NEW DELHI: Delhi Lieutenant Governor (LG) VK Saxena has urged Union Finance Minister Nirmala Sitharaman to consider a system that links vehicle insurance premiums to the number of traffic violations recorded against each vehicle. The proposal aims to enhance road safety and promote responsible driving behavior.
In a formal letter, Saxena emphasized the critical importance of this measure. “I would like to suggest for your consideration that insurance premiums should be index-linked with the number of traffic violations recorded against a vehicle, which would have a salutary impact on road safety and traffic discipline,” he wrote.
The proposal is supported by alarming statistics from the Ministry of Road Transport and Highways (MoRTH). In 2022, India witnessed over 437,000 road accidents, resulting in approximately 155,000 fatalities. Saxena noted that over-speeding accounted for nearly 70% of these accidents, while other violations, such as red-light jumping, also contributed significantly.
Analysis from the World Bank indicates that vehicles with multiple traffic violations face a 40% higher risk of fatal crashes compared to vehicles with clean records. This trend is mirrored in Delhi’s traffic data. A 2023 report by the Delhi Traffic Police found that 60% of fatal road accidents in the city involved vehicles previously fined for traffic violations, primarily over-speeding and red-light running.
Saxena further elaborated, “There is an obvious correlation between repeat traffic offences and the risk of accidents. I would therefore suggest that a layered insurance premium system based on the frequency and severity of traffic violations, as recorded in MoRTH’s VAHAN database, may be introduced.” He suggested that drivers with frequent offenses, like over-speeding and dangerous driving, should face higher insurance premiums as a financial deterrent, thereby encouraging safer driving habits.
Saxena cited examples from other countries to support his proposal. He highlighted that the United States and several European nations have already implemented similar systems. “Such measures have been successfully implemented in other countries such as the United States, where insurance premiums increase significantly based on traffic violations and speeding tickets, leading to an average premium increase of 20 to 30%,” he said.
In his letter, Saxena requested that the Finance Minister initiate discussions with the Insurance Regulatory and Development Authority of India (IRDAI) to develop a framework for implementing this system. He pointed out that linking insurance premiums to traffic violations would “not only align insurance costs with risk but also reduce the financial burden on insurers due to claims arising from frequent accidents.” He further added this market-driven solution would “encourage responsible driving, contribute to reduced road accidents, save lives, and ensure better management of insurance claims.”
