Car Insurance Committee

:00:27. > :00:34.Order, order. Good afternoon and welcome to the committee. Could you

:00:35. > :00:42.give us your name and organisation? Good afternoon, my name is Elizabeth

:00:43. > :00:44.Box, I am head of research at the RAC Foundation. Nigel Dotchin, and I

:00:45. > :00:53.chaired the Wheels two Work Association. In a survey of people

:00:54. > :01:00.who have signed this petition, we were told that the cost of car

:01:01. > :01:03.insurance is a great bar to people's access to insurance, do you agree

:01:04. > :01:08.with that and is it particularly young people or people generally? We

:01:09. > :01:11.would certainly say with the evidence that we have seen that it

:01:12. > :01:16.is a significant issue for young people. People of all ages but

:01:17. > :01:20.certainly young people and the issue of the cost of insurance. Some of

:01:21. > :01:27.the work that we have done found that looking at the Department of

:01:28. > :01:31.the work and pensions database, one in five job advert required people

:01:32. > :01:36.to have access to the vehicle. And in the apprenticeship database, it

:01:37. > :01:41.is one in six. Given that young people trying to access employment,

:01:42. > :01:49.that is a big issue. 63% of people travel to work by car. It is higher

:01:50. > :01:54.in rural areas. It is a big issue. It is particularly an issue for

:01:55. > :02:00.rural areas? Yes but we also see it in city areas as well, so in London,

:02:01. > :02:05.we know that about 22% of 17 to 34-year-old needs to travel to work

:02:06. > :02:12.by car. It is not just a rural issue. What help can employers give

:02:13. > :02:19.in this situation? Would either of you like to talk on that? To follow

:02:20. > :02:23.up on that question, I would support Elizabeth on what she said on the

:02:24. > :02:27.cost of insurance and the cost of driving generally being a factor in

:02:28. > :02:35.determining whether people can access work, implement and training.

:02:36. > :02:43.That is why Wheels two Work Association was set up in the first

:02:44. > :02:46.place, to provide an affordable form of transport for people,

:02:47. > :02:49.particularly in rural areas but not just there, to access those areas.

:02:50. > :02:55.There is a range of issues that come into play which determine whether

:02:56. > :02:59.one can access your place of work or whatever it is. Insurance clearly

:03:00. > :03:02.comes out of the evidence we have that it is one of the factors but

:03:03. > :03:08.not the only one. In terms of whether employers can help, it is a

:03:09. > :03:15.difficult one, some employers will provide help individually if they

:03:16. > :03:23.are keen to take on board young people in their employment, but I

:03:24. > :03:27.fixed the challenge is the fact that if an employer is fated to people,

:03:28. > :03:33.one of whom can drive and one who cannot, the chances are they will

:03:34. > :03:39.offer the employment to the person who has access and is able to drive.

:03:40. > :03:44.Some of the petitioners who responded to the survey have said

:03:45. > :03:50.that the price of car insurance does make it difficult for them to access

:03:51. > :03:55.education or training. So to what extent do you think in particular

:03:56. > :04:01.the cost of car insurance affect their ability to access this? We

:04:02. > :04:04.certainly know from the RAC report that was done last year that people

:04:05. > :04:08.said the cost of car insurance generally is a big concern and it is

:04:09. > :04:14.rising up the agenda over the last few years. Now people say the most

:04:15. > :04:19.important thing is road maintenance, then people using mobile phones in

:04:20. > :04:24.cars, then car insurance is often that, so people think it is a

:04:25. > :04:31.concern. -- car insurance is after that. The premium tax has been

:04:32. > :04:35.raised recently, hired than the rest of Europe, and with the discount

:04:36. > :04:43.rate analysis today, it will be even harder for young people to get car

:04:44. > :04:48.insurance. You mentioned a figure that one in five job adverts, one in

:04:49. > :04:53.six then shipped adverts, require access to a car. Are you aware of

:04:54. > :05:00.any help that is available to try and support young people with access

:05:01. > :05:04.to a car and the affordability of car insurance in order to try and

:05:05. > :05:09.meet those requirements? I am not aware of any apart from the very

:05:10. > :05:17.good Wheels To Work Association programmes which occur in part of

:05:18. > :05:24.the country which is more about motorcycle usage for people to get

:05:25. > :05:28.to work so that they can purchase their own. I am not aware of any

:05:29. > :05:32.schemes either that help young people which is why Wheels To Work

:05:33. > :05:40.Association is out there, to provide an alternative to people who cannot

:05:41. > :05:43.afford to buy a car, run a car or access public transport, it may be

:05:44. > :05:47.not there or may not run at a time they want or it may not be

:05:48. > :05:55.affordable. What Wheels To Work schemes do is provide an opportunity

:05:56. > :06:03.to get access to a relatively cheap form of transport, ie a motorhead or

:06:04. > :06:08.scooter. One of the things is that -- mopeds or scooter. One of the

:06:09. > :06:12.things is that the scheme pays for the insurance for those bikes. So it

:06:13. > :06:16.is something that they do not need to worry about. For young people

:06:17. > :06:19.still in education, are you aware of any support that is available,

:06:20. > :06:23.particularly with the support for car insurance if they require that

:06:24. > :06:30.in order to get to their place of study? I am not aware of any in

:06:31. > :06:32.education but in terms of, since the educational maintenance allowance

:06:33. > :06:37.was scrapped in the UK, they rely on bursaries from their colleges and

:06:38. > :06:44.places of training. We know that that is a key issue for them. We saw

:06:45. > :06:49.from the survey that a large percentage of young people cannot

:06:50. > :06:54.access places of further education because of that, because they do not

:06:55. > :07:00.have access. It comes down to money, really, and the fact that they do

:07:01. > :07:05.not have that money to access that form of transport. There are some

:07:06. > :07:10.interesting different forms of car access that you can get now, in

:07:11. > :07:18.interesting different forms of car access that you can get now, cities

:07:19. > :07:22.under options, like car share schemes, but young people do not

:07:23. > :07:29.have good access to them, one in London says that you need to be at

:07:30. > :07:38.least 23 or have two years experience so it it difficult for

:07:39. > :07:42.young people. What impact does this have on social lives of young

:07:43. > :07:48.people? I am interested if there is any research regarding the issue of

:07:49. > :07:54.cost and social exclusion issues. We know in a general sense that eight

:07:55. > :07:57.out of ten people say that if they did not have a car, the lifestyle

:07:58. > :08:06.would speak affected, we do not have a broken down by age. 10% of the

:08:07. > :08:14.poorest households are spending 22% of their income on car related

:08:15. > :08:21.outgoing. It takes a lot out of people's Mac wages. From our

:08:22. > :08:27.anecdotal evidence, largely, we know that access to social activities is

:08:28. > :08:31.a key component and without access to any form of transport, people are

:08:32. > :08:35.not able to engage on day-to-day life, depending on where they live,

:08:36. > :08:41.particularly acute in rural areas. It is not just employment, it is

:08:42. > :08:53.participating in what is going on out there. The key -- it is a key

:08:54. > :08:57.consideration for young people. Our survey respondents said that they

:08:58. > :08:59.felt socially isolated, my own constituency which is not rural

:09:00. > :09:09.comedy Central Belt Scotland but is a mixture of villages and towns,

:09:10. > :09:12.people in my area would be completely isolated in the evening

:09:13. > :09:16.if you do not have a car and your friends were in the next town. I

:09:17. > :09:24.think the evening factor is crucial, because not only do a lot of young

:09:25. > :09:28.people work in the night-time economy, their social activities go

:09:29. > :09:33.on in that period and that is where public transport is not available,

:09:34. > :09:40.not in the evenings. An alternative form of transport is something we

:09:41. > :09:45.need to look at. Without a car, does access to the scooter help in that

:09:46. > :09:50.respect? We have heard from young parents and carers who are

:09:51. > :09:55.struggling to meet the cost of insurance. What more can be done to

:09:56. > :10:01.help that particular group who may be unable to afford it but

:10:02. > :10:05.desperately need to use a car? We would favour the idea of a cap is an

:10:06. > :10:12.interesting one. It this he has implications because -- we obviously

:10:13. > :10:19.know it has indications because young people are more likely to be

:10:20. > :10:26.intelligence and there are costs related to that. It has begun in

:10:27. > :10:30.other countries which have more tightly regulated insurance systems.

:10:31. > :10:34.We could decide as a society that we could make it more affordable for

:10:35. > :10:39.young families in certain situations to get insurance but it has knock-on

:10:40. > :10:46.implications. The key thing for us is the need to understand the root

:10:47. > :10:49.cause of high insurance costs, we want mobile young people but we also

:10:50. > :10:54.want a safe young people. Given in the UK our insurance market is based

:10:55. > :10:59.on individual risk, whereas in Europe it is based on the vehicle,

:11:00. > :11:05.we need to understand better how we can reduce the risk for young people

:11:06. > :11:08.and we know a lot about how we can do that. Do you think there is

:11:09. > :11:11.something to be said, being released at about the cap, that it should

:11:12. > :11:18.just apply to certain groups that need a car, such as young parents

:11:19. > :11:23.and carers? That could be an option. The other option which we have put

:11:24. > :11:26.across in our submission which is whether you can do something with

:11:27. > :11:34.insurance premium tax. Those people who pay the most pay the most tax,

:11:35. > :11:42.you could with particularly learner drivers, you could get them to get

:11:43. > :11:45.more experience after they passed that tests, they could be safer and

:11:46. > :11:52.there would be lower insurance costs. On that one point, having

:11:53. > :12:00.taken out insurance relatively recently, I do not recall being

:12:01. > :12:04.asked if I had children. You would have thought that a 20-year-old

:12:05. > :12:09.parent that is going to be driving their kids around would be a much

:12:10. > :12:14.safer driver or would drive in a safer fashion than 20 Robert did

:12:15. > :12:18.not. I am -- than a 20-year-old that did not. I am perhaps being overly

:12:19. > :12:23.objective. If the insurance criteria in terms of your assessment, giving

:12:24. > :12:27.out insurance, is its objective or objective? If it is subjective, you

:12:28. > :12:31.could consider a person who is a family and carrying their kids

:12:32. > :12:38.around is more likely to be a safer driver, dried in the speed limit and

