late, the Indian government has been taking several measures that is changing the way the automobile industry works.
These drastic changes are happening rapidly and is difficult to come to terms with, immediately. The shift towards electric mobility is one that has been coming from a long time. In September 2018, the IRDAi made it compulsory for all new vehicles to be sold with fives years' insurance.
Almost a year later, the Indian government implemented the Motor Vehicles Amendment Act 2019, and hiked finesand penalties by a huge margin. Under the new rules, Rs 1,000 is the lowest penalty for a traffic violation.
The fine for driving under the influence of alcohol has been increased from Rs 2,000 to Rs 10,000. The penalty for speeding is now Rs 4,000. With such steep fines, motorists are enraged and fuming. However, it seems like the government is not done.
There is one more aspect of motoring that the government wants to monitor more strictly and that is of insurance premiums. For years now, there have been discussions and reports that the government is set to link insurance premiums to the number of traffic violations against a vehicle.
This way, the insurance companies will charge a higher premium for the vehicle with more number of traffic violations. This will benefit the insurance companies since the vehicles that constantly violate rules are the ones that are likely to meet with accidents.
It will also benefit the government as this rule will force motorists to drive in a sane manner. However, there were no signs of implementing this method, until now. The IRDAI has set up a nine-member team to oversee and implement the pilot project in the Delhi-NCR region.
The team consists of officials from the Delhi Traffic Police, IRDAI, IIBI (Insurance Information Bureau of India) and other closely-linked authorities. The team will attempt to create an interlinked system wherein the traffic violation history of each vehicle stored on government servers will be made accessible to the IIBI.
Insurance companies can then look into the number of violations a vehicle has registered against it and an insurance premium will be decided upon. This will require a new framework and additional systems, but will be effective in reducing the number of accidents and the number of rash driving incidents.
Thoughts On Insurance Premium Being Linked With Traffic Violations
Several European and American countries have linked insurance premium to traffic violations and have been following this system for a long time now. The Indian government too has been intending to do this since a long time.
However, nothing concrete happened in this area until now. The future of this initiative depends on the pilot project in Delhi. It is only a matter of time before it is implemented all across the country.