Photo: PTI
Photo: PTI

Opinion | There’s a premium on how you drive

The Insurance Regulatory and Development Authority of India has set up a panel to suggest a framework and methodology to link premiums with traffic violations

India has the dubious distinction of being home to the highest number of road accidents and also the most fatalities globally. Since at least 2008, it has held on to this record, with half a million accidents resulting in some 150,000 deaths annually. The government has been thinking up ways to drive some sense into India’s unruly vehicular traffic. In a new step, the government plans to set up a databank of information on every driver’s traffic violations, including accidents. Depending on the driver’s behaviour, a rating would be assigned that would be used by vehicle insurers to price their premiums.

A vehicle’s annual insurance premium so far has varied by its insured value, with a “no-claim" bonus awarded for renewal in case no damages needed to be covered during the previous year. If the new idea is adopted, then the user’s traffic record will be an input as well. Those with too many violations could find they have to pay that much more. To the extent that this system aligns insurance prices with real risks, it is welcome.

Its success would depend on data accuracy. The Insurance Regulatory and Development Authority of India has set up a panel to suggest a framework and methodology to link premiums with traffic violations. If all goes well, then the outline of a plan could be ready in a matter of months. Together with the hefty new fines for flouting traffic rules, it could help bring some order to the disorder on our streets. But then again, we hope it doesn’t result in roadside bribery.

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