:12:39. > :12:41.not take unnecessary risks. From our understanding, the insurance costs

:12:42. > :12:45.are based on four things, the cost of the vehicle, its likelihood of

:12:46. > :12:49.theft, the cost of overall claims generally and then the risk of the

:12:50. > :12:54.individual. So how they can take the risk of the individual is based on

:12:55. > :13:02.age, location, employment, I would not over they include that but you

:13:03. > :13:06.are right, it could be more detailed, the systems. What is

:13:07. > :13:10.interesting about the telematics market, 500,000 are now in

:13:11. > :13:14.operation, that is having moment by moment risk assessment of what young

:13:15. > :13:17.people are doing and it has feedback to help change their behaviour. So

:13:18. > :13:22.it could be more intelligent that we have got one of the most complex

:13:23. > :13:28.systems in terms of telematics in Europe. Do young people who have

:13:29. > :13:34.disabilities face a particular problem because of the cost of motor

:13:35. > :13:41.insurance? In your experience? I think there is an issue about higher

:13:42. > :13:44.premiums for people with disabilities, it depends very much

:13:45. > :13:53.on the disability, of course. The challenge at the moment is there

:13:54. > :13:56.assessment and access to the Motobility scheme. We have got lots

:13:57. > :14:00.of examples where people have had to hand back the car. Once they have

:14:01. > :14:07.done that, they find themselves in a very difficult position. So disabled

:14:08. > :14:12.people who are very pendent on getting around, whether it is to

:14:13. > :14:18.employment -- very dependent on getting around, whether it is to

:14:19. > :14:24.implement social activities, find that their means of access is taken

:14:25. > :14:28.away, whether they can use a big transport is something which would

:14:29. > :14:33.depend on that individual. And young people with caring responsibilities,

:14:34. > :14:40.they have particularly difficult times as well? I think that is true.

:14:41. > :14:46.I think that the specific example of carers, whether they are young or

:14:47. > :14:50.all, getting around, and the visits that they have to make, which is why

:14:51. > :14:57.we have been looking at things like alternative forms of transport for

:14:58. > :15:00.them if they cannot afford the car or insurance, is it possible to

:15:01. > :15:04.develop scooter schemes for them? We know that some of the caring

:15:05. > :15:08.organisations are talking to grow one as to how those schemes can help

:15:09. > :15:14.carers. -- they are talking to Wheels To Work. A lot of the

:15:15. > :15:18.respondents to the survey said that public transport in particular was

:15:19. > :15:23.often too infrequent, to unreliable and too expensive, do you think

:15:24. > :15:25.enough is being done to make public transport a viable alternative to

:15:26. > :15:31.car ownership, in particular for young people?

:15:32. > :15:38.We don't think there is another thing Talanoa think the figures of

:15:39. > :15:43.how many people rely -- who rely on their cars in rural areas shows

:15:44. > :15:47.that, it can be expensive for the journeys they make. There has been

:15:48. > :15:50.some research saying that for certain people, you could use that

:15:51. > :15:54.money for taxes when you needed but people feel they needed for the

:15:55. > :15:58.safety net, especially in rural areas because they feel they don't

:15:59. > :16:03.have a reasonable service that gives flexibility. Especially for people

:16:04. > :16:07.who have independence and need that flexibility, public transport is

:16:08. > :16:11.just not flexibility enough. We would say in urban areas, obviously

:16:12. > :16:16.the public transport option can be a real viable alternative there is a

:16:17. > :16:20.need to be realistic about what is the potential in rural areas,

:16:21. > :16:23.because it is such a sparsely populated area over such a diverse

:16:24. > :16:28.network, it is quite difficult to serve in the way people would like.

:16:29. > :16:31.It's a particularly difficult problem, because the situation is

:16:32. > :16:35.getting worse. If you move outside of London, particularly in rural

:16:36. > :16:42.areas, where it depends on local Government financing, more and more

:16:43. > :16:50.services are being cut and we heard recently of a bus service from

:16:51. > :16:56.centre eyes to lands end which goes through 12 communities -- St Ives.

:16:57. > :16:59.That has been cut back. Once that disappeared, it is very difficult.

:17:00. > :17:03.One of the main things young people have said is that fact that public

:17:04. > :17:07.transport doesn't run when it needs to. More and more people are doing

:17:08. > :17:12.shiftwork and working in Evening Standard becomes very difficult. If

:17:13. > :17:15.you have a bus that is every hour, and in some cases there are some

:17:16. > :17:19.examples of one a week, it just doesn't work for them. And the other

:17:20. > :17:23.thing, coming back to disabled people, of course that transport

:17:24. > :17:30.system has to be accessible and that's another consideration for

:17:31. > :17:36.young disabled people. You have already touched on the issue of

:17:37. > :17:41.public transport in rural areas and I have had experience of Wheels to

:17:42. > :17:45.Work working for young people in my constituency, so thank you for what

:17:46. > :17:47.you are doing there, but I just wondered if you thought there was

:17:48. > :17:52.anything particularly the Government could do to address this issue with

:17:53. > :17:55.regard to rural areas, where as we have highlighted, the problem could

:17:56. > :18:00.be much more of an issue than urban areas. From a Wheels to Work

:18:01. > :18:03.perspective, it is about funding and having more schemes out there and

:18:04. > :18:07.growing those schemes and Wheels to Work has struggled over the years

:18:08. > :18:10.because it is very much dependent on grants, there is no sort of central

:18:11. > :18:14.Government funding at the moment and we are looking at ways in which we

:18:15. > :18:20.can encourage that and move towards... Do we have the funding

:18:21. > :18:24.organisation similar to the community transport Association? At

:18:25. > :18:29.the moment, there are ad hoc schemes across the country, dependent on

:18:30. > :18:32.local authorities and how they see it and attach importance to those

:18:33. > :18:38.particular schemes. The funding goes up and down. If you look at the

:18:39. > :18:43.number of schemes over the years, Ukip peaks. In 2002, we had 60

:18:44. > :18:49.schemes, then it went down to 20 by 2012 and it is at 38 at the moment

:18:50. > :18:56.-- you get peaks. It is very much dependent on where the money comes

:18:57. > :18:59.from. A lot of it, we try to encourage to be self-sufficient and

:19:00. > :19:03.sustainable and we have evidence to show they are doing that, they are

:19:04. > :19:06.reliant on more activities of their own, dealerships and things like

:19:07. > :19:11.that, which can bring in a bit of money but whether we can get to

:19:12. > :19:14.100%, one or two of the manager by various means but there is always

:19:15. > :19:19.going to be a requirement for an element of subsidy and the question

:19:20. > :19:22.is where does that come from? Local authorities are finding it very

:19:23. > :19:28.difficult at the moment. We are reliant on things like in the past,

:19:29. > :19:33.the local sustainable transport fund, the access fund, but they do

:19:34. > :19:37.not go on forever. It is interesting that just under half of young people

:19:38. > :19:40.have a driving licence, which demonstrates some are managing to

:19:41. > :19:43.get by without having a driving licence and when we look at the

:19:44. > :19:47.National transport survey data, it indicates a high proportion of young

:19:48. > :19:50.people do say they want to get a driving licence in the next five

:19:51. > :19:56.years, because they demonstrate that a need for it. We did some work as

:19:57. > :19:59.part of the car in British society back in 2010, when we held focus

:20:00. > :20:04.groups with young people and we held it with those who had lost their

:20:05. > :20:08.driving licence for one reason or another, and it started to get under

:20:09. > :20:12.the skin of what happens when people have planned a live around getting a

:20:13. > :20:16.car and for whatever reason, losing their license or not being able to

:20:17. > :20:19.afford it, couldn't get access to a vehicle and it demonstrates how

:20:20. > :20:22.important the car is to people in rural areas and how difficult they

:20:23. > :20:32.find it when that safety net is taken away. Just following up on the

:20:33. > :20:38.Wheels to Work, would you say that access to Wheels to Work or a

:20:39. > :20:43.similar alternative scheme, if there was one, would you say that that

:20:44. > :20:50.offered young people the same access to education and training as those

:20:51. > :20:55.with full car ownership? I think most people, most of the clients, if

:20:56. > :21:05.you like, four Wheels to Work, see it as a transitional process. They

:21:06. > :21:12.can't afford the car now, but the use of a scooter or Obed gives them

:21:13. > :21:19.that access for six months -- Ore mopeds. Some of them will obviously

:21:20. > :21:23.become keen motorcyclists, if you like, and take it up but the

:21:24. > :21:29.majority from our survey suggests that once they can afford it, they

:21:30. > :21:33.would move on to using a car. So that would be their aspiration, I

:21:34. > :21:37.suppose. The other thing, for example, there is the distance

:21:38. > :21:42.involved, that is another key component of this, because if you

:21:43. > :21:50.are travelling by cycle, for example, which is about five miles,

:21:51. > :21:53.but for a mopeds or a scooter, you can do up to 30 miles but if you

:21:54. > :21:59.have a journey or a commute longer than that, the car becomes the

:22:00. > :22:05.better possibility, if you like. I think those are the sort of criteria

:22:06. > :22:09.that they would take into account. And what opportunities are there at

:22:10. > :22:21.the moment for young people to get access to a pool car? To a pooled

:22:22. > :22:25.car? Yes, or supported or subsidised access scheme? As Elizabeth

:22:26. > :22:29.mentioned before, it becomes difficult dependent on age. You said

:22:30. > :22:35.there was a two-year qualifying period usually, so it is difficult.

:22:36. > :22:39.We understand it is difficult and young people can't often get access

:22:40. > :22:43.to a rental car until they are 21, because rental firms decide it is

:22:44. > :22:48.too risky to actually have younger people, unless they have lots of

:22:49. > :22:52.experience, involved in that. So what do you think are the main

:22:53. > :23:01.obstacles to ensuring a wider access? Is it, as you have mentioned

:23:02. > :23:04.Nigel, in terms of Wheels 2 Work finance, basically, financial

:23:05. > :23:11.support to try and subsidise vehicle access for young people? I think it

:23:12. > :23:15.is having the alternatives there, that for example, you if you can't

:23:16. > :23:20.afford a car, then you need some alternative form of transport and

:23:21. > :23:22.it's not always available. In terms of Government, what can the

:23:23. > :23:29.Government tried to do to widen access? I think most of the onus is

:23:30. > :23:34.going to be on local authorities and what they decide to do. The current

:23:35. > :23:38.policy is to leave it at the local level. As far as Wheels 2 Work is

:23:39. > :23:43.concerned, then it is from the centre, there is consideration that

:23:44. > :23:49.could be given to longer term funding, if you like, put that in

:23:50. > :23:55.place. That would be one role. There is the whole question about the bus

:23:56. > :24:00.subsidies and so on, again, that would need to be considered as well.

