Car Insurance: Young People

Karl McCartney Excerpts

Monday 20th March 2017 Westminster Hall

[Steve Double]

My hon. Friend makes a very good point that I will come to later. I think the current testing regime needs to be more robust and more comprehensive to address the many different aspects of driving, rather than just having the very narrow test we have currently. We teach young people to pass the test. We do not equip them to deal them with the many different experiences of driving on roads in the UK today.

[Karl MᶜCartney (Lincoln) (Con)]

Before my hon. Friend moves on, I am intrigued and interested to hear about the various different safety regimes for new drivers, but what we are discussing in today’s debate is the cost of premiums for young drivers. Does he not agree that one of the reasons why they are so expensive is that insurance companies keep putting them up? The rates are not as open and competitive as some of us would like them to be. The companies obviously want to carry on making profits and perhaps pass on the costs of expensive whiplash claims to premium holders, whether they are young or old.

[Steve Double]

My hon. Friend makes a very good point. I am certainly not here to defend every insurance company or the premiums they quote to young people or anyone else. I am sure there is always room to do better and drive down those costs. We could talk about the insurance premium tax, which has perhaps contributed to the cost. Young people are unfairly penalised on that count because of the high premiums. We need to be realistic: this is about insurance companies assessing risk and charging according to that.

To put the matter into perspective, a typical insurance premium for a teenager is £2,000, which comes out at just over £5 a day. I am sure that many Members in the Chamber today have very nice vehicles. Would they give their car to a 17-year-old for 24 hours to drive however they chose in return for £5? I do not think many of us would do that. Although £2,000 is a very large amount of money for someone who is 17 or 18 years old—we acknowledge that—we also understand that for that money they are getting insurance cover not only for the vehicle, but for any third-party damage or injury that they may cause.

[Steve Double]

I personally am not of that view. If fact, if we look across the world, other countries allow young people to learn to drive at much younger ages. I certainly would not look to reduce the age. However, I think we need to give our young 17 and 18-year-olds more tuition and better experience, so that they become more capable drivers much quicker. That is where I would focus the attention, rather than increasing the age. If we increase the age, they will still be new drivers at whatever age they begin to drive.

[Karl MᶜCartney]

I thank my hon. Friend for giving way; he is doing well with so many interventions. I want to reassure all the young drivers or potential young drivers who might be following this debate that although hon. Members would perhaps not lend them their nice, or not-so-nice, cars for £5 a day, having seen some of my hon. Friends driving, I probably would not lend them my car for £5 a day either.

[Steve Double]

I am grateful for that point.

Some young would-be drivers, overwhelmed at the potentially unobtainable cost of car ownership, including, but especially, insurance, are tempted to simply flout the law and proceed to drive without insurance and at times even without a licence, which is a totally unacceptable and dangerous solution. That has disastrous consequences for them and for other road users. The fallout can be death, serious injury or a criminal record, and, with motoring prosecutions now a part of their profile, it makes it even more expensive to start the process towards a driving insurance premium. It also has the effect of pushing up insurance costs for law-abiding, properly insured drivers. There is genuine concern about the cost of insurance for young drivers from many quarters, not just from novice drivers. There is concern about the impact on other outcomes and about excluding the young from a societal norm: the freedom to own and run a car. The high costs of entry might also feed into other problems in society: isolation, alienation and perhaps even a sense of failure for young people. We therefore need to take the matter seriously.

However, it is important to consider why the premiums are so high. The Government’s response to the petition stated:

“The Government is aware that the cost of motor insurance can be high for new drivers and understands the concerns that have been expressed about this. The average cost of motor insurance for the 17-22 age group was estimated to be £1277 as at January 2016”.

In my experience and from talking to many people, the cost is often much higher than that. It is important to bear in mind that motor insurers have to provide unlimited cover against the risk of personal injury to third parties and cover of up to £1 million for property damage. They use a wide range of criteria to assess the potential risk that a driver poses, which include the age of the applicant, the type of vehicle being driven, the area where the applicant lives and his or her driving experience.