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In a bold move aimed at improving road safety, Delhi's Lieutenant Governor VK Saxena has proposed a revolutionary approach to vehicle insurance premiums. He has written to Union Finance Minister Nirmala Sitharaman, advocating for a system where insurance costs directly reflect the frequency of traffic violations committed by a vehicle owner. This dynamic insurance structure, mirroring successful models in countries like the United States and several European nations, seeks to introduce a financial deterrent for reckless driving practices across India.
Saxena's proposal is based on the premise that linking insurance premiums to the driver's risk profile would not only encourage safer driving habits but also alleviate the financial strain on the insurance industry due to frequent claims. By aligning insurance costs with the probability of accidents, the system intends to incentivize responsible behavior on the road. The Lieutenant Governor argues that this approach has demonstrably led to reduced road accidents and a more responsible driving culture in countries where it has been implemented.
The urgency for such a measure is evident in India's alarming road safety statistics. According to the Ministry of Road Transport and Highways (MoRTH), over-speeding and red-light violations remain leading causes of fatal accidents. A World Bank study further emphasizes the direct correlation between repeated traffic violations and severe crashes. In 2022 alone, India witnessed over 4.37 lakh road accidents, with over-speeding contributing to nearly 70 per cent of these incidents. Red-light violations, too, played a significant role in the tragic death toll.
Data from Delhi, where Saxena's proposal originated, reinforces the need for action. Delhi Traffic Police reports reveal that 60 per cent of fatal accidents in 2023 involved vehicles with a history of traffic violations. The most concerning statistic, however, is the disproportionate involvement of vehicles with over three recorded violations in a year in severe accidents. This data underscores the potential of a dynamic insurance model to deter dangerous driving behavior and ultimately save lives.
Globally, index-linked insurance premiums have proven successful in reducing traffic violations and improving road safety outcomes. By aligning insurance costs with the risk profile of drivers, these systems encourage responsible behavior and contribute to a safer driving environment. Saxena believes that implementing this model in India could establish a new benchmark for road safety initiatives, not only improving public safety but also creating a sustainable framework for transportation in the future.
To pave the way for this transformative change, Saxena urges the Finance Minister to engage the Insurance Regulatory and Development Authority of India (IRDAI) in the development of a comprehensive framework for the proposed system. He emphasizes that the success of this policy hinges on the creation of a robust and transparent mechanism that accurately reflects driving behavior and assigns appropriate premiums. The LG believes that if implemented effectively, this policy could be a crucial step towards reducing road fatalities, preserving lives, and ensuring a safer, more sustainable future on Indian roads.
Source: Delhi Lt Governor proposes linking of vehicle insurance to traffic violations