The Insurance Regulatory and Development Authority of India (IRDAI) plans to test an automated number plate recognition (ANPR) system that could link fuel purchases with valid insurance status. The proposed pilot follows a Supreme Court directive aimed at improving compliance with mandatory third-party motor insurance.
According to sources cited by MyRupia, the regulator will test the system in selected cities, although the locations have not yet been finalised. The proposed technology would scan vehicle registration numbers and check them against the Insurance Information Bureau (IIB) and VAHAN databases.
How the No Insurance, No Fuel System Could Work
The proposed system would use ANPR cameras to capture a vehicle’s registration number at a fuel station. The system could then verify the vehicle’s insurance status using data from IIB and VAHAN.
If the vehicle has valid third-party motor insurance, the fuel transaction could proceed. If the system finds no valid cover, fuel stations could eventually restrict the sale of petrol or diesel until the owner obtains the required policy.
The Supreme Court directed IRDAI and the Ministry of Road Transport and Highways (MoRTH) in August to develop a pilot linking fuel supply with valid insurance. The court also called for technology that could identify uninsured vehicles through number-plate recognition and insurance databases.
The proposal does not mean fuel stations across India currently deny fuel to uninsured vehicles. IRDAI still needs to test the technology, data connections and operational process before any wider rollout.
Large Uninsured Vehicle Base Drives Action
The Supreme Court cited data showing that 16.54 crore out of 30.48 crore vehicles lacked valid insurance, representing nearly 56% of the vehicle base. The court linked mandatory third-party cover to ensuring compensation for accident victims and reducing prolonged legal disputes.
IRDAI already states that third-party liability insurance remains mandatory for vehicles operating on public roads in India.
The proposed pilot could also create a larger market for general insurers if uninsured vehicle owners purchase policies to maintain access to fuel. However, its impact will depend on how accurately insurers update policy information against vehicle registration numbers and how quickly the system can verify that data.
The initiative also comes alongside the Supreme Court’s direction to extend mandatory third-party cover for newly purchased vehicles to four years for new cars and six years for new two-wheelers.
As IRDAI develops the pilot, insurance companies, fuel retailers and government agencies will need to coordinate on data accuracy, connectivity and customer handling. The proposed system could mark a significant technology-led change in how India enforces mandatory motor insurance.
Motor Insurance Overview: Understand mandatory motor insurance and the different types of cover available – Explore Motor Insurance
Also Read: Life Insurers Push Digital-First Insurance Distribution
Disclaimer: This MyRupia article provides information based on publicly available government, regulatory and industry sources. It does not constitute investment, financial, tax, insurance or legal advice. Information, examples, market data and expert views may change over time and do not represent a recommendation to buy, sell, invest in or surrender any financial product. Readers should consider their individual circumstances and consult a qualified financial professional before making financial decisions.