Car Insurance: Young People

Gavin Robinson Excerpts

Monday 20th March 2017 Westminster Hall

[Steve Double]

I am grateful for that intervention. I was not aware of the points made by the hon. Gentleman. I certainly bow to his knowledge in this area. He has made his points well.

Although the Government cannot intervene directly in the setting of premiums, they can help to establish a situation in which young and newly qualified drivers are better equipped for a life of independent driving. Accordingly, the Government have taken forward a programme of measures to strengthen the way in which people learn to drive and are tested, and to provide opportunities for additional training for newly qualified drivers.

We have also engaged insurers in the process so that they can have confidence that additional measures will make a real difference that can be rewarded. We are focusing our efforts on encouraging learner drivers to do more practice and to practise in a wider range of driving conditions; on ensuring that the driving test assesses the skills needed for today’s roads and vehicles and those of the future; and on identifying the most promising behavioural, educational and technological interventions that can reduce young driver casualties.

The Government’s road safety statement, published in December 2015, announced a £2 million research programme to identify the best possible interventions for learner and novice drivers. The road safety statement also conveyed the Government’s wider commitment to addressing concerns about motor insurance premiums for all drivers. It states:

“We will support innovation in the motoring insurance market so premiums become more responsive to safer driver behaviour and vehicle choice. This could include extending the ‘reward based’ insurance approach pioneered through young driver telematics products to the wider motoring community and fleets.”

In essence, insurance premiums reflect the risk of the potential claim both in terms of the number of claims and the cost of each claim. Claims from young drivers are typically four times higher than the average. The statistics are startling and throw into perspective why insurance costs are so high.

Research for the RAC Foundation showed that although teenage drivers make up only 1.5% of full licence holders, they are involved in 12% of accidents where someone is killed or seriously hurt. One in five newly qualified drivers will have an accident within six months of passing their test.

The European Commission notes that in developed countries traffic accidents are the main cause of death among 15 to 24-year-olds; the fatality rate for drivers in that age group is twice as high as that of more experienced drivers. Further, for every young driver killed in a crash, an average of 1.3 other people also die as passengers or other road users. Young drivers with passengers have greatly increased chances of being involved in serious and fatal accidents owing to factors such as peer pressure and over-confidence. Accidents involving young drivers are often caused by loss of control or speeding and are more likely to happen at night.

We must not lose sight of the fact that behind the high insurance premiums are these heartbreaking statistics—lives lost, life-limiting injuries and heartbroken families and friends. The issue is not only or even primarily about money; the real cost of young drivers is the lives lost and the families in mourning. Premiums can be prohibitively expensive, but of even greater concern to us should be the cause: novice drivers are much more likely to be involved in fatal accidents.

More must be done to address the reasons behind the high premiums and reduce the high accident rate among inexperienced drivers compared with the rest of the driving community. There are many avenues to explore in improving the accident toll and also valid ways of reducing premiums, including improved training and tuition, extending advertising and education around the perils and risks for young drivers, legislation to further penalise poor driving, and compulsory professional tuition. Manufacturers’ innovations and new technologies will also play an increasing role.

There are various ways in which novice drivers can reduce insurance premiums. For instance, Pass Plus is a practical training course that takes at least six hours and helps drivers to improve their skills and drive more safely. It can be taken at any time, although it should be most useful to new drivers in the year after passing their test. However, a more thorough overhaul is due, which I will come to later.

Another option to ease premiums is the addition of a named—usually older—driver with a clean licence and good accident-free record, who may make occasional use of the car and can reduce the overall premium. That is very different from the illegal practice known as “fronting”, where a low-risk driver fronts as the main user of the car when in fact it is predominantly used by the inexperienced driver.

[Gavin Robinson (Belfast East) (DUP)]

I am very grateful to the hon. Gentleman for giving way on that point. The consideration about whether what is involved is fronting or a useful tool to lower premiums often takes place after a collision. That is when the insurance company—in my view, unfairly and narrowly—looks at the circumstances. If it comes to the view that the person is fronting or has been fraudulent it cancels the policy and treats it as if it never existed. Insurance companies do not want it to be used as a mechanism to reduce premiums; they are trying to catch people out.

[Steve Double]

The hon. Gentleman makes a very good point. There are many pitfalls to the issue of fronting. The insurance industry should do more to address that issue at the beginning, rather than wait until there is a claim. Companies happily take the premiums before they address the problem. There is more that can be done to ensure that, when older drivers are put on policies, it is proper and legitimate.

Some insurers now offer telematics policies and fit a GPS-enabled transmitter to the car; I believe that smartphone app options are also available. Drivers under 21 who take out such a policy and have the appropriate equipment fitted are typically offered a 25% discount on the initial premiums. Such policies can also further reduce renewal premiums, as there is a record of where, when and how the car has been driven. High-risk driving behaviours are recorded by the technology and can cause renewal premiums to rise, whereas sensible driving can lead to a significant reduction in premiums.

One insurer, Marmalade, which operates a telematic policy, saw a dramatic improvement in the accident rates of novice drivers. On average, one in five new drivers makes a claim in the first six months, but with monitoring equipment in place, that number improved to one in 16—an outstanding and significant improvement. Telematics policies have been growing in number. In 2009, there were about 12,000, but the technology has become more widely known and continues to fall in price, making the policies more attractive: the number has risen quickly to more than 750,000 today.

Dash-cam technology can also be used to improve driving and can lead to a fall in the insurance price. Some insurers now offer lower costs—typically 10% lower —provided that a camera is fitted and is always activated when driving. That footage is made available should there be a claim. That irrefutable evidence can be very helpful, given that young drivers are sometimes blamed and bullied at the roadside for collisions that are not actually their fault, and there is often a presumption that the less experienced driver is at fault. Dash cams also have the effect of improving driving behaviour, as the driver knows there is a record of how the car has been driven.

Some households enter into a written agreement with the novice driver, in which behaviours such as careful, legal and considerate use of the car are set out. Both parties sign the agreement, which, although not legally binding, offers a clearly set out explanation and brings focus, consideration and thought to the very real responsibilities of driving safely. An example template can be found on the website brake.org.

As helpful and welcome as many of those things are, they fail to address the underlying issue. It is time for us to look at our system for obtaining a licence to drive. It is my view that in this country we teach people to pass the test, rather than educate and train them to become safe and competent drivers. Rhys Parker, the instigator of this petition, said to members of the Petitions Committee:

“if young people are so dangerous that the only way to get them to drive safely is forcing them to pay £200 for an advanced driving test, why don’t we just make the driving test better?”

I agree. I think he has a point.

The driving licence was first introduced in 1903, but there was no test requirement. The test was introduced in 1935, and although there have been some changes along the way, such as the introduction of the theory test in the mid-’90s, little has changed. In that time, vehicle technology has changed, cars have become much faster and we have gone from fewer than 1 million cars on our roads to more than 30 million.

The driving scene in our country has changed completely. I believe we need a better, more rigorous and comprehensive system of training and testing that is fit for our age and our roads. I suggest that passing the driving test should be seen not as a one-off, but as a process. Under what has become known as a graduated driving test, new drivers would have restrictions placed on their driving. For example, they would not be able to drive at night or on motorways, or carry more than one passenger, until they received further tuition, gained more experience and further proved their ability to drive.