:24:01. > :24:05.It is having, if you like, an integrated transport system out

:24:06. > :24:11.there and making sure that the whole picture is being looked at in the

:24:12. > :24:14.round, that it's not just a case of access to employment, access to

:24:15. > :24:18.education, training, but getting all the partners together to discuss how

:24:19. > :24:24.best it can be delivered and that needs to be done at the top, because

:24:25. > :24:27.a lot of this is delivering the policies of wider Government

:24:28. > :24:32.departments. You know, it is not just transport, it is environment,

:24:33. > :24:37.in terms of pollution, congestion, so on. Things like the

:24:38. > :24:40.apprenticeship agenda and so on as well as education. So what

:24:41. > :24:45.Government can do is bring everybody together and address this particular

:24:46. > :24:49.issue. I think what we would say, in terms of what can the Government do,

:24:50. > :24:53.again, it comes back to the root cause of why it is so difficult for

:24:54. > :24:59.drivers to get car insurance and that is because they are a very high

:25:00. > :25:02.risk to insurers based on the way we price risk insurance in this

:25:03. > :25:06.country. The Government could do something around the way we learn to

:25:07. > :25:10.drive, there have been some good moves around this new driving test

:25:11. > :25:13.which is much more real world but there hasn't of getting young people

:25:14. > :25:18.more on road experience before they take their test and also, in a post

:25:19. > :25:25.test environments, we know that postgraduate driving tests can be

:25:26. > :25:31.very effective tool reduce injury and deaths by 20-30% and some of the

:25:32. > :25:34.research around it says it is universal law that puts in place

:25:35. > :25:38.protections for the public and when we don't have it in place, we need

:25:39. > :25:42.very specific level interventions to guard against the fact that there is

:25:43. > :25:47.a public health risk associated with young drivers. So there is a lot we

:25:48. > :25:51.can do in a driving test. In particular, we very much focused on

:25:52. > :25:54.skills training, physical skills training, but not behavioural skills

:25:55. > :25:58.training. There has been some work done in Australia that found if you

:25:59. > :26:03.give young people resilience training, how you minimise risks for

:26:04. > :26:07.young people with alcohol and drugs and other risky behaviour, as well

:26:08. > :26:10.as driving, they found that overall, that resilience training meant they

:26:11. > :26:17.could have a 44% reduction in their crash risk in the first year of

:26:18. > :26:20.driving. And these are the sort of initiatives,... Graduated driving

:26:21. > :26:24.licences are difficult because of freedoms and young people needing to

:26:25. > :26:28.get employment opportunities, but there are other behavioural

:26:29. > :26:36.approaches that could be taken to actually improve the situation for

:26:37. > :26:43.young drivers. You said that training can result in a 44%

:26:44. > :26:47.reduction in accident risk. Would that result in young drivers coming

:26:48. > :26:52.down to the same level of risk as other drivers or would they still be

:26:53. > :26:56.higher? When the accident curbs are done, it tends to take into account

:26:57. > :27:00.age and experience, so within the first six months of driving, a young

:27:01. > :27:03.driver would probably be around the same risk as another driver, so it

:27:04. > :27:08.is all about getting those 1,000 miles of experience. I'm not sure

:27:09. > :27:13.whether at the moment you can compare those two figures, but it is

:27:14. > :27:17.certainly a very impressive result from something that wasn't driving

:27:18. > :27:26.focus. In this country, we focus, on the worse case scenario, taking

:27:27. > :27:32.young people to things that increase Chris, instead of classroom

:27:33. > :27:35.learning. Teaching these are the consequences and risks associated

:27:36. > :27:49.with your baby about how Duplan to mitigate it in that situation, in

:27:50. > :27:56.your -- risks associated with your and how Duplan to mitigate it in the

:27:57. > :28:00.situation? So is it possible to design insurance around those

:28:01. > :28:04.issues, for example, hours of darkness, whether the driver is

:28:05. > :28:08.alone in the car, so that you design an insurance policy that reduces

:28:09. > :28:13.those risks? Because most accidents, as I understand it, are curbed when

:28:14. > :28:19.a young driver is accompanied, rather than on their own. That is

:28:20. > :28:23.right and graduated driver license approach has a lot to say in terms

:28:24. > :28:27.of that about driving for certain hours of driving with one or no

:28:28. > :28:31.passengers. I imagine in the technology now, you would be able to

:28:32. > :28:34.detect how many people are in vehicles, that would be possible,

:28:35. > :28:41.but if it wasn't able to go down of regulatory route, I think parents

:28:42. > :28:46.are quite perceptive about getting guidance on how those first six

:28:47. > :28:50.months should be proceeding, in terms of parental contracts when you

:28:51. > :28:55.say, only one person in the vehicle and maybe at certain times. I think

:28:56. > :28:59.insurance products have gone down that route before and are now a lot

:29:00. > :29:05.more detailed and there have been some problems associated with having

:29:06. > :29:08.severe cut-offs for the time people should be home, but now they are

:29:09. > :29:12.more based on individual driving, no matter what time of deities. But we

:29:13. > :29:18.certainly feel there is an opportunity for sort by graduated

:29:19. > :29:22.driving licence, a lighter approach in a way, that takes some of the

:29:23. > :29:28.good aspects of that than put it into context which is acceptable.

:29:29. > :29:33.One of the questions I am not quite understanding and perhaps you can

:29:34. > :29:36.help me with, wise motorcycle insurance for young people

:29:37. > :29:41.considerably cheaper than car insurance, especially when it seems

:29:42. > :29:45.a more risky mode of transport? I mean, you are right, it is based on

:29:46. > :29:52.risk but in fact the statistics show that motorcycle fatalities are

:29:53. > :29:58.coming down, and that is in spite of the fact that the number of

:29:59. > :30:05.motorcycles, mopeds and scooters on the ground is increasing. So a trend

:30:06. > :30:15.has been downwards, less accidents involving drivers and... But it has

:30:16. > :30:20.levelled off and this is one of the concerns that the exercise

:30:21. > :30:27.motorcycle industry Association and the police Federation and highways

:30:28. > :30:31.England, last year they published their safety and transport policy

:30:32. > :30:37.framework, which was looking at ways in which the training of motorcycle

:30:38. > :30:41.drivers could be improved and that has been considered by the

:30:42. > :30:47.Department of Transport now, things like the test and so on, so the

:30:48. > :30:51.downward trend is quite marked, over the years, and the statistics are

:30:52. > :30:55.quite revealing in that respect, but it is just in the last couple of

:30:56. > :30:59.years, where it was quite clear that there needed to be more effort, if

:31:00. > :31:02.you like, to be put in to an overall policy and strategy for motorcycle

:31:03. > :31:11.drivers. In terms of Wheels To Work, there is

:31:12. > :31:18.a relatively low risk, our statistics show, but there are very

:31:19. > :31:23.few fatalities, if any, very few accidents, because primarily, if you

:31:24. > :31:28.are a client on the scheme, you have to go through compulsory training,

:31:29. > :31:33.basic training. So it improves your driving skills, and they are

:31:34. > :31:40.provided with things like helmets and protective clothing. He defined

:31:41. > :31:48.as a result of that, the accidents are less. And the evidence suggests

:31:49. > :31:51.that people who have been through that process become more road aware

:31:52. > :31:57.and become better car drivers is that is what they choose to do later

:31:58. > :32:01.on. That helps my understanding. You mentioned the increase in motorcycle

:32:02. > :32:05.use, and I am wondering if that is people my age, the midlife crisis

:32:06. > :32:08.getting motorbikes, or have you got evidence that it is younger people

:32:09. > :32:12.because of the cost of car insurance, they are taking

:32:13. > :32:19.predominantly to bikes? Certainly more people are buying vehicles but

:32:20. > :32:28.they are buying them at the lower end of the market. Mopeds are only

:32:29. > :32:36.50 cc, scooters are 125 cc. So they are relatively slow vehicles. I

:32:37. > :32:40.think it is over 19 you have to have a license if you want to drive the

:32:41. > :32:45.bigger vehicles. The Wheels To Work schemes only focus on the smaller

:32:46. > :32:49.models, which is going to help. But again the statistics show, the

:32:50. > :32:54.evidence suggests that those sales, of those types of models, has gone

:32:55. > :33:01.up row recently. Whether that is because of the cost of driving, we

:33:02. > :33:05.would need more work on that. There are other factors, in cities there

:33:06. > :33:12.is congestion to take into a fact as well, you can get to work a lot

:33:13. > :33:16.quicker and it is cheaper for some people the public transport. The

:33:17. > :33:20.point that came across in the survey, a number of respondents made

:33:21. > :33:24.the claim that motorcycle riders make better car drivers because they

:33:25. > :33:29.have more road awareness. I would agree on face value. Is there any

:33:30. > :33:38.evidence to back that up? We have some evidence from the driving... I

:33:39. > :33:41.forget the title, the driving instructors Association have done

:33:42. > :33:49.some work on that. They do suggest that they make better car driver.

:33:50. > :33:53.That is when I thought, it brings me onto another question, you may have

:33:54. > :33:57.a comment on this, why do we think that insurance companies do not give

:33:58. > :34:04.motorcycle riders who progressed to car use the no claims continuation?

:34:05. > :34:08.We have one, neither does that. So if one can do it, why not the rest?

:34:09. > :34:12.It is also the strength of the evidence, some of the trials that

:34:13. > :34:19.have been done have been small-scale. It would be interesting

:34:20. > :34:25.to see more research done. HGV drivers are being asked to be a

:34:26. > :34:28.cyclist in London, that is a scheme, and certainly from a psychological

:34:29. > :34:33.research perspective, it makes sense to make someone feel what it is like

:34:34. > :34:37.driving like somebody else and get a different perspective. But I do not

:34:38. > :34:46.think there is the research to back up an absolute change in insurance.

