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Order, order. Good afternoon and welcome to the committee. Could you | :00:27. | :00:34. | |
give us your name and organisation? Good afternoon, my name is Elizabeth | :00:35. | :00:42. | |
Box, I am head of research at the RAC Foundation. Nigel Dotchin, and I | :00:43. | :00:44. | |
chaired the Wheels two Work Association. In a survey of people | :00:45. | :00:53. | |
who have signed this petition, we were told that the cost of car | :00:54. | :01:00. | |
insurance is a great bar to people's access to insurance, do you agree | :01:01. | :01:03. | |
with that and is it particularly young people or people generally? We | :01:04. | :01:08. | |
would certainly say with the evidence that we have seen that it | :01:09. | :01:11. | |
is a significant issue for young people. People of all ages but | :01:12. | :01:16. | |
certainly young people and the issue of the cost of insurance. Some of | :01:17. | :01:20. | |
the work that we have done found that looking at the Department of | :01:21. | :01:27. | |
the work and pensions database, one in five job advert required people | :01:28. | :01:31. | |
to have access to the vehicle. And in the apprenticeship database, it | :01:32. | :01:36. | |
is one in six. Given that young people trying to access employment, | :01:37. | :01:41. | |
that is a big issue. 63% of people travel to work by car. It is higher | :01:42. | :01:49. | |
in rural areas. It is a big issue. It is particularly an issue for | :01:50. | :01:54. | |
rural areas? Yes but we also see it in city areas as well, so in London, | :01:55. | :02:00. | |
we know that about 22% of 17 to 34-year-old needs to travel to work | :02:01. | :02:05. | |
by car. It is not just a rural issue. What help can employers give | :02:06. | :02:12. | |
in this situation? Would either of you like to talk on that? To follow | :02:13. | :02:19. | |
up on that question, I would support Elizabeth on what she said on the | :02:20. | :02:23. | |
cost of insurance and the cost of driving generally being a factor in | :02:24. | :02:27. | |
determining whether people can access work, implement and training. | :02:28. | :02:35. | |
That is why Wheels two Work Association was set up in the first | :02:36. | :02:43. | |
place, to provide an affordable form of transport for people, | :02:44. | :02:46. | |
particularly in rural areas but not just there, to access those areas. | :02:47. | :02:49. | |
There is a range of issues that come into play which determine whether | :02:50. | :02:55. | |
one can access your place of work or whatever it is. Insurance clearly | :02:56. | :02:59. | |
comes out of the evidence we have that it is one of the factors but | :03:00. | :03:02. | |
not the only one. In terms of whether employers can help, it is a | :03:03. | :03:08. | |
difficult one, some employers will provide help individually if they | :03:09. | :03:15. | |
are keen to take on board young people in their employment, but I | :03:16. | :03:23. | |
fixed the challenge is the fact that if an employer is fated to people, | :03:24. | :03:27. | |
one of whom can drive and one who cannot, the chances are they will | :03:28. | :03:33. | |
offer the employment to the person who has access and is able to drive. | :03:34. | :03:39. | |
Some of the petitioners who responded to the survey have said | :03:40. | :03:44. | |
that the price of car insurance does make it difficult for them to access | :03:45. | :03:50. | |
education or training. So to what extent do you think in particular | :03:51. | :03:55. | |
the cost of car insurance affect their ability to access this? We | :03:56. | :04:01. | |
certainly know from the RAC report that was done last year that people | :04:02. | :04:04. | |
said the cost of car insurance generally is a big concern and it is | :04:05. | :04:08. | |
rising up the agenda over the last few years. Now people say the most | :04:09. | :04:14. | |
important thing is road maintenance, then people using mobile phones in | :04:15. | :04:19. | |
cars, then car insurance is often that, so people think it is a | :04:20. | :04:24. | |
concern. -- car insurance is after that. The premium tax has been | :04:25. | :04:31. | |
raised recently, hired than the rest of Europe, and with the discount | :04:32. | :04:35. | |
rate analysis today, it will be even harder for young people to get car | :04:36. | :04:43. | |
insurance. You mentioned a figure that one in five job adverts, one in | :04:44. | :04:48. | |
six then shipped adverts, require access to a car. Are you aware of | :04:49. | :04:53. | |
any help that is available to try and support young people with access | :04:54. | :05:00. | |
to a car and the affordability of car insurance in order to try and | :05:01. | :05:04. | |
meet those requirements? I am not aware of any apart from the very | :05:05. | :05:09. | |
good Wheels To Work Association programmes which occur in part of | :05:10. | :05:17. | |
the country which is more about motorcycle usage for people to get | :05:18. | :05:24. | |
