In a move that should come as a welcome step for those who drive or ride safely and follow all traffic rules, the Insurance Regulatory and Development Authority (IRDA) is considering the linking of insurance premiums with traffic violations. The fewer the road violations you commit, the lower your premiums will be, if these new rules should come into effect.
This move, which is still pending a thorough review and whose implementation framework and linking methodology is being looked into by a nine-member IRDA-sanctioned panel at the time of this writing, should save “safe” drivers/riders several hundreds of Rupees in premiums over the course of a single year.
Although the pilot for this move isn’t going to be rolled out till 2020, this is a move that industry watchers are calling “a much-needed step in the right direction”.
Coming in the footsteps of the strengthened Motor Vehicles Act, through which several motor-offenses-related penalties have risen sharply, this new step (when rolled out) will lay further emphasis on following traffic rules. Note that this is not unprecedented; this move has been successfully implemented in some western countries.
How Will It Work Exactly?
The nine-member panel’s mandate involves "evaluating the current point system for traffic violations implemented by states and evolve a standard point system considering each traffic violation". In layman’s terms, each violation will reduce your driving rating. During motor insurance renewals, your rating will be a factor when your premium is being calculated. Naturally, your history will also be constantly recorded and factored into premium calculations.
The fewer the road violations you commit, the lower your premiums will be.
Speaking about the viability of this new car insurance rules for the insurers, a Transport Ministry official commented, “If their initiatives reduce the number of accidents and deaths, their total compensation outgo will also fall. So, it makes perfect sense for their future business.”
It is expected that these new vehicle insurance rules, when rolled out, will be supported wholeheartedly. IRDA has been engaged in people-friendly motor insurance new rules for the last couple of years.
(Source and Credits: ToI)