:34:47. > :34:50.I have had two sons who have both had mopeds, scooters, at 16 and then

:34:51. > :34:55.at 17, progressed to passing their driving test. We found quite a big

:34:56. > :34:59.difference between insurance companies that gave them a better

:35:00. > :35:05.price because they had had a year the Road experience on the mopeds,

:35:06. > :35:09.and those that did not give them any recompense of that. I wanted your

:35:10. > :35:12.thoughts on why there is such a difference in different insurance

:35:13. > :35:15.company's approach to that. You would have to ask them all stop we

:35:16. > :35:26.will be asking them. Another issue raised by petitioners

:35:27. > :35:28.are responding to the survey is that sometimes, the cost car insurance is

:35:29. > :35:34.so expensive that young drivers simply drive without insurance. Have

:35:35. > :35:40.you found that is a common problem and is there an upward or downward

:35:41. > :35:46.trend in that? There is certainly consequences in terms of having to

:35:47. > :35:55.pay insurance. It can act as barrier so young people cannot enter at all,

:35:56. > :36:01.but as you say, they might under insure, third-party insurance is

:36:02. > :36:04.more extensive in the UK as conference is because insurance

:36:05. > :36:10.companies think it is more risk because someone thinks they do not

:36:11. > :36:16.need that. I think there were some figures from the DVLA a few years

:36:17. > :36:20.old now, about 7500 newly qualified drivers within the first three years

:36:21. > :36:25.were found to be driving without insurance and were thus by those

:36:26. > :36:30.results. That is potentially only the -- and were disqualified as a

:36:31. > :36:36.result. That is potentially only the tip of the iceberg. It is a risk of

:36:37. > :36:43.having very high insurance levels and the expense so people feel they

:36:44. > :36:54.are able to do that. Some surveys have been done were around 50% of

:36:55. > :37:01.the public think it is acceptable to be involved in insurance fraud. It

:37:02. > :37:10.puts pressure on people potentially do things they would not do.

:37:11. > :37:13.Anything to add? In terms of the Wheels To Work schemes, insurance is

:37:14. > :37:18.part of the package so it is not a case of people not having insurance.

:37:19. > :37:24.We have been able to negotiate on half of the scheme is a lower rate

:37:25. > :37:29.-- on behalf of the scheme, to procure a lower rate of insurance

:37:30. > :37:35.for members of the scheme. He mentioned insurance fronting, this

:37:36. > :37:42.is another thing which has come to our attention, how common is that?

:37:43. > :37:50.One survey said that 53% of people thought that this form of deception

:37:51. > :37:54.was acceptable. It is strictly speaking illegal, it is insurance

:37:55. > :37:58.fraud. I do not think we know, it is difficult to get an understanding of

:37:59. > :38:02.how common it is. We can only get people's view on it, whether they

:38:03. > :38:06.think it is acceptable. There is also an issue of people not

:38:07. > :38:09.realising it is illegal, a lot of people would be doing something

:38:10. > :38:19.illegal which is something you would not expect to be that high. There is

:38:20. > :38:22.something that we need to be raising awareness. Does that have a

:38:23. > :38:31.significant reduction on people's premiums? I am afraid I do not know

:38:32. > :38:36.the percentage reduction. We have talked a bit about telematics, as

:38:37. > :38:40.one option. For reducing the cost of insurance the young people. What are

:38:41. > :38:44.some of the challenges that you think there are in getting young

:38:45. > :38:52.people to take this on board, what are the barriers? The RAC report on

:38:53. > :38:57.motoring looked at public acceptance of telematics and other tracking

:38:58. > :39:02.type technologies. Back in 2010, over 50% of people said they opposed

:39:03. > :39:09.it, they do not want it at all. The most recent survey, in September

:39:10. > :39:13.last year, said 33% of people would oppose it. So there is now more

:39:14. > :39:17.acceptance and I'm telematics. I think it is because young people in

:39:18. > :39:21.particular see the benefit of what they are getting as a result of

:39:22. > :39:23.buying into that process, they are getting a good discount on the

:39:24. > :39:28.insurance because it is based on how they drive as an individual, not the

:39:29. > :39:31.fact that they are a young person. It is an individually tailored

:39:32. > :39:40.system, rather than an overarching thing. The only point I would make

:39:41. > :39:45.is that it is about raising awareness of all the things that are

:39:46. > :39:56.available out there. And demonstrating that they can work.

:39:57. > :40:03.So, in terms of the impact that a cap on car insurance would have on

:40:04. > :40:11.young drivers, what impact do you think it would have on drivers'

:40:12. > :40:14.behaviour? I think that is an interesting question. It would be

:40:15. > :40:20.interesting to get research to understand what impact it would

:40:21. > :40:25.have. I suppose regular insurance as it stands at the moment, if you have

:40:26. > :40:29.got a very expensive insurance product that you are paying for, it

:40:30. > :40:31.would not affect your behaviour because you have paid for it

:40:32. > :40:36.regardless. So a cap would be similar. It seems to be the

:40:37. > :40:42.telematics insurance and has the most potential to influence

:40:43. > :40:45.behaviour because it is all about providing feedback to the driver and

:40:46. > :40:52.the parent. Many insurance companies, as part of the package

:40:53. > :40:57.the parent has access to the records and can talk about them. I think

:40:58. > :41:05.that would have more of an impact on the mobility side of young people

:41:06. > :41:11.having the affordability to drive, it would not have an impact on

:41:12. > :41:14.safety, and it could make it more expensive for other drivers because

:41:15. > :41:23.the cost has to come from somewhere. Do you have examples as where a cap

:41:24. > :41:28.has been incremented abroad, or is it just telematics? There are a

:41:29. > :41:32.number of different examples abroad, we have got a report coming out soon

:41:33. > :41:37.which is going to look at a cap on insurance markets for young drivers

:41:38. > :41:41.in France, Germany, Spain, Netherlands and Sweden. In France,

:41:42. > :41:44.it is interesting because it is quite a rural area, sparsely

:41:45. > :41:50.populated, they note the importance of getting people access to

:41:51. > :41:55.employment. So they have a young driver insurance and then I premium

:41:56. > :42:00.of that of 100% then each year it goes down, the second year is 75%,

:42:01. > :42:07.then 50%, then 25%, and if you do not have any accidents you get a

:42:08. > :42:13.coefficient added that it reduces. It is quite regulated environment.

:42:14. > :42:17.The first insurance they get is the same is that one else but then it

:42:18. > :42:22.has a young driver aspect added onto it. Again it is on the price of the

:42:23. > :42:29.vehicle. In Germany, if everybody on the vehicle insurance, if someone on

:42:30. > :42:35.the insurance is under 25, they based the insurance on that

:42:36. > :42:38.individual. If everyone is over 25, it is on that individual. So it is

:42:39. > :42:43.priced on the vehicle but it is looking at the individual as well.

:42:44. > :42:47.There are interesting concept and ideas which are more about

:42:48. > :42:51.regulating how prices are capped. Do you find in the UK there are

:42:52. > :42:59.significant differential insurance rates based on geography, or is it

:43:00. > :43:06.predictable for a young person, or is it different depending on how

:43:07. > :43:11.they have shopped around? You talk about a regulated model, Alice,

:43:12. > :43:20.presumably, is the opposite. -- hours presumably if the opposite. In

:43:21. > :43:23.other countries, the insurance is usually done through brokers and

:43:24. > :43:28.some do not have comparison sites at all, and in the UK it is more

:43:29. > :43:34.competitive and it is more about risk. We have not researched on how

:43:35. > :43:39.it this is by area but we know it is location -based. I think the West

:43:40. > :43:45.end up with quite high figures. It is geographically specific because

:43:46. > :43:51.thinking about theft of the vehicle and the extent of cost to repair,

:43:52. > :43:59.that is different throughout the country. So you could argue of that

:44:00. > :44:01.young people of some of the most challenging communities, they can

:44:02. > :44:07.find access to car insurance even more difficult than those who live

:44:08. > :44:13.in more affluent part of the country, compounding social

:44:14. > :44:17.inequality? I think that is the case potentially, but it is for

:44:18. > :44:19.everybody. Thank you very much indeed for your evidence and for

:44:20. > :44:29.answering our questions, thank you. Welcome to the committee, could you

:44:30. > :44:38.give us your name and organisation? I and Simon Allsop from Aviva.

:44:39. > :44:45.Graeme Trudgill, British insurers Association. Nick Moger, Marmalade.

:44:46. > :44:50.James Dalton from the Association of British insurance. Some people have

:44:51. > :44:56.told us they are paying over ?4000 for car insurance, young people, why

:44:57. > :45:01.should it be so high? If I talk about how car insurance premiums are

:45:02. > :45:06.made up. The insurance company will look at claims experience, history,

:45:07. > :45:10.and compare that the claims experience to the rating factors

:45:11. > :45:16.that we get on the drivers and that will include age, location, make and

:45:17. > :45:22.model of vehicle, driving experience, claims history, things

:45:23. > :45:28.of that nature. We compare the claims cost with those two work out

:45:29. > :45:32.what the relative factors are for working out factors and setting a

:45:33. > :45:39.premium to cover costs. The high cost of motor insurance for

:45:40. > :45:43.young people causes many difficulties. Do you think the

:45:44. > :45:47.insurance industry has any responsibility in that regard? I

:45:48. > :45:51.think we have a responsibility in the sense that we should be charging

:45:52. > :45:55.the appropriate premium for the risk the customer brings into the pool.