to work so that they can purchase their own. I am not aware of any | :05:25. | :05:28. | |
schemes either that help young people which is why Wheels To Work | :05:29. | :05:32. | |
Association is out there, to provide an alternative to people who cannot | :05:33. | :05:40. | |
afford to buy a car, run a car or access public transport, it may be | :05:41. | :05:43. | |
not there or may not run at a time they want or it may not be | :05:44. | :05:47. | |
affordable. What Wheels To Work schemes do is provide an opportunity | :05:48. | :05:55. | |
to get access to a relatively cheap form of transport, ie a motorhead or | :05:56. | :06:03. | |
scooter. One of the things is that -- mopeds or scooter. One of the | :06:04. | :06:08. | |
things is that the scheme pays for the insurance for those bikes. So it | :06:09. | :06:12. | |
is something that they do not need to worry about. For young people | :06:13. | :06:16. | |
still in education, are you aware of any support that is available, | :06:17. | :06:19. | |
particularly with the support for car insurance if they require that | :06:20. | :06:23. | |
in order to get to their place of study? I am not aware of any in | :06:24. | :06:30. | |
education but in terms of, since the educational maintenance allowance | :06:31. | :06:32. | |
was scrapped in the UK, they rely on bursaries from their colleges and | :06:33. | :06:37. | |
places of training. We know that that is a key issue for them. We saw | :06:38. | :06:44. | |
from the survey that a large percentage of young people cannot | :06:45. | :06:49. | |
access places of further education because of that, because they do not | :06:50. | :06:54. | |
have access. It comes down to money, really, and the fact that they do | :06:55. | :07:00. | |
not have that money to access that form of transport. There are some | :07:01. | :07:05. | |
interesting different forms of car access that you can get now, in | :07:06. | :07:10. | |
interesting different forms of car access that you can get now, cities | :07:11. | :07:18. | |
under options, like car share schemes, but young people do not | :07:19. | :07:22. | |
have good access to them, one in London says that you need to be at | :07:23. | :07:29. | |
least 23 or have two years experience so it it difficult for | :07:30. | :07:38. | |
young people. What impact does this have on social lives of young | :07:39. | :07:42. | |
people? I am interested if there is any research regarding the issue of | :07:43. | :07:48. | |
cost and social exclusion issues. We know in a general sense that eight | :07:49. | :07:54. | |
out of ten people say that if they did not have a car, the lifestyle | :07:55. | :07:57. | |
would speak affected, we do not have a broken down by age. 10% of the | :07:58. | :08:06. | |
poorest households are spending 22% of their income on car related | :08:07. | :08:14. | |
outgoing. It takes a lot out of people's Mac wages. From our | :08:15. | :08:21. | |
anecdotal evidence, largely, we know that access to social activities is | :08:22. | :08:27. | |
a key component and without access to any form of transport, people are | :08:28. | :08:31. | |
not able to engage on day-to-day life, depending on where they live, | :08:32. | :08:35. | |
particularly acute in rural areas. It is not just employment, it is | :08:36. | :08:41. | |
participating in what is going on out there. The key -- it is a key | :08:42. | :08:53. | |
consideration for young people. Our survey respondents said that they | :08:54. | :08:57. | |
felt socially isolated, my own constituency which is not rural | :08:58. | :08:59. | |
comedy Central Belt Scotland but is a mixture of villages and towns, | :09:00. | :09:09. | |
people in my area would be completely isolated in the evening | :09:10. | :09:12. | |
if you do not have a car and your friends were in the next town. I | :09:13. | :09:16. | |
think the evening factor is crucial, because not only do a lot of young | :09:17. | :09:24. | |
people work in the night-time economy, their social activities go | :09:25. | :09:28. | |
on in that period and that is where public transport is not available, | :09:29. | :09:33. | |
not in the evenings. An alternative form of transport is something we | :09:34. | :09:40. | |
need to look at. Without a car, does access to the scooter help in that | :09:41. | :09:45. | |
respect? We have heard from young parents and carers who are | :09:46. | :09:50. | |
struggling to meet the cost of insurance. What more can be done to | :09:51. | :09:55. | |
help that particular group who may be unable to afford it but | :09:56. | :10:01. | |
desperately need to use a car? We would favour the idea of a cap is an | :10:02. | :10:05. | |
interesting one. It this he has implications because -- we obviously | :10:06. | :10:12. | |
know it has indications because young people are more likely to be | :10:13. | :10:19. | |
intelligence and there are costs related to that. It has begun in | :10:20. | :10:26. | |
other countries which have more tightly regulated insurance systems. | :10:27. | :10:30. | |
