Link traffic fines to insurance premium: Delhi LG VK Saxena writes to FM Nirmala Sitharaman

New Delhi [India], September 25 : Delhi Lieutenant Governor VK Saxena has written to the Union Finance Minister Nirmala Sitharaman, urging her to link insurance premiums of vehicles to the number of traffic violations recorded against the vehicles to deter traffic violations and improve road safety.
He added that similar measures have been successfully implemented in other countries, such as the United States and many European countries.
"Resptd Smt Nirmala Ji I am writing to your kind attention to a matter of critical importance concerning road safety and vehicular insurance in India. I would like to suggest for your consideration that insurance premium 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," Saxena wrote in the letter.
As per the Ministry of Road Transport and Highways (MoRTH), India recorded over 4.37 lakh road accidents in 2022, resulting in approximately 1.55 lakh fatalities. Notably, over-speeding accounted for nearly 70 per cent of these accidents, while violations such as red-light jumping contributed significantly to fatal accidents.
Analysis of accident data by the World Bank indicates that vehicles with multiple traffic violations have a 40 per cent higher risk of being involved in fatal crashes compared to those with a clean driving record. Delhi's accident statistics corroborates these findings, Saxena said.
"According to a 2023 report of the Delhi Traffic Police, 60 per cent of fatal road accidents involved vehicles that had previously been fined for traffic violations, primarily over-speeding and red-light jumping. Vehicles with more than three traffic challans in a given year were found to have a disproportionately high involvement in severe accidents," he said in the letter.
"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. A vehicle that has been frequently challenged for offences such as over-speeding, red light jumping and dangerous driving should be obligated to pay the higher insurance premium," he added.
"This financial deterrent would encourage better driving behaviour. Such measures have been successfully implemented in other countries such as United States, where insurance premiums increase significantly based on traffic violation and speeding tickets leading to an average premium increase of 20 to 30 per cent. This also followed in several European Nations," Saxena wrote in the letter.
"In India, vehicle insurance falls under the purview of financial regulations, and as such, I seek your esteemed office's intervention to initiate discussions with the Insurance Regulatory and Development Authority of India (IRDAI) to create a framework to implement such a system. 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 said in the letter.
"This market-driven solution would encourage responsible driving, and contribute to reduced road accidents, saving lives, and ensuring better management of insurance claims. I look forward to your kind consideration of this proposal," Delhi LG said.