:45:56. > :45:59.So insurance is about collecting the premiums of the many to pay the

:46:00. > :46:04.claims of the few. That is the pool in principle, but in order to get

:46:05. > :46:08.into the pool, you need to pay an appropriate premium for the risk

:46:09. > :46:11.that you bring. So the danger would be if we couldn't charge an

:46:12. > :46:15.appropriate premium, then we would shrink the size of the pool and say

:46:16. > :46:19.we can only have drivers aged between 40 and 50 in the pool to

:46:20. > :46:23.make sure everyone is paying an appropriate premium for the risks

:46:24. > :46:29.they bring. Yesterday, the Justice Secretary announced a reduction in

:46:30. > :46:39.Piper sent to minors no .7%. It is Piper sent to minors no .7%. It is

:46:40. > :46:52.reported that is going to have a big impact on young drivers -- from 2/5%

:46:53. > :46:56.to -0.7. The single biggest factor that is driving higher large claims

:46:57. > :47:02.compared to other drivers is age and it has been widely reported by PWC

:47:03. > :47:07.that young drivers aged 18-22 would expect a ?1000 increase in their

:47:08. > :47:13.premium just from a single stroke of the Lord Chancellor's pen. So for

:47:14. > :47:17.people paying ?4000, it could go up to 5,000? From the assessment made

:47:18. > :47:23.by PWC, yes. You think that is acceptable? Isn't this going beyond

:47:24. > :47:27.the bounds of reasonableness? Jor want me to take that? The Lord

:47:28. > :47:35.Chancellor's decision is absolute madness. As you have rightly pointed

:47:36. > :47:40.out, add significant cost to the cost of the young drivers' car

:47:41. > :47:48.insurance premiums. As Simon has articulated, the PwC estimate was

:47:49. > :47:53.around ?1000. It is really important that this group of MPs, and I would

:47:54. > :47:57.urge you to grasp this issue and make very clear to the Lord

:47:58. > :48:06.Chancellor these significant impact that this is going to have on young

:48:07. > :48:10.drivers, and you have a petition of 180,000 people who indicated their

:48:11. > :48:15.concern at the cost of car insurance and I think all of the market

:48:16. > :48:20.estimates that have been put out of the past 24 hours would indicate

:48:21. > :48:22.that the Lord Chancellor's decision yesterday is going to bed car

:48:23. > :48:28.insurance the young drivers skyrocket. I don't get the whole

:48:29. > :48:34.madness point, because the whole idea of this is to make sure that

:48:35. > :48:37.people who are involved in serious accidents and need long-term care

:48:38. > :48:42.have enough return on their investments, so therefore it kills

:48:43. > :48:46.not giving a good enough return, something has to be done, but can I

:48:47. > :48:50.come back to the ?1000 question what it leads through to the concern

:48:51. > :48:55.about scaremongering. According to our documentation, the average cost

:48:56. > :49:00.of insurance is ?850 for a young group of drivers. So if we have got

:49:01. > :49:06.the differential that we actually need, because of the yield on

:49:07. > :49:10.Guilds, how on earth can it be over 44 young person's insurance coach

:49:11. > :49:17.Mark because you are only talking about a small number with larger

:49:18. > :49:26.claims. How can it be double the premium? The Lord Chancellor has

:49:27. > :49:32.announced a negative discount rate of -0.5%. What claimants do with

:49:33. > :49:38.their lump sum awards damages is known only to them, I can't tell you

:49:39. > :49:43.what they do with that in practice but my is that they do not go back

:49:44. > :49:45.into Government securities, for a whole range of reasons. But the

:49:46. > :49:51.supposition that they do, which is supposition that they do, which is

:49:52. > :49:58.what the Lord Chancellor has made, would end at a rate of -0.5% makes

:49:59. > :50:01.an assumption that those people making investments are investing in

:50:02. > :50:06.order to lose money, and that simply cannot be right. And this goes to

:50:07. > :50:11.your point about the differential. What we are asking you for and what

:50:12. > :50:17.we are asking the Lord Chancellor for is an urgent review of the

:50:18. > :50:23.damages act 1996, which sets the rate so that young drivers in

:50:24. > :50:25.particular are not forced to pay these extraordinarily high car

:50:26. > :50:31.insurance premiums, which is only going to get worse when the decision

:50:32. > :50:37.takes effect. My point here is that the best way for young persons' car

:50:38. > :50:40.insurance premiums to reduce is to make young drivers safer. Could you

:50:41. > :50:47.are somebody to provide some evidence to show how an ?850 premium

:50:48. > :50:52.can go up by ?1000 due to this factor? Can somebody provide a

:50:53. > :50:57.model? Because I would be concerned that young people are being ransomed

:50:58. > :51:00.in return for pressure on Government to change this policy, which is

:51:01. > :51:03.designed to make sure that people in serious accidents have enough care

:51:04. > :51:05.for the rest of their lifetime. So someone from your bureau could

:51:06. > :51:15.provide that information, I would be happy to take up the matter. Simon

:51:16. > :51:19.may have some comment on that. Why PWC, a firm that act as consultants,

:51:20. > :51:24.would put out something to scaremonger... Incredibly quickly

:51:25. > :51:27.and secondly, it is like anything in life, if we haven't got the

:51:28. > :51:31.information and see the methodology, why shouldn't we question it is

:51:32. > :51:39.accurate question mark the table and the range was from plus 2.5 and

:51:40. > :51:46.minors no .5, they selected a number from a table they had chosen.

:51:47. > :51:55.Do you accept that the increase is actually what is going to happen? A

:51:56. > :51:59.?1000 increase? It seemed like the right magnitude according to the

:52:00. > :52:03.calculations I have seen elsewhere. I think it is real. To be absolutely

:52:04. > :52:07.clear, I have huge sympathy for people who are trying to use their

:52:08. > :52:12.vehicle to get to and from work who are driving sensibly. As an insurer,

:52:13. > :52:15.when you are presented with a risk, an 18-year-old, to be able to

:52:16. > :52:20.differentiate those people who want to drive their vehicle from and to

:52:21. > :52:23.work or college and those who want to drive it with six people rammed

:52:24. > :52:29.in it at three o'clock in the morning is impossible without

:52:30. > :52:36.interventions such as the telematics boxes that marmalade are presenting.

:52:37. > :52:41.So you are saying young people should take the brunt of this

:52:42. > :52:44.change? I am not saying that at all, I would rather the change hadn't

:52:45. > :52:48.happened at all but what I'm saying is people who are coming into the

:52:49. > :52:54.insurance pool should pay a premium appropriate to the risk they bring.

:52:55. > :52:59.I just wanted to follow up to one of the very end questions we had on the

:53:00. > :53:06.figures and how we get these extremely high cost of 4,500. I am

:53:07. > :53:09.grateful for the tables as to the average premiums, average claims and

:53:10. > :53:15.the frequency in age groups but when I look at that, the youngest and

:53:16. > :53:20.riskiest group, the average premium, ?993, is a fraction of ?4500 that

:53:21. > :53:24.people have claimed, so how do we get to that and what is the actual

:53:25. > :53:29.range of premiums people are paying if the average is that and others

:53:30. > :53:34.are paying 4,500. Are they getting free insurance at one end and deals?

:53:35. > :53:38.As a follow-on to that, I will give it all at one time, the bit that

:53:39. > :53:44.interests me with the information we got from the EBI is the profit

:53:45. > :53:47.margin on the different age ranges that the companies make, is that

:53:48. > :53:54.consistent across all ages or is there a variation in that as well? I

:53:55. > :53:56.don't have information about the profit on particular lines of

:53:57. > :54:02.business, that would be very commercially sensitive information

:54:03. > :54:07.for each individual insurer. Going to your first question on averages,

:54:08. > :54:10.averages are by definition an average, so there will be people who

:54:11. > :54:16.pay lower car insurance premiums and people who pay higher. There are a

:54:17. > :54:20.whole range of ways that young drivers can reduce their car

:54:21. > :54:27.insurance premium. For example, they can drive smaller cc cars, they can

:54:28. > :54:31.spend a lot of time thinking about telematics and the increase uptake

:54:32. > :54:36.of telematics through mobile phone technology has helped reduce car

:54:37. > :54:43.insurance premiums for young drivers, but my point is the average

:54:44. > :54:48.is the average. We talked about this earlier, in the previous session,

:54:49. > :54:52.but the rate of reduction in risk with age is very significant. So in

:54:53. > :54:55.the age range we have got there, the 18-year-olds, at the beginning of

:54:56. > :55:03.the age range and of course there are 17-year-olds driving legally in

:55:04. > :55:06.cars, it goes down very quickly. Other things that reduce risk length

:55:07. > :55:11.of time driving, surpassing your driving test and not buying your

:55:12. > :55:14.first insurance on your own vehicle until a year later makes a huge

:55:15. > :55:20.difference to the premium you will pay, so that is why you are getting

:55:21. > :55:24.that shape in those averages. In terms of the average profit margin,

:55:25. > :55:27.Ike then I can't speak to the market, but I can make an

:55:28. > :55:30.observation about the market and that is that the motor insurance

:55:31. > :55:36.market has only made money as a market in years out of the last 20

:55:37. > :55:40.years and only Maka the late actually, some of those profits will

:55:41. > :55:43.be wiped out by yesterday's announcement -- and actually. The

:55:44. > :55:46.other fact is that the younger drivers, the market, if it is not

:55:47. > :55:49.telematics, is becoming smaller because more and more insurers are

:55:50. > :55:54.finding themselves unable to make any profit at all, even at those

:55:55. > :55:58.very large premiums. I think the difficulty the young drivers is the

:55:59. > :56:02.claims ratios there are ten times more likely to have an accident and

:56:03. > :56:06.for that accident to be more costly, so our members to give lots of

:56:07. > :56:10.advice as to why there are different averages you can hear and they would

:56:11. > :56:17.be about driving a more modern car with autonomous emergency braking

:56:18. > :56:23.and using telematics policies. Our latest ads show over 750,000 live

:56:24. > :56:27.policies exist with a telematics box or downloadable app and those are

:56:28. > :56:37.about 25% cheaper. When you are a young driver, our experts who work

:56:38. > :56:41.in telematics show that you are half as likely to have an accident in

:56:42. > :56:44.your first year of driving and ten times less likely in your first six

:56:45. > :56:47.months one of the recommendations we have in this committee is to

:56:48. > :56:51.consider having an IPT insurance tracks premium rate of zero for

:56:52. > :56:57.those young drivers that are prepared to have a telematics box in

:56:58. > :57:01.their car. An average premium of ?1500, the IPT rate having doubled

:57:02. > :57:07.over an 18 month period, is going from 6% up to 12%, meaning their IPT

:57:08. > :57:11.is going from ?90 to 180,000 we have done the cost benefit analysis with

:57:12. > :57:15.others in the industry and this shows that there is going to be a

:57:16. > :57:21.?212 million saving to Government over a seven-year period, about

:57:22. > :57:24.1,000 killed, serious injury and accidents could be averted if you're

:57:25. > :57:28.drivers could be given support in going to have a telematics box

:57:29. > :57:32.Allsopp so perhaps one recommendation we all could consider

:57:33. > :57:36.is zero rate IPT for telematics. And I think in the long-term, bearing in

:57:37. > :57:41.mind what massive affect the discount rate is having, it will we

:57:42. > :57:45.very helpful if the Chancellor in the budget next week was to agree to

:57:46. > :57:47.freeze insurance premium tax for this term our parliament because of

:57:48. > :57:58.so much pressure on young drivers and motorists. Included in the cost

:57:59. > :58:04.of telematics and insurance, there was the cost of the box, the cost of

:58:05. > :58:10.the software, is there at the 8020% on that? So for an average premium

:58:11. > :58:20.of ?1500, the Government is taking ?215. -- is their VAT of 20%. So

:58:21. > :58:25.young people really are being penalised by this, combination of

:58:26. > :58:31.the two, VAT and IPT on top of the VAT.