We could decide as a society that we could make it more affordable for | :10:31. | :10:34. | |
young families in certain situations to get insurance but it has knock-on | :10:35. | :10:39. | |
implications. The key thing for us is the need to understand the root | :10:40. | :10:46. | |
cause of high insurance costs, we want mobile young people but we also | :10:47. | :10:49. | |
want a safe young people. Given in the UK our insurance market is based | :10:50. | :10:54. | |
on individual risk, whereas in Europe it is based on the vehicle, | :10:55. | :10:59. | |
we need to understand better how we can reduce the risk for young people | :11:00. | :11:05. | |
and we know a lot about how we can do that. Do you think there is | :11:06. | :11:08. | |
something to be said, being released at about the cap, that it should | :11:09. | :11:11. | |
just apply to certain groups that need a car, such as young parents | :11:12. | :11:18. | |
and carers? That could be an option. The other option which we have put | :11:19. | :11:23. | |
across in our submission which is whether you can do something with | :11:24. | :11:26. | |
insurance premium tax. Those people who pay the most pay the most tax, | :11:27. | :11:34. | |
you could with particularly learner drivers, you could get them to get | :11:35. | :11:42. | |
more experience after they passed that tests, they could be safer and | :11:43. | :11:45. | |
there would be lower insurance costs. On that one point, having | :11:46. | :11:52. | |
taken out insurance relatively recently, I do not recall being | :11:53. | :12:00. | |
asked if I had children. You would have thought that a 20-year-old | :12:01. | :12:04. | |
parent that is going to be driving their kids around would be a much | :12:05. | :12:09. | |
safer driver or would drive in a safer fashion than 20 Robert did | :12:10. | :12:14. | |
not. I am -- than a 20-year-old that did not. I am perhaps being overly | :12:15. | :12:18. | |
objective. If the insurance criteria in terms of your assessment, giving | :12:19. | :12:23. | |
out insurance, is its objective or objective? If it is subjective, you | :12:24. | :12:27. | |
could consider a person who is a family and carrying their kids | :12:28. | :12:31. | |
around is more likely to be a safer driver, dried in the speed limit and | :12:32. | :12:38. | |
not take unnecessary risks. From our understanding, the insurance costs | :12:39. | :12:41. | |
are based on four things, the cost of the vehicle, its likelihood of | :12:42. | :12:45. | |
theft, the cost of overall claims generally and then the risk of the | :12:46. | :12:49. | |
individual. So how they can take the risk of the individual is based on | :12:50. | :12:54. | |
age, location, employment, I would not over they include that but you | :12:55. | :13:02. | |
are right, it could be more detailed, the systems. What is | :13:03. | :13:06. | |
interesting about the telematics market, 500,000 are now in | :13:07. | :13:10. | |
operation, that is having moment by moment risk assessment of what young | :13:11. | :13:14. | |
people are doing and it has feedback to help change their behaviour. So | :13:15. | :13:17. | |
it could be more intelligent that we have got one of the most complex | :13:18. | :13:22. | |
systems in terms of telematics in Europe. Do young people who have | :13:23. | :13:28. | |
disabilities face a particular problem because of the cost of motor | :13:29. | :13:34. | |
insurance? In your experience? I think there is an issue about higher | :13:35. | :13:41. | |
premiums for people with disabilities, it depends very much | :13:42. | :13:44. | |
on the disability, of course. The challenge at the moment is there | :13:45. | :13:53. | |
assessment and access to the Motobility scheme. We have got lots | :13:54. | :13:56. | |
of examples where people have had to hand back the car. Once they have | :13:57. | :14:00. | |
done that, they find themselves in a very difficult position. So disabled | :14:01. | :14:07. | |
people who are very pendent on getting around, whether it is to | :14:08. | :14:12. | |
employment -- very dependent on getting around, whether it is to | :14:13. | :14:18. | |
implement social activities, find that their means of access is taken | :14:19. | :14:24. | |
away, whether they can use a big transport is something which would | :14:25. | :14:28. | |
depend on that individual. And young people with caring responsibilities, | :14:29. | :14:33. | |
they have particularly difficult times as well? I think that is true. | :14:34. | :14:40. | |
I think that the specific example of carers, whether they are young or | :14:41. | :14:46. | |
all, getting around, and the visits that they have to make, which is why | :14:47. | :14:50. | |
we have been looking at things like alternative forms of transport for | :14:51. | :14:57. | |
them if they cannot afford the car or insurance, is it possible to | :14:58. | :15:00. | |
develop scooter schemes for them? We know that some of the caring | :15:01. | :15:04. | |
organisations are talking to grow one as to how those schemes can help | :15:05. | :15:08. | |
