Soon your motor insurance premium could depend on whether you follow traffic rules

IRDAI forms a working group to examine the establishment of a system of linking of motor insurance premium with traffic violations

Kumar Shankar Roy Sep 10, 2019

Car insuranceThe motor insurance premium you pay every year depends on factors like engine capacity of the vehicle, the location of the RTO registration, the age of the vehicle and the insured declared value (IDV) among others. Now, there could be one new factor – the number of traffic violations reported against you. Insurance regulator IRDAI has formed a working group to examine the establishment of a system of linking of motor insurance premium with traffic violations. This virtually means that your motor insurance premium could be lower if you don’t break traffic rules compared to somebody who is a complete nuisance when it comes to complying with traffic rules.

The Government of India is focussing on intelligent traffic management system in the metropolitan and smart cities. In view of this, the automated traffic enforcement and violations of the Motor Vehicles Act through e-challan has been initiated to take action against registered owners/drivers of motor vehicles involved in traffic offences. It is perceived that linking insurance premium to traffic violations committed could reduce road accidents and change driver behaviour.

“In this regard, the High Powered Committee for Traffic Management in the National Capital Territory (NCT) of Delhi under the chairmanship of Union Home Secretary requested Insurance Regulatory and Development Authority of India (IRDAI) to examine the issue of linking insurance premium with traffic violations. Subsequently, in a meeting held under the chairmanship of Special Commissioner of Police: Traffic, Delhi on Integration of Insurance and Traffic Prosecution Data, it was decided that a Working Group will be formed to take the idea forward,” IRDAI said.

Hence, the working group is constituted to examine the establishment of a system of linking of motor insurance premium with traffic violations. The insurance companies have to undertake a pilot project in NCT, Delhi to implement the premium escalation formula.

The IRDAI working group will recommend the implementation framework and methodology to link insurance premium with traffic violations. It will study international practices on the above subject and recommend best practices suitable to India.

The working group will evaluate the current point system for traffic violations implemented by states and evolve a standard point system considering each traffic violations. The group will also develop data fields required to implement traffic violations as a rating factor in motor insurance.

Plus, it will suggest a system of access to traffic violation history data of each vehicle and transfer of data from enforcement authorities to IIBI database.

We can expect the working group to submit its report in eight weeks’ time i.e. around 2nd week of November. For those who don’t drive their own vehicles, one will have to wait for the report to see how their vehicle/driver will be assessed.

Globally, insurance companies like GEICO push up auto insurance rate based on driving record. This means accidents that result in a claim can impact your rate. Speeding tickets may increase your premium. Your qualification for discounts may also change based on your record.

The Insurance Corporation of British Columbia (ICBC) starting September 1, 2019, is changing how insurance premiums are set, to hold drivers more accountable for their driving decisions and more accurately reflect drivers’ risk. If somebody there has frequent or serious driving convictions resulting from violations that occurred on or after June 10, their premium costs for Collision and Third Party Liability coverages may be impacted.

Kumar Shankar Roy

Kumar Shankar Roy is contributing editor with RupeeIQ. Kumar is a financial journalist, with a functional experience of 15 years. He tracks mutual funds, insurance, pension, PMS, fixed income/debt and alternative investments markets closely. He has worked for The Times of India, The Hindu Business Line, Deccan Chronicle Group, DNA, and Value Research, among others, across different cities in India. He is deeply interested in marrying data insights with actionable opinion. He can be contacted at

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