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Above: Linking insurance premiums to traffic violations will discipline errant drivers/Photo: @dtptraffic

The Insurance Regulatory and Development Authority of India has called for linking vehicle insurance with traffic violations as in other countries. This is a welcome move to curb accidents

By Ramesh Menon

Watch the way you drive. Soon, vehicle insurance premiums will shoot up depending on the number of traffic violations one is charged with. The Insurance Regulatory and Development Authority of India (IRDAI) has called for the institution of a nine-member Working Group to examine and recommend linking of motor insurance premiums with traffic violations.

It is a global practice to link violations with premiums, but India did not consider it till it implemented the latest Motor Vehicles Act. TL Alamelu, member, IRDAI, said that linking insurance premiums to traffic violations would reduce road accidents and change the behaviour of drivers.

The idea came about after a high-powered committee for traffic management in the National Capital Territory asked IRDAI to examine the concept of linking insurance premiums with traffic violations. Though the Motor Vehicles Act falls in the Concurrent List, it is for the states to decide how to implement it. But insurance companies are not going to let go of the new rule as it would lead to less insurance claims. Careful driving would mean fewer accidents.

However, vehicle owners are not amused. Gurvinder Singh, a Delhi resident, told India Legal: “The new rules that impose stiff fines are okay, but tying traffic violations to insurance premiums is a bit too much. No one is asking the government what it is doing with the revenue that it is getting from traffic fines. It should be improving the conditions of roads and employing more traffic personnel to help bring discipline on the roads.”

The group is studying international norms to figure out how India can implement it. Once its recommendations come in, a pilot project would be launched in the capital to examine how to implement the new formula of fixing insurance premiums. The group comprises officials of the Delhi Traffic Police, Insurance Information Bureau of India and other private sector general insurance companies.

Till now, premiums depended on the year one’s vehicle was manufactured, its make and its variant. Earlier, the em­phasis was on the vehicle, not the driver. Now, drivers will have to drive more responsibly and follow rules.

Sujata, a senior official at New India Assurance Company, told India Legal: “India needs a law where vehicle insurance premiums are linked to the number of traffic violations. It will make a big difference in the way people drive.”

Praveen Kumar, sales manager, Star Health and Allied Insurance Company Limited, told India Legal: “It is a great idea to link insurance premiums to the number of traffic violations. If drivers follow rules, they do not have to worry about premiums rising. In fact, traffic fines must be increased further. Only fear works in India. Look at how thousands lined up for pollution checks when the new fines came in.”

Over 1.5 lakh people die annually due to nearly 50,000 road accidents, making India the most dangerous country as far as driving is concerned. But sources say the figure is much higher. As events proved after the new law kicked in, thousands were driving without licences, helmets, insurance policies and pollution certificates. There were many driving on the wrong side of the road as well.

However, it is only in cities like Delhi that drivers have suddenly become more disciplined. For the first time, there was a visible change as drivers started respecting zebra crossings, traffic lights and general rules. One lesson to learn from the Delhi example is that it is punishment that disciplines drivers and so it should not be watered down as has been done in Gujarat and Uttarakhand. Many states such as Kerala and Karnataka want to make the provisions less stringent due to public pressure. As politics is driven by populism, there is little hope that the states will follow the stringent law piloted by Union Minister for Road Transport and Highways Nitin Gadkari.

In fact, it was in the pipeline for the last five years but the NDA government could not push it in the last Lok Sabha as it did not have the numbers. One of the first things it did after riding to power in 2019 was to push this law. Gadkari said that the aim was not only to bring discipline on the roads but reduce fatalities. He said that there would be no rollback, though states were trying to dilute it. The new law should not worry and intimidate those who follow traffic rules, he said.

Many welcomed it as they saw that it was the only way to ensure some order in road transportation. Go to any Tier-II or Tier-III city and see the mind-boggling array of vehicles fighting for road space—ramshackle trucks, auto-rickshaws, taxis, private buses and overloaded tractor trolleys. Traffic rules are violated with impunity every day.

Deepak, who drives a taxi for four hours or so every day, told India Legal: “The idea of linking insurance premiums to traffic violations is apt and must be done. The stiff fines have changed the way we drive around in the capital. I have never been fined till now, but I suddenly got an SMS from the traffic police with a photograph of my car tyre that had just touched a zebra crossing and was asked to pay the fine online. I am glad that strict rules have come in.”

If the new rules are implemented, it will definitely lead to a change as the fines are Rs 5,000 for speeding, Rs 10,000 for drink driving and so on. Rajnish Kansal, a senior sales professional in Delhi who is planning to buy a new car, says that dealers are now telling him that they will also charge him for third party insurance, which under the new law is mandatory. Earlier, buyers had a choice whether to opt for it or not. “In the US and many other countries, linking insurance premiums to traffic violations is a norm. States should not dilute the law as our roads need to become safer,” he said. Internationally, many insurance companies fix auto premiums depending on the driving record. This September, the Insurance Corporation of British Columbia, for instance, started to fix insurance premiums on the basis of violations involved.

States too are handicapped in their own way. For instance, the Supreme Court’s Committee on Road Safety found that UP only had around 3,000 traffic policemen against a requirement of over 48,000. While Delhi has started respecting traffic rules, in Noida, there is no change as there are no traffic policemen to enforce rules. Traffic there is as chaotic as before and rules are given the go-by. This proves that just having strict laws won’t help; enforcement too should be there. Even cities like Mumbai, Kolkata, Delhi and Bengaluru are short of traffic cops. One can only imagine the condition in smaller towns and villages.

The centre will have to persuade states to adopt the new Act in order to prevent it from becoming another toothless law.

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