carers. -- they are talking to Wheels To Work. A lot of the | :15:09. | :15:14. | |
respondents to the survey said that public transport in particular was | :15:15. | :15:18. | |
often too infrequent, to unreliable and too expensive, do you think | :15:19. | :15:23. | |
enough is being done to make public transport a viable alternative to | :15:24. | :15:25. | |
car ownership, in particular for young people? | :15:26. | :15:31. | |
We don't think there is another thing Talanoa think the figures of | :15:32. | :15:38. | |
how many people rely -- who rely on their cars in rural areas shows | :15:39. | :15:43. | |
that, it can be expensive for the journeys they make. There has been | :15:44. | :15:47. | |
some research saying that for certain people, you could use that | :15:48. | :15:50. | |
money for taxes when you needed but people feel they needed for the | :15:51. | :15:54. | |
safety net, especially in rural areas because they feel they don't | :15:55. | :15:58. | |
have a reasonable service that gives flexibility. Especially for people | :15:59. | :16:03. | |
who have independence and need that flexibility, public transport is | :16:04. | :16:07. | |
just not flexibility enough. We would say in urban areas, obviously | :16:08. | :16:11. | |
the public transport option can be a real viable alternative there is a | :16:12. | :16:16. | |
need to be realistic about what is the potential in rural areas, | :16:17. | :16:20. | |
because it is such a sparsely populated area over such a diverse | :16:21. | :16:23. | |
network, it is quite difficult to serve in the way people would like. | :16:24. | :16:28. | |
It's a particularly difficult problem, because the situation is | :16:29. | :16:31. | |
getting worse. If you move outside of London, particularly in rural | :16:32. | :16:35. | |
areas, where it depends on local Government financing, more and more | :16:36. | :16:42. | |
services are being cut and we heard recently of a bus service from | :16:43. | :16:50. | |
centre eyes to lands end which goes through 12 communities -- St Ives. | :16:51. | :16:56. | |
That has been cut back. Once that disappeared, it is very difficult. | :16:57. | :16:59. | |
One of the main things young people have said is that fact that public | :17:00. | :17:03. | |
transport doesn't run when it needs to. More and more people are doing | :17:04. | :17:07. | |
shiftwork and working in Evening Standard becomes very difficult. If | :17:08. | :17:12. | |
you have a bus that is every hour, and in some cases there are some | :17:13. | :17:15. | |
examples of one a week, it just doesn't work for them. And the other | :17:16. | :17:19. | |
thing, coming back to disabled people, of course that transport | :17:20. | :17:23. | |
system has to be accessible and that's another consideration for | :17:24. | :17:30. | |
young disabled people. You have already touched on the issue of | :17:31. | :17:36. | |
public transport in rural areas and I have had experience of Wheels to | :17:37. | :17:41. | |
Work working for young people in my constituency, so thank you for what | :17:42. | :17:45. | |
you are doing there, but I just wondered if you thought there was | :17:46. | :17:47. | |
anything particularly the Government could do to address this issue with | :17:48. | :17:52. | |
regard to rural areas, where as we have highlighted, the problem could | :17:53. | :17:55. | |
be much more of an issue than urban areas. From a Wheels to Work | :17:56. | :18:00. | |
perspective, it is about funding and having more schemes out there and | :18:01. | :18:03. | |
growing those schemes and Wheels to Work has struggled over the years | :18:04. | :18:07. | |
because it is very much dependent on grants, there is no sort of central | :18:08. | :18:10. | |
Government funding at the moment and we are looking at ways in which we | :18:11. | :18:14. | |
can encourage that and move towards... Do we have the funding | :18:15. | :18:20. | |
organisation similar to the community transport Association? At | :18:21. | :18:24. | |
the moment, there are ad hoc schemes across the country, dependent on | :18:25. | :18:29. | |
local authorities and how they see it and attach importance to those | :18:30. | :18:32. | |
particular schemes. The funding goes up and down. If you look at the | :18:33. | :18:38. | |
number of schemes over the years, Ukip peaks. In 2002, we had 60 | :18:39. | :18:43. | |
schemes, then it went down to 20 by 2012 and it is at 38 at the moment | :18:44. | :18:49. | |
-- you get peaks. It is very much dependent on where the money comes | :18:50. | :18:56. | |
from. A lot of it, we try to encourage to be self-sufficient and | :18:57. | :18:59. | |
sustainable and we have evidence to show they are doing that, they are | :19:00. | :19:03. | |
reliant on more activities of their own, dealerships and things like | :19:04. | :19:06. | |
that, which can bring in a bit of money but whether we can get to | :19:07. | :19:11. | |
100%, one or two of the manager by various means but there is always | :19:12. | :19:14. | |
