Lesson Learnt! After New Traffic Rules, 500% Increase In Vehicle Insurance Renewal Reported

There is one industry that is utterly rejoicing the steep rise in traffic penalties - that of motor vehicle insurance. There are no points for guessing that the insurance companies have reported a monumental increase in the number of vehicle insurances recorded post the implementation of the new Motor Vehicle Act.

Understandably so, as the new traffic rules now imply a penalty of Rs 2,000 to uninsured vehicles on the road, subsequently increasing it to Rs 4,000 and imprisonment on further violations.

Naturally, people have started lining up to get their lapsed insurance policies renewed. Since the process of policy renewal is easier online, digital insurance companies have recorded the maximum increase in the renewal of policies.

¡°With the new regulations, people are now voluntarily coming in and renewing their policies. We have seen a rise of 300 per cent in issuance of two-wheeler insurance policies in the past few days since the new regulations kicked in,¡± Jasleen Kohli, chief distribution officer, Digit Insurance was quoted as saying in a recent report by Business Standard.

(Representative Image: BCCL)

Of course, the move is propelling the Indian roads towards a better future. The new and increased penalties have ultimately resulted in bridging of gap between the insured and un-insured vehicles in the country.

While Digit Insurance claims a rise of 300% in the insurance issuance, Policy Bazaar mentions this number to be 500%, that too, within five days of the new rules coming into effect. ¡°We are now selling about 67,000 insurance policies per day on our platform,¡± says Sajja Praveen Chowdary, business head, motor insurance, PolicyBazaar.com.

Furthermore, there is no downside to the upsurge as the trend is expected to continue for the considerable future. A simple reason is the fact that while many states have already implemented the new laws, some like Rajasthan and Madhya Pradesh are yet to do so, meaning more motorists to opt for such policy renewals.

Prior to the new rules coming into effect, the insurance industry was experiencing a slide owing to the drop in sales of vehicles in the country. The BS report mentions that the Insurance Regulatory and Development Authority of India (Irdai) is now thinking of linking insurance premiums to traffic violations committed. This could further result in a change in driver behaviour and hence reduced accidents on the roads.