:58:32. > :58:35.Many of the respondents to our online survey fed back that they

:58:36. > :58:41.felt the high cost of car insurance for young people was often based on

:58:42. > :58:45.a stereotype, so I wonder what more the insurance industry could be

:58:46. > :58:52.doing to explain to the public why insurance is so high and also what

:58:53. > :58:55.more they could be doing to demonstrate to young people how they

:58:56. > :58:59.can reduce the costs of their insurance. I think our insurance

:59:00. > :59:02.brokers would be very keen to work with customers and explain how it

:59:03. > :59:06.works and the many things they can do to bring their costs down. The

:59:07. > :59:09.insurance industry collectively all pay towards the money advice

:59:10. > :59:14.service, which is part of our regulatory body, or connected to it,

:59:15. > :59:19.which is supposedly there to give insurance customers advice. That is

:59:20. > :59:22.being replaced by the single financial guidance body and the

:59:23. > :59:25.consultation that has just come out has no mention of insurance in it,

:59:26. > :59:29.so I think there is a lack of advice from Government when it comes to

:59:30. > :59:34.insurance but I think the industry are very keen to help and talk

:59:35. > :59:42.through all the things young drivers can do, telematics, dash cam is in

:59:43. > :59:45.your car, we have a find a broker service which helps over a quarter

:59:46. > :59:50.of a million people every year, including many young drivers, to a

:59:51. > :59:54.suitable broker who specialises in young drivers or telematics. So

:59:55. > :59:58.there is a lot we can do and we are very happy to work with you to do

:59:59. > :00:02.that. If I can add to that, one of the things the ABI has been

:00:03. > :00:07.campaigning for the many years is graduated drivers licenses, picked

:00:08. > :00:14.up in the previous panel. The evidence to support internationally

:00:15. > :00:17.the benefits of the introduction of them is overwhelming, it has been

:00:18. > :00:20.tried and tested in many jurisdictions under this is a

:00:21. > :00:25.publication from September 2012 that we produced, trying to campaign, to

:00:26. > :00:29.improve the road safety outcomes of young people, which, as a result,

:00:30. > :00:35.will reduce their car insurance premiums. It is absolutely critical

:00:36. > :00:38.as a piece of regulatory intervention to improve the

:00:39. > :00:42.catastrophic nature of some of the death and injury that we see on the

:00:43. > :00:43.roads and as I said, reduce car insurance premiums as a result of

:00:44. > :00:54.that. One of the things that we do is that

:00:55. > :00:57.we ensure we have a parent and young driver on the policy so we can

:00:58. > :01:04.afford both of them if they both drive badly. We have a team that

:01:05. > :01:10.specialises and looking at the journeys and if both drivers are

:01:11. > :01:13.driving badly, they can get together and talk about where the problems

:01:14. > :01:17.lie. We have also been doing learner driver insurance. We give reductions

:01:18. > :01:21.for that. The more practice they get, when they are learning to

:01:22. > :01:24.drive, the better. I had accompanied the other day with some driving

:01:25. > :01:34.instructors who are insisting that that pupils to 2000 miles of private

:01:35. > :01:38.practice in addition to lessened and they have proven that the accident

:01:39. > :01:45.levels are less. Practice, practice, practice, these one-week intensive

:01:46. > :01:50.courses, if I had my way, I would stop them immediately. You can pass

:01:51. > :01:57.a test in a week but you have got no experience and those people are

:01:58. > :02:01.having accidents. It is the most important factor, on whether they

:02:02. > :02:06.are going to cause accidents. The thing I observed within drivers in

:02:07. > :02:10.their driving training is more up-to-date than yours on mine, their

:02:11. > :02:17.reaction and reflexes are better but we often see for worse experiences.

:02:18. > :02:19.So part of that is explained by our experience of different road

:02:20. > :02:23.conditions, we are used to it, but a lot of it is the attitude, how you

:02:24. > :02:31.choose to pay by the wheel. The best way is to understand that by

:02:32. > :02:36.observing the driving by some kind of telematics device fitted to the

:02:37. > :02:42.phone or vehicle. I am interested in what you are saying, we do therefore

:02:43. > :02:48.recommend more experience be required before you pass a test?

:02:49. > :02:54.Without any shadow of a doubt. Like getting a pilot license, you need

:02:55. > :02:57.your driving hours? Yes, this group of driving instructors are refusing

:02:58. > :03:04.to take on pupils under the parents agree. Agree to the child doing the

:03:05. > :03:11.minimum they said 2500 miles of practice. Obviously, that creates

:03:12. > :03:16.difficulties for young people that do not have parents that can provide

:03:17. > :03:21.that support. True, true, but at the end of the day, they would rather

:03:22. > :03:23.not have the children maimed or killed, that is the point. The pilot

:03:24. > :03:32.entry killed, that is the point. The pilot

:03:33. > :03:35.-- we have had evidence saying that the premium tax is regressive on

:03:36. > :03:41.young people, we know that you agree, I wanted to see if you all

:03:42. > :03:44.agreed with the suggestion that there is a case for amending the

:03:45. > :03:58.insurance premium young people tax rate. Yes. Absolutely and it is

:03:59. > :04:09.certainly regressive. We have already had evidence on the relation

:04:10. > :04:12.that telematics can have on reducing premium tax, have you had a thought

:04:13. > :04:19.on how that might impact on all young drivers, both those who agree

:04:20. > :04:22.to get the telematics and therefore get potentially a reduction in

:04:23. > :04:25.insurance premium tax, and the general market for young people,

:04:26. > :04:35.those who do not have telematics devices? Insurance is about

:04:36. > :04:38.risk-based prices, so the evidence that is presented to you, you will

:04:39. > :04:42.then feed the premium back. If they do not have the telematics box, they

:04:43. > :04:47.will have a standard premium, but those who are prepared to moderate

:04:48. > :04:50.their driving behaviour, not break the speed limit, they would be

:04:51. > :04:54.awarded with a cheaper rate because that risk is reduced. The claims

:04:55. > :04:57.will be lower. We do not need to collect that amount of premium. We

:04:58. > :05:07.do not see any negative effects on those drivers that are not choosing

:05:08. > :05:15.to go to telematics. We looked at the figures every year, there is a

:05:16. > :05:22.40% increase on a year ago, so I think the spy in the car words that

:05:23. > :05:29.the only male uses, I think that is passed. -- that the Daily Mail

:05:30. > :05:34.users. I think more and more children use it. And I think parents

:05:35. > :05:37.like it because they can look at the dashboard and see how the child is

:05:38. > :05:40.driving and they are prepared to pay the premium. I think it is

:05:41. > :05:45.responsible and it has definitely become more popular. One of the

:05:46. > :05:53.things to emphasise is that the public policy outcome that we should

:05:54. > :05:57.the -- we should be striving to get here is to improve the young

:05:58. > :06:04.people's Mac driving. Telematics is one way of getting that end point.

:06:05. > :06:10.We should not lose site of making sure the get to that end point to a

:06:11. > :06:14.whole range of policy interventions. The increase of telematics,

:06:15. > :06:17.absolutely, but let's get to the end point of improving road safety

:06:18. > :06:20.outcomes. The absolutely clear international evidence is through

:06:21. > :06:24.the introduction of graduated driving licensing.

:06:25. > :06:31.The insurance sector also always says that the high cost of premiums

:06:32. > :06:36.is to do with fraud. Our young people being unfairly penalised? How

:06:37. > :06:40.much of the premium charge to young people is to do with fraud that they

:06:41. > :06:48.have committed rather than fraud in the whole sector generally? Fraud is

:06:49. > :06:51.a significant costs and the way that fraud gets allocated in a premium is

:06:52. > :06:58.similar to the way that claims cost allocated. You associated with the

:06:59. > :07:02.risk factors that people bring. You do not seek propensity for fraud

:07:03. > :07:08.between customers who are 18 to 25 other than the fraud that the RAC

:07:09. > :07:14.foundation talked about, fronting, Mr presenting risk. And often that

:07:15. > :07:22.-- misrepresenting risk. And that is often inadvertent, think Mum as the

:07:23. > :07:28.main driver and overtime it becomes the child's vehicle. In deliberate

:07:29. > :07:31.fraud, cash for crash for example, we do not see that associated with

:07:32. > :07:36.young drivers. Are you saying that the cost of insurance premiums for

:07:37. > :07:39.young people, there is no evidence that that is his due to fraud in

:07:40. > :07:45.your car collisions? There will be some fraud in there but the

:07:46. > :07:50.propensity for fraud is in other age groups. Is that related to fraud

:07:51. > :07:53.amongst young drivers or more generally? Young drivers are not

:07:54. > :07:57.that associated with fraud. If you look at the cases where fraud is

:07:58. > :08:03.found it is typically people involved who are over the age of 25.