going to be a requirement for an element of subsidy and the question | :19:15. | :19:19. | |
is where does that come from? Local authorities are finding it very | :19:20. | :19:22. | |
difficult at the moment. We are reliant on things like in the past, | :19:23. | :19:28. | |
the local sustainable transport fund, the access fund, but they do | :19:29. | :19:33. | |
not go on forever. It is interesting that just under half of young people | :19:34. | :19:37. | |
have a driving licence, which demonstrates some are managing to | :19:38. | :19:40. | |
get by without having a driving licence and when we look at the | :19:41. | :19:43. | |
National transport survey data, it indicates a high proportion of young | :19:44. | :19:47. | |
people do say they want to get a driving licence in the next five | :19:48. | :19:50. | |
years, because they demonstrate that a need for it. We did some work as | :19:51. | :19:56. | |
part of the car in British society back in 2010, when we held focus | :19:57. | :19:59. | |
groups with young people and we held it with those who had lost their | :20:00. | :20:04. | |
driving licence for one reason or another, and it started to get under | :20:05. | :20:08. | |
the skin of what happens when people have planned a live around getting a | :20:09. | :20:12. | |
car and for whatever reason, losing their license or not being able to | :20:13. | :20:16. | |
afford it, couldn't get access to a vehicle and it demonstrates how | :20:17. | :20:19. | |
important the car is to people in rural areas and how difficult they | :20:20. | :20:22. | |
find it when that safety net is taken away. Just following up on the | :20:23. | :20:32. | |
Wheels to Work, would you say that access to Wheels to Work or a | :20:33. | :20:38. | |
similar alternative scheme, if there was one, would you say that that | :20:39. | :20:43. | |
offered young people the same access to education and training as those | :20:44. | :20:50. | |
with full car ownership? I think most people, most of the clients, if | :20:51. | :20:55. | |
you like, four Wheels to Work, see it as a transitional process. They | :20:56. | :21:05. | |
can't afford the car now, but the use of a scooter or Obed gives them | :21:06. | :21:12. | |
that access for six months -- Ore mopeds. Some of them will obviously | :21:13. | :21:19. | |
become keen motorcyclists, if you like, and take it up but the | :21:20. | :21:23. | |
majority from our survey suggests that once they can afford it, they | :21:24. | :21:29. | |
would move on to using a car. So that would be their aspiration, I | :21:30. | :21:33. | |
suppose. The other thing, for example, there is the distance | :21:34. | :21:37. | |
involved, that is another key component of this, because if you | :21:38. | :21:42. | |
are travelling by cycle, for example, which is about five miles, | :21:43. | :21:50. | |
but for a mopeds or a scooter, you can do up to 30 miles but if you | :21:51. | :21:53. | |
have a journey or a commute longer than that, the car becomes the | :21:54. | :21:59. | |
better possibility, if you like. I think those are the sort of criteria | :22:00. | :22:05. | |
that they would take into account. And what opportunities are there at | :22:06. | :22:09. | |
the moment for young people to get access to a pool car? To a pooled | :22:10. | :22:21. | |
car? Yes, or supported or subsidised access scheme? As Elizabeth | :22:22. | :22:25. | |
mentioned before, it becomes difficult dependent on age. You said | :22:26. | :22:29. | |
there was a two-year qualifying period usually, so it is difficult. | :22:30. | :22:35. | |
We understand it is difficult and young people can't often get access | :22:36. | :22:39. | |
to a rental car until they are 21, because rental firms decide it is | :22:40. | :22:43. | |
too risky to actually have younger people, unless they have lots of | :22:44. | :22:48. | |
experience, involved in that. So what do you think are the main | :22:49. | :22:52. | |
obstacles to ensuring a wider access? Is it, as you have mentioned | :22:53. | :23:01. | |
Nigel, in terms of Wheels 2 Work finance, basically, financial | :23:02. | :23:04. | |
support to try and subsidise vehicle access for young people? I think it | :23:05. | :23:11. | |
is having the alternatives there, that for example, you if you can't | :23:12. | :23:15. | |
afford a car, then you need some alternative form of transport and | :23:16. | :23:20. | |
it's not always available. In terms of Government, what can the | :23:21. | :23:22. | |
Government tried to do to widen access? I think most of the onus is | :23:23. | :23:29. | |
going to be on local authorities and what they decide to do. The current | :23:30. | :23:34. | |
policy is to leave it at the local level. As far as Wheels 2 Work is | :23:35. | :23:38. | |
concerned, then it is from the centre, there is consideration that | :23:39. | :23:43. | |
could be given to longer term funding, if you like, put that in | :23:44. | :23:49. | |
place. That would be one role. There is the whole question about the bus | :23:50. | :23:55. | |
