Drive safe or pay more: Delhi LG's plan to link traffic fines to insurance

In his letter, Delhi LG V K Saxena has recommended a tiered insurance premium system that would directly reflect the driving habits of individual motorists

Delhi Lieutenant Governor (LG) V K Saxena has written to Union Finance Minister Nirmala Sitharaman, proposing a policy to link vehicle insurance premiums to the number of traffic violations recorded against the vehicle. The initiative aims to promote safer driving practices across India by financially penalising reckless driving behaviour.
 

In his letter, Saxena recommended a tiered insurance premium system that would directly reflect the driving habits of individual motorists. Under this system, vehicles with a history of traffic violations, such as speeding and red-light jumping, would face higher insurance premiums. This approach, Saxena believes, would act as a financial deterrent, encouraging safer and more responsible driving on Indian roads.
 

The LG further emphasised that such a system would not only ensure that insurance costs align with the actual risk posed by individual drivers but also reduce the financial strain on insurance companies caused by frequent claims. 

 

Enhancing road safety through innovation
 

Saxena pointed out that similar models have been successfully implemented in the US and several European countries, resulting in significant improvements in road safety.
 

Supporting his proposal with data, Saxena cited recent statistics from the Ministry of Road Transport and Highways (MoRTH), which reveal that over-speeding and red-light violations are major contributors to road accidents. India recorded over 437,000 road accidents in 2022, leading to 155,000 fatalities. Alarmingly, over-speeding accounted for 70 per cent of these accidents. A study by the World Bank further highlights that vehicles with multiple traffic violations are 40 per cent more likely to be involved in fatal crashes compared to those with a clean record.

Promoting safer roads through insurance
 

The LG also referenced a 2023 report from the Delhi Traffic Police, which found that 60 per cent of fatal road accidents in the capital involved vehicles that had previously been fined for violations, primarily over-speeding and red-light jumping. Vehicles with more than three traffic challans in a single year were particularly prone to severe accidents.

  

Saxena argued that linking insurance premiums to driving behaviour would bring India in line with global best practices and could position the country as a leader in road safety initiatives. The LG urged the Finance Minister to engage with the Insurance Regulatory and Development Authority of India (IRDAI) to expedite the creation of a framework for index-linked insurance premiums.
 

If implemented, this policy could mark a significant step toward improving road safety, reducing accidents, and ensuring a more sustainable transportation system for future generations.