:08:04. > :08:06.We have found the same thing for applications for 17, 18,

:08:07. > :08:09.19-year-olds, fraudulent applications are very low. I am

:08:10. > :08:13.trying to establish whether those high premiums for young people

:08:14. > :08:19.include an element for fraud to do with young people rather than fraud

:08:20. > :08:25.generally. It will include an element of fraud that is to do with

:08:26. > :08:28.young people, not other drivers. The biggest cost are fraudulent whiplash

:08:29. > :08:32.claims from claims management companies who are not currently

:08:33. > :08:36.regular kid by the SCA but are due to be and we are waiting for the

:08:37. > :08:42.bill so I would encourage you to get that. -- they are not currently

:08:43. > :08:46.regulated. That whiplash claim cost is spread over everyone of every age

:08:47. > :08:52.range. So we are very happy to see some bills introduced which will aim

:08:53. > :08:56.to reduce the cost of fraudulent claims. In the past, the insurance

:08:57. > :09:00.industry had said that if changes were made in relation to whiplash

:09:01. > :09:05.claims, premiums would come down and has not happened. It has not become

:09:06. > :09:08.an act yet. This was promises made before when other changes were made.

:09:09. > :09:14.The transport committee look at this issue and a clear promise was made

:09:15. > :09:16.by the insurance sector that if certain recommendations were

:09:17. > :09:22.followed the cost of the premiums would come down and that has not

:09:23. > :09:25.happened. We saw the sentencing and punishment of offenders act, when

:09:26. > :09:30.those changes were made, there were some changes to read insurance

:09:31. > :09:34.premium, which was at -- Road insurance premiums which was

:09:35. > :09:39.downwards, but since then whiplash claims have accelerated and the cost

:09:40. > :09:44.on the industry has been enormous. What we are seeing, and what George

:09:45. > :09:50.Osborne previously announced in the budget for that Karren Brady would

:09:51. > :09:57.do an independent review of the claim management companies, that is

:09:58. > :10:05.coming to fruition. The main changes that can be made to costs has not

:10:06. > :10:13.been in acted. Aviva has said publicly that would be ?40 of

:10:14. > :10:17.people's insurance, and once that is enacted, that will happen. We will

:10:18. > :10:21.see if it happens. I understand in the US, because the

:10:22. > :10:30.insurance market is more heavily regulated, vices are based on

:10:31. > :10:33.actuary evidence, so there is a requirement that the price follows

:10:34. > :10:37.the risk which is determinative whereas the UK has not got this. The

:10:38. > :10:42.difficulty is, coming back to the difficulty is, coming back to

:10:43. > :10:44.employment checks, we think something may happen but it does

:10:45. > :10:47.not, because you come up with the price without having to demonstrate

:10:48. > :10:52.it is absolutely following risk. That is why I come back to this

:10:53. > :10:56.point, why does it cost so much for young people. That is true, my

:10:57. > :11:03.understanding is that in most states the price is regulated and the way

:11:04. > :11:08.to get the costs decided is to prove that the statistics are working as

:11:09. > :11:12.required. Shouldn't we have the same thing in this country so we can

:11:13. > :11:17.absolutely tell that the price is based on risk as evidence, rather

:11:18. > :11:21.than your industry saying this is the cost? I think there is a lot of

:11:22. > :11:24.evidence that price regulation is a barrier to competition in those

:11:25. > :11:28.markets. In the UK with price comparison website, we have the most

:11:29. > :11:32.competitive insurance market in the world and that in itself will act as

:11:33. > :11:36.the pressure valve which make sure that nobody tries to make too much

:11:37. > :11:42.profit on young drivers. If anyone can see a way of ensuring driver who

:11:43. > :11:49.is young more cheaply, they will bring down the price, which is why

:11:50. > :11:52.the telematics have been so successful, as soon as someone did

:11:53. > :11:57.it, the prices came down and the market starts to grow and become

:11:58. > :12:04.competitive. It taken to another point, because we do not know. In

:12:05. > :12:11.years come by, it is assumed that young drivers are risky because they

:12:12. > :12:15.are inexperienced and more foolish and less mature. And now older

:12:16. > :12:19.drivers playing around with gizmos inside their cars, more technology

:12:20. > :12:24.around you, strikes me that our aged traffic has changed and we are all

:12:25. > :12:26.more naive. But it is still weighted towards young people

:12:27. > :12:30.disproportionately. Because we cannot get to the evidence on it, I

:12:31. > :12:37.struggle to understand whether it is the case or not. I do not dig it is

:12:38. > :12:39.disproportionate, the risk is, the premium goes where the risk is

:12:40. > :12:44.presented. I take your point that a cart as an environment is coming

:12:45. > :12:49.more distracting and that causes accidents but in terms of the data

:12:50. > :12:52.and what we see, we do not seek that older drivers are being distracted

:12:53. > :12:56.and having many more accidents. In fact the frequency of accident in

:12:57. > :13:01.general in the UK is coming down over time. The place where you see

:13:02. > :13:04.an increase in risk is at very old age is where it is difficult to

:13:05. > :13:08.predict where somebody will become less able to control their vehicle.

:13:09. > :13:15.Another point is that the cost of care long-term for a young driver

:13:16. > :13:22.for the next 50 years, it is going to cost an insurer much more than an

:13:23. > :13:27.older driver. That is a key factor on why it will cost so much more. In

:13:28. > :13:36.particular we have been discussing calls for a cap on current rents for

:13:37. > :13:41.18-25 -year-olds. -- on car insurance. Why do you think that is

:13:42. > :13:44.a bad idea? I think the cost will be hot on to other motorists which I am

:13:45. > :13:48.sure they would not agree with. When we looked at the online survey that

:13:49. > :13:52.this committee were involved in, we saw many respondents saying they

:13:53. > :13:58.they did not want the cost part onto them. We also believe that there is

:13:59. > :14:03.no incentive for risk management, so young drivers could get high-powered

:14:04. > :14:09.cars, drive badly, get convictions, and still get a cap premium which is

:14:10. > :14:12.not sensible. The other point is that some insurers would say it is

:14:13. > :14:16.not affordable, it will cost them far more in claims and they are not

:14:17. > :14:24.going to provide capacity for young drivers any more. That is very

:14:25. > :14:27.strong reasons from a perspective. Touching on telematics, you have all

:14:28. > :14:32.given anecdotal evidence about how telematics improve driver behaviour,

:14:33. > :14:38.particular in younger drivers, but what evidence exists? The Road

:14:39. > :14:43.safety foundation did some research with an insurance company and a

:14:44. > :14:47.broken member, and the evidence they have had has produced a report which

:14:48. > :14:55.I have -- a member who is a broker, it hasn't juiced a report I -- has

:14:56. > :15:03.produced a report J have here. There is a 40% reduction in crash risk

:15:04. > :15:08.which is most welcome. The cost benefit analysis was done and it

:15:09. > :15:13.showed that if you could reduce the rate to zero over a seven-year

:15:14. > :15:21.period, there was a ?699 million benefit for that. Because of the few

:15:22. > :15:26.incidents, 1000 fewer serious incidents, the cost for the

:15:27. > :15:31.government losing taxes ?487 million so there is a net profit for the

:15:32. > :15:33.government. There is accosted analysis. I know that Marmalade has

:15:34. > :15:43.some positive statistics as well. One in 16 have an accident in the

:15:44. > :15:50.first six months, rather than the one in five over the national

:15:51. > :15:55.survey. We send e-mails out at 2.00am so they have it when they

:15:56. > :16:00.wake up and found both drivers registered on the policy, and can

:16:01. > :16:06.say if one is driving badly. 99% of the time we are getting support from

:16:07. > :16:10.the parent and it is sorted out. Occasionally we don't, some parents

:16:11. > :16:14.seem oblivious to what their little darlings are doing. One recently

:16:15. > :16:22.told us that the system was not calibrated to her son's style of

:16:23. > :16:26.driving! But what was worse, 48 hours later, he wrote off two cars.

:16:27. > :16:32.Oh, dear. This is positive but what I would be

:16:33. > :16:38.interested to know is why, according to the survey, 46% of those that had

:16:39. > :16:44.telematics so a decrease or reduction in the insurance premium?

:16:45. > :16:49.Ours are significantly reduced. On renewals, we are down to an average

:16:50. > :16:54.of 40% of the first year's premium, we have gone up to 66% in some

:16:55. > :16:58.cases. So we do look at how they have been driving and work it out at

:16:59. > :17:02.the end of the year. If you are driving well, the premium is down.

:17:03. > :17:09.. There are three times of the system. The mileage base, the lower

:17:10. > :17:14.miles, the curfew based system, where if you drive at night it costs

:17:15. > :17:17.more and the behaviour base, the acceleration, the breaking and G

:17:18. > :17:23.force and general behaviour over speeding. It depends on the system

:17:24. > :17:29.you have as to what is suitable. If you run a night shift you don't want

:17:30. > :17:33.the curfew policy. But I agree with Nick, in that the telematics, they

:17:34. > :17:39.show a higher success rate than the one you mentioned. They give the

:17:40. > :17:44.customers the discounts for the better driving ratio.

:17:45. > :17:50.The fact you have chosen to have the box in the vehicle, it is means that

:17:51. > :17:54.your starting premium is lowered. So for the curfew, that is fixed for

:17:55. > :17:59.the policy year unless you break the curfew. That is part of the deNamic

:18:00. > :18:05.that is happening there. We found we did it to begin with,

:18:06. > :18:11.and we found that kids were rushing back in the evening. We found a

:18:12. > :18:15.number of young people who are trying to get part time jobs to pay

:18:16. > :18:20.for the cars to pay for insurance. They are working in restaurants in

:18:21. > :18:26.the evening, McDonald's, they have to get home. We found they are more

:18:27. > :18:31.responsible. The once we found the worst are the once where the parents

:18:32. > :18:37.give them everything on a plate. What work is being done so that

:18:38. > :18:42.telematics does not penalise part time workers, people working night

:18:43. > :18:48.shifts, nurses, careers who don't have a choice to work night shifts.

:18:49. > :18:50.We don't penalise for that at all. Sadly, many still do.

:18:51. > :19:06.Many do, yes. There are insurance policies selling

:19:07. > :19:09.fewer units, the behaviour ones give the driver control over elements of

:19:10. > :19:15.their people yum, which is what we are after.