subsidies and so on, again, that would need to be considered as well. | :23:56. | :24:00. | |
It is having, if you like, an integrated transport system out | :24:01. | :24:05. | |
there and making sure that the whole picture is being looked at in the | :24:06. | :24:11. | |
round, that it's not just a case of access to employment, access to | :24:12. | :24:14. | |
education, training, but getting all the partners together to discuss how | :24:15. | :24:18. | |
best it can be delivered and that needs to be done at the top, because | :24:19. | :24:24. | |
a lot of this is delivering the policies of wider Government | :24:25. | :24:27. | |
departments. You know, it is not just transport, it is environment, | :24:28. | :24:32. | |
in terms of pollution, congestion, so on. Things like the | :24:33. | :24:37. | |
apprenticeship agenda and so on as well as education. So what | :24:38. | :24:40. | |
Government can do is bring everybody together and address this particular | :24:41. | :24:45. | |
issue. I think what we would say, in terms of what can the Government do, | :24:46. | :24:49. | |
again, it comes back to the root cause of why it is so difficult for | :24:50. | :24:53. | |
drivers to get car insurance and that is because they are a very high | :24:54. | :24:59. | |
risk to insurers based on the way we price risk insurance in this | :25:00. | :25:02. | |
country. The Government could do something around the way we learn to | :25:03. | :25:06. | |
drive, there have been some good moves around this new driving test | :25:07. | :25:10. | |
which is much more real world but there hasn't of getting young people | :25:11. | :25:13. | |
more on road experience before they take their test and also, in a post | :25:14. | :25:18. | |
test environments, we know that postgraduate driving tests can be | :25:19. | :25:25. | |
very effective tool reduce injury and deaths by 20-30% and some of the | :25:26. | :25:31. | |
research around it says it is universal law that puts in place | :25:32. | :25:34. | |
protections for the public and when we don't have it in place, we need | :25:35. | :25:38. | |
very specific level interventions to guard against the fact that there is | :25:39. | :25:42. | |
a public health risk associated with young drivers. So there is a lot we | :25:43. | :25:47. | |
can do in a driving test. In particular, we very much focused on | :25:48. | :25:51. | |
skills training, physical skills training, but not behavioural skills | :25:52. | :25:54. | |
training. There has been some work done in Australia that found if you | :25:55. | :25:58. | |
give young people resilience training, how you minimise risks for | :25:59. | :26:03. | |
young people with alcohol and drugs and other risky behaviour, as well | :26:04. | :26:07. | |
as driving, they found that overall, that resilience training meant they | :26:08. | :26:10. | |
could have a 44% reduction in their crash risk in the first year of | :26:11. | :26:17. | |
driving. And these are the sort of initiatives,... Graduated driving | :26:18. | :26:20. | |
licences are difficult because of freedoms and young people needing to | :26:21. | :26:24. | |
get employment opportunities, but there are other behavioural | :26:25. | :26:28. | |
approaches that could be taken to actually improve the situation for | :26:29. | :26:36. | |
young drivers. You said that training can result in a 44% | :26:37. | :26:43. | |
reduction in accident risk. Would that result in young drivers coming | :26:44. | :26:47. | |
down to the same level of risk as other drivers or would they still be | :26:48. | :26:52. | |
higher? When the accident curbs are done, it tends to take into account | :26:53. | :26:56. | |
age and experience, so within the first six months of driving, a young | :26:57. | :27:00. | |
driver would probably be around the same risk as another driver, so it | :27:01. | :27:03. | |
is all about getting those 1,000 miles of experience. I'm not sure | :27:04. | :27:08. | |
whether at the moment you can compare those two figures, but it is | :27:09. | :27:13. | |
certainly a very impressive result from something that wasn't driving | :27:14. | :27:17. | |
focus. In this country, we focus, on the worse case scenario, taking | :27:18. | :27:26. | |
young people to things that increase Chris, instead of classroom | :27:27. | :27:32. | |
learning. Teaching these are the consequences and risks associated | :27:33. | :27:35. | |
with your baby about how Duplan to mitigate it in that situation, in | :27:36. | :27:49. | |
your -- risks associated with your and how Duplan to mitigate it in the | :27:50. | :27:56. | |
situation? So is it possible to design insurance around those | :27:57. | :28:00. | |
issues, for example, hours of darkness, whether the driver is | :28:01. | :28:04. | |
alone in the car, so that you design an insurance policy that reduces | :28:05. | :28:08. | |
those risks? Because most accidents, as I understand it, are curbed when | :28:09. | :28:13. | |
a young driver is accompanied, rather than on their own. That is | :28:14. | :28:19. | |
