IRDA working group to decide modalities to link premiums to traffic violations

The Insurance Regulatory and Development Authority of India (IRDAI) is finalising ways to link traffic violations and insurance premiums of vehicles in India.  A recent IRDAI order accessed by Asiaville sets out the mandates of the newly set up ‘Working Group’ to examine and recommend the linking of motor insurance premiums with traffic violations.

“The Government of India is focusing on Intelligent Traffic Management System in the metropolitan and smart cities. ln view of this, the Automated Traffic Enforcement and violations of Motor Vehicles Act through e-challan have been initiated to take action against Registered owners/Drivers of Motor Vehicles involved in traffic offences. lt is perceived that linking of insurance premium to traffic violations committed could reduce road accidents and change driver behaviour,” says the order issued by IRDAI on Friday.

ln this regard, the High Powered Committee for Traffic Management in the National Capital Territory (NCT) of Delhi under the chairmanship of the Union Home Secretary requested the Insurance Regulatory and Development Authority of India (IRDAI) to examine the issue of linking insurance premiums with traffic violations. Subsequently, in a meeting held under the chairmanship of the special commissioner of police (Traffic), Delhi on the integration of insurance and traffic prosecution data, it was decided that a Working Group would be formed to take the idea forward, the letter adds.

IRDAI has decided to undertake a pilot project in NCT Delhi to implement the premium escalation formula.

The Working Group constituted by IRDAI comprises of representatives from Delhi Traffic police, IRDAI, lnsurance lnformation Bureau of lndia (IIBI), and General lnsurance Companies.
The terms of reference of the Working Group are to recommend implementation framework and methodology to link insurance premium with traffic violations, to study international practices on the above subject, and to recommend best practices suitable to India. This is done by evaluating the current point system for traffic violations implemented by states and evolving the standard point system considering each traffic violation, and developing data fields required to implement traffic violations as a rating factor in motor insurance.

The working group has also been mandated to suggest a system of access to traffic violation history data of each vehicle and transfer of data from enforcement authorities to the IIBI database and to suggest modalities for carrying out an immediate pilot project in Delhi.
The IRDAI Working Group has been asked to submit its report in two months.