:19:16. > :19:21.What we found is that the level of single vehicle accidents by having a

:19:22. > :19:26.telematics box, looking into the acceleration, going into corners,

:19:27. > :19:31.heavy braking, stopping that reduces single vehicle accidents hugely.

:19:32. > :19:43.Three years ago we had 16 in a year, the following year we had one.

:19:44. > :19:46.That issue about driver behaviour, I had an advanced driving lesson to

:19:47. > :19:52.teach me to drive economically, to get the most out of fuel that

:19:53. > :19:57.involved things like slowing down, reading the traffic in advance,

:19:58. > :20:00.making sure I did not speed up and slap on the brakes at the Lewis

:20:01. > :20:05.Hamilton, all of those sorts of things but if we were to do more in

:20:06. > :20:10.the driving instruction, before people pass their tests, to teach

:20:11. > :20:15.them more about the economics of driving, given that fuel is a

:20:16. > :20:20.significant cost in driving, would that assist in reducing the number

:20:21. > :20:23.of accidents especially amongst young drivers by improving their

:20:24. > :20:29.behaviour as they are understanding the machine that they are driving

:20:30. > :20:34.more and more sympathet click. It would but they don't tend to look

:20:35. > :20:40.at the cost that much. That's why we are here? Yes but they don't look at

:20:41. > :20:44.the cost of the future. You and I know if we drive sensible, you get

:20:45. > :20:48.more miles to the gal on but many don't take that into consideration

:20:49. > :20:57.as much as we would like them to. You are right. A member of ours from

:20:58. > :21:00.the AA, who does drivers courses, can show a speed awareness course,

:21:01. > :21:04.the learnings from those are fantastic. We believe that if they

:21:05. > :21:08.could be put into the driving test process, it would help.

:21:09. > :21:12.Northumberland police ran a survey on people that are taking the

:21:13. > :21:19.courses and erevisiting them a year later to see if it has stuck. And

:21:20. > :21:26.the frequent results are that 78% of the people on the course are more

:21:27. > :21:30.likely to keep to the speed limit. 91% learn something new and 96% say

:21:31. > :21:35.that the courses should be offered to others. Our view is not to offer

:21:36. > :21:39.it after they have offended and risked lives but to put it into the

:21:40. > :21:45.driving test to prepare people before they are out there, that will

:21:46. > :21:52.mean fewer claims and cheaper premiums for the young drivers.

:21:53. > :22:01.The RAC Foundation Suggs that premiums could be reduced by

:22:02. > :22:05.introducing driving education -- RAC fun deportation suggestion that

:22:06. > :22:08.premiums could be reduced by introducing driving education, what

:22:09. > :22:12.is your thought on that? It is important for the committee to focus

:22:13. > :22:17.on the quality of the learning that takes place before the test, and the

:22:18. > :22:22.number of accidents that happen afterwards. The evidence suggests

:22:23. > :22:28.that we don't have a robust testing and training system in this country.

:22:29. > :22:32.So picking up the RAC's point and to the nub of your question, I think we

:22:33. > :22:37.must grapple getting a driving test that is fit for purpose, that

:22:38. > :22:42.exposes young people to the variety of different driving conditions that

:22:43. > :22:47.they are likely to experience, especially in the first six months

:22:48. > :22:53.post passing their test when we know that they are most likely to have an

:22:54. > :22:58.accident. So getting the test right, challenging them in the test, to

:22:59. > :23:04.expose them to the raft of driving conditions is critical.

:23:05. > :23:14.And a consequence consequence is allowing people to drive on a

:23:15. > :23:18.younger age but driving with the education post qualification.

:23:19. > :23:23.And we spoke about a driving licence, how much could, or should a

:23:24. > :23:29.young driver expect to save on their car insurance by taking such a

:23:30. > :23:34.course? . There is a document here from 2012, I think from memory we

:23:35. > :23:41.were talking about a 20% reduction on the average premium. So that is a

:23:42. > :23:51.significant cost saving when the premiums are so high.

:23:52. > :23:59.Alt Christmas we were in Israel, we were visiting a company, if I pull

:24:00. > :24:08.out of a lane without indicating, there are sirens that go off in the

:24:09. > :24:14.car. What cost savings could younger people have if they have those

:24:15. > :24:24.alarms in the cars? It is recognised by the industry. The car group give

:24:25. > :24:29.ratings to the car. Where there are vehicles fitted with certain

:24:30. > :24:36.technologies, emergency braking, they tend to rate the car groups and

:24:37. > :24:42.that is reflected in the premium. It is taken into account. It is in the

:24:43. > :24:45.newer vehicles, and the more promotion of that, the more support

:24:46. > :24:51.we can give. And the brand I mentioned, Mobili,

:24:52. > :24:57.there can be a retro fit, where it does not brake for you but can give

:24:58. > :25:06.you a warning, which the evidence suggests, that is helpful to cause

:25:07. > :25:12.less damage as possible. Will this reduce the premium? It is

:25:13. > :25:18.something it is harder than if it is fitted from new. As you must be sure

:25:19. > :25:23.as to how and who has fitted it. But there are insurance brokers who

:25:24. > :25:28.consider that. Dash cams and such, so it is something that we can help

:25:29. > :25:35.with. But the problem with that is it puts the cost up. The insurance

:25:36. > :25:38.premium may come down but they have had to pay ?1,000 to get the

:25:39. > :25:43.technology. How much could the premium come

:25:44. > :25:52.down? I don't know. But if it came down by 10%, you are saving on

:25:53. > :25:59.?4,000, you are saving ?400 but it costs ?1,000 for the technology.

:26:00. > :26:05.In four or five years' time it will be not a bolt on but an essential

:26:06. > :26:11.item, and I suppose that the point is will we see the insurance

:26:12. > :26:16.premiums fall or is it something that will be built into the price?

:26:17. > :26:19.There is a package with the manufactures where they give us a

:26:20. > :26:23.discount that pays for the insurance. Those cars with all of

:26:24. > :26:30.this on, the cost of the insurance is considerably less.

:26:31. > :26:34.We are seeing that frequency of coming down that is great. Of course

:26:35. > :26:38.if the cost of paying the claims is going up, that is an off setting

:26:39. > :26:42.factor. Or like the previous promises that

:26:43. > :26:47.the sector made that something was going to come down, it didn't, it is

:26:48. > :26:52.because another factor went up? If we were making money in the market,

:26:53. > :27:00.I would have sympathy but we are not.

:27:01. > :27:02.Mrs Olsson? The really important thing to remember is that the

:27:03. > :27:08.technology that you are talking about tends to be in cars at the

:27:09. > :27:13.higher end. Those are the cars that young drivers tend not to be

:27:14. > :27:19.driving. As time goes on, you will see those cars entering the fleet as

:27:20. > :27:24.they are sold on to second-hand cars and those young people will drive

:27:25. > :27:29.the cars with that technology and the premiums will reduce as a

:27:30. > :27:38.result. But at the moment those cars are at the higher end of the market.

:27:39. > :27:43.A new fiesta still costs ?14,000, the cars with the technology it is

:27:44. > :27:46.about ?21,000. That is a lot of money for a young

:27:47. > :27:52.person. It is but it is all relative. It

:27:53. > :28:08.will come down. I want to get this on the record

:28:09. > :28:14.that the person that created the petition, said: Why don't we make

:28:15. > :28:20.the drivering test better? What are your thoughts on that. I agree. That

:28:21. > :28:27.issue about semiautonomous vehicles, I don't think we will have them as

:28:28. > :28:33.you will never pay out on them. But the if we are to have the

:28:34. > :28:37.semiautonomous vehicles you must have done some research and market

:28:38. > :28:43.research into what the impact that is going to be on your market?

:28:44. > :28:47.Inevitably, once these cars become safers and there are fewer

:28:48. > :28:51.accidents, so what assessment have you made of the impact of

:28:52. > :28:56.semiautonomous vehicles on your market? There is lots of evidence to

:28:57. > :29:04.say that the utility of motoring insurance as we see it will be

:29:05. > :29:09.reducing over time. The timescale is the very first autonomous vehicle,

:29:10. > :29:14.avoiding accidents, could be five years away at the very top end, then

:29:15. > :29:21.another ten years to go through the car pool to the lower models and

:29:22. > :29:27.another 10 years for a replacement of vehicle, so that sort of

:29:28. > :29:31.timescale of 25 years. But what will also happen, rather than people

:29:32. > :29:38.being worried about accidents killing and injuring people, and may

:29:39. > :29:43.that day come quickly, people are worried about getting to one place

:29:44. > :29:46.in a certain of time, and the nature of all of that will change in 25

:29:47. > :29:54.years. That is interesting. So, basically,

:29:55. > :29:59.if you were in charge of the Government and heaven if forbid if

:30:00. > :30:08.the insurance companies were in charge of the Government but what

:30:09. > :30:16.would you do for the premiums to be reduced for young people? We have a

:30:17. > :30:22.plan for young drivers with telematics, the improvements to the

:30:23. > :30:27.driving tests as mentioned. Greater promotions of the driver advance

:30:28. > :30:36.systems, promotions from the single guidance body from the Government.

:30:37. > :30:41.Advanced driving courses. And getting the whip lash bill through,

:30:42. > :30:46.that will have a massive effect on the premiums. The discount rate that

:30:47. > :30:54.we saw yesterday, that must be looked at and reviewed. And finally,

:30:55. > :30:57.the insurance form taskforce had 26 recommendations to reduce insurance

:30:58. > :31:03.fraud and we need Government to help work us through with that. What can

:31:04. > :31:08.the insurance sector do? It is recognising all of these things. We

:31:09. > :31:14.are sitting with the Government groups with the Department for

:31:15. > :31:17.Transport, the Treasury, giving new products for discounts for

:31:18. > :31:21.autonomous emergency braking and telematics. So the insurance

:31:22. > :31:26.industry is in 2 with the Government, this is a public/private

:31:27. > :31:28.partnership to get the premiums as competitive as we can for the young

:31:29. > :32:00.drivers. Thank you very much. Order. Order.

:32:01. > :32:06.Order, order, thank you very much for coming to see us. As you can see

:32:07. > :32:11.by looking in our direction, the whole committee without exception is

:32:12. > :32:12.operated take