right and graduated driver license approach has a lot to say in terms | :28:20. | :28:23. | |
of that about driving for certain hours of driving with one or no | :28:24. | :28:27. | |
passengers. I imagine in the technology now, you would be able to | :28:28. | :28:31. | |
detect how many people are in vehicles, that would be possible, | :28:32. | :28:34. | |
but if it wasn't able to go down of regulatory route, I think parents | :28:35. | :28:41. | |
are quite perceptive about getting guidance on how those first six | :28:42. | :28:46. | |
months should be proceeding, in terms of parental contracts when you | :28:47. | :28:50. | |
say, only one person in the vehicle and maybe at certain times. I think | :28:51. | :28:55. | |
insurance products have gone down that route before and are now a lot | :28:56. | :28:59. | |
more detailed and there have been some problems associated with having | :29:00. | :29:05. | |
severe cut-offs for the time people should be home, but now they are | :29:06. | :29:08. | |
more based on individual driving, no matter what time of deities. But we | :29:09. | :29:12. | |
certainly feel there is an opportunity for sort by graduated | :29:13. | :29:18. | |
driving licence, a lighter approach in a way, that takes some of the | :29:19. | :29:22. | |
good aspects of that than put it into context which is acceptable. | :29:23. | :29:28. | |
One of the questions I am not quite understanding and perhaps you can | :29:29. | :29:33. | |
help me with, wise motorcycle insurance for young people | :29:34. | :29:36. | |
considerably cheaper than car insurance, especially when it seems | :29:37. | :29:41. | |
a more risky mode of transport? I mean, you are right, it is based on | :29:42. | :29:45. | |
risk but in fact the statistics show that motorcycle fatalities are | :29:46. | :29:52. | |
coming down, and that is in spite of the fact that the number of | :29:53. | :29:58. | |
motorcycles, mopeds and scooters on the ground is increasing. So a trend | :29:59. | :30:05. | |
has been downwards, less accidents involving drivers and... But it has | :30:06. | :30:15. | |
levelled off and this is one of the concerns that the exercise | :30:16. | :30:20. | |
motorcycle industry Association and the police Federation and highways | :30:21. | :30:27. | |
England, last year they published their safety and transport policy | :30:28. | :30:31. | |
framework, which was looking at ways in which the training of motorcycle | :30:32. | :30:37. | |
drivers could be improved and that has been considered by the | :30:38. | :30:41. | |
Department of Transport now, things like the test and so on, so the | :30:42. | :30:47. | |
downward trend is quite marked, over the years, and the statistics are | :30:48. | :30:51. | |
quite revealing in that respect, but it is just in the last couple of | :30:52. | :30:55. | |
years, where it was quite clear that there needed to be more effort, if | :30:56. | :30:59. | |
you like, to be put in to an overall policy and strategy for motorcycle | :31:00. | :31:02. | |
drivers. In terms of Wheels To Work, there is | :31:03. | :31:11. | |
a relatively low risk, our statistics show, but there are very | :31:12. | :31:18. | |
few fatalities, if any, very few accidents, because primarily, if you | :31:19. | :31:23. | |
are a client on the scheme, you have to go through compulsory training, | :31:24. | :31:28. | |
basic training. So it improves your driving skills, and they are | :31:29. | :31:33. | |
provided with things like helmets and protective clothing. He defined | :31:34. | :31:40. | |
as a result of that, the accidents are less. And the evidence suggests | :31:41. | :31:48. | |
that people who have been through that process become more road aware | :31:49. | :31:51. | |
and become better car drivers is that is what they choose to do later | :31:52. | :31:57. | |
on. That helps my understanding. You mentioned the increase in motorcycle | :31:58. | :32:01. | |
use, and I am wondering if that is people my age, the midlife crisis | :32:02. | :32:05. | |
getting motorbikes, or have you got evidence that it is younger people | :32:06. | :32:08. | |
because of the cost of car insurance, they are taking | :32:09. | :32:12. | |
predominantly to bikes? Certainly more people are buying vehicles but | :32:13. | :32:19. | |
they are buying them at the lower end of the market. Mopeds are only | :32:20. | :32:28. | |
50 cc, scooters are 125 cc. So they are relatively slow vehicles. I | :32:29. | :32:36. | |
think it is over 19 you have to have a license if you want to drive the | :32:37. | :32:40. | |
bigger vehicles. The Wheels To Work schemes only focus on the smaller | :32:41. | :32:45. | |
models, which is going to help. But again the statistics show, the | :32:46. | :32:49. | |
evidence suggests that those sales, of those types of models, has gone | :32:50. | :32:54. | |
up row recently. Whether that is because of the cost of driving, we | :32:55. | :33:01. | |
would need more work on that. There are other factors, in cities there | :33:02. | :33:05. | |
