Delhi Lieutenant Governor VK Saxena has proposed linking vehicle insurance premiums to the number of traffic violations recorded against the vehicles.
In a letter to Union Finance Minister Nirmala Sitharaman, Saxena suggested a tiered insurance premium system that would reflect drivers’ behavior. Vehicles with a history of traffic violations, such as speeding or reckless driving, would face higher premiums.
Saxena argued that this financial deterrent would encourage safer driving practices and promote responsible motoring. He also noted that such a system would align insurance costs with the actual risk posed by drivers and reduce the financial burden on insurers caused by frequent claims.
“This financial deterrent driven approach, practised in the US and European countries, would promote responsible driving behaviour, leading to reduction in accidents, saving lives, and ensuring more efficient management of insurance claims,” Saxena said.
Recent data from the Road Transport and Highways Ministry reveals that speeding and red-light jumping significantly contribute to fatal accidents. A World Bank study further emphasizes the correlation between multiple traffic violations and a higher risk of severe crashes.
In 2022, India recorded over 4.37 lakh road accidents, resulting in approximately 1.55 lakh fatalities. Speeding accounted for nearly 70% of these accidents. The World Bank’s analysis indicates that vehicles with multiple traffic violations have a 40% higher risk of being involved in fatal crashes compared to those with a clean driving record.
Saxena also highlighted Delhi’s accident statistics, which support these findings. According to a 2023 report from the Delhi Traffic Police, 60% of fatal road accidents involved vehicles previously fined for traffic violations, primarily speeding and red-light jumping. Vehicles with over three traffic challans in a year were disproportionately involved in severe accidents.
Saxena requested that the Union Finance Minister engage the Insurance Regulatory and Development Authority of India (IRDAI) to promptly create a framework for index-linked insurance premiums.
The letter concluded that implementing this policy would be a major step toward creating safer roads, saving lives, and ensuring a sustainable transportation system.