is congestion to take into a fact as well, you can get to work a lot | :33:06. | :33:12. | |
quicker and it is cheaper for some people the public transport. The | :33:13. | :33:16. | |
point that came across in the survey, a number of respondents made | :33:17. | :33:20. | |
the claim that motorcycle riders make better car drivers because they | :33:21. | :33:24. | |
have more road awareness. I would agree on face value. Is there any | :33:25. | :33:29. | |
evidence to back that up? We have some evidence from the driving... I | :33:30. | :33:38. | |
forget the title, the driving instructors Association have done | :33:39. | :33:41. | |
some work on that. They do suggest that they make better car driver. | :33:42. | :33:49. | |
That is when I thought, it brings me onto another question, you may have | :33:50. | :33:53. | |
a comment on this, why do we think that insurance companies do not give | :33:54. | :33:57. | |
motorcycle riders who progressed to car use the no claims continuation? | :33:58. | :34:04. | |
We have one, neither does that. So if one can do it, why not the rest? | :34:05. | :34:08. | |
It is also the strength of the evidence, some of the trials that | :34:09. | :34:12. | |
have been done have been small-scale. It would be interesting | :34:13. | :34:19. | |
to see more research done. HGV drivers are being asked to be a | :34:20. | :34:25. | |
cyclist in London, that is a scheme, and certainly from a psychological | :34:26. | :34:28. | |
research perspective, it makes sense to make someone feel what it is like | :34:29. | :34:33. | |
driving like somebody else and get a different perspective. But I do not | :34:34. | :34:37. | |
think there is the research to back up an absolute change in insurance. | :34:38. | :34:46. | |
I have had two sons who have both had mopeds, scooters, at 16 and then | :34:47. | :34:50. | |
at 17, progressed to passing their driving test. We found quite a big | :34:51. | :34:55. | |
difference between insurance companies that gave them a better | :34:56. | :34:59. | |
price because they had had a year the Road experience on the mopeds, | :35:00. | :35:05. | |
and those that did not give them any recompense of that. I wanted your | :35:06. | :35:09. | |
thoughts on why there is such a difference in different insurance | :35:10. | :35:12. | |
company's approach to that. You would have to ask them all stop we | :35:13. | :35:15. | |
will be asking them. Another issue raised by petitioners | :35:16. | :35:26. | |
are responding to the survey is that sometimes, the cost car insurance is | :35:27. | :35:28. | |
so expensive that young drivers simply drive without insurance. Have | :35:29. | :35:34. | |
you found that is a common problem and is there an upward or downward | :35:35. | :35:40. | |
trend in that? There is certainly consequences in terms of having to | :35:41. | :35:46. | |
pay insurance. It can act as barrier so young people cannot enter at all, | :35:47. | :35:55. | |
but as you say, they might under insure, third-party insurance is | :35:56. | :36:01. | |
more extensive in the UK as conference is because insurance | :36:02. | :36:04. | |
companies think it is more risk because someone thinks they do not | :36:05. | :36:10. | |
need that. I think there were some figures from the DVLA a few years | :36:11. | :36:16. | |
old now, about 7500 newly qualified drivers within the first three years | :36:17. | :36:20. | |
were found to be driving without insurance and were thus by those | :36:21. | :36:25. | |
results. That is potentially only the -- and were disqualified as a | :36:26. | :36:30. | |
result. That is potentially only the tip of the iceberg. It is a risk of | :36:31. | :36:36. | |
having very high insurance levels and the expense so people feel they | :36:37. | :36:43. | |
are able to do that. Some surveys have been done were around 50% of | :36:44. | :36:54. | |
the public think it is acceptable to be involved in insurance fraud. It | :36:55. | :37:01. | |
puts pressure on people potentially do things they would not do. | :37:02. | :37:10. | |
Anything to add? In terms of the Wheels To Work schemes, insurance is | :37:11. | :37:13. | |
part of the package so it is not a case of people not having insurance. | :37:14. | :37:18. | |
We have been able to negotiate on half of the scheme is a lower rate | :37:19. | :37:24. | |
-- on behalf of the scheme, to procure a lower rate of insurance | :37:25. | :37:29. | |
for members of the scheme. He mentioned insurance fronting, this | :37:30. | :37:35. | |
is another thing which has come to our attention, how common is that? | :37:36. | :37:42. | |
One survey said that 53% of people thought that this form of deception | :37:43. | :37:50. | |
was acceptable. It is strictly speaking illegal, it is insurance | :37:51. | :37:54. | |
fraud. I do not think we know, it is difficult to get an understanding of | :37:55. | :37:58. | |
how common it is. We can only get people's view on it, whether they | :37:59. | :38:02. | |
think it is acceptable. There is also an issue of people not | :38:03. | :38:06. | |
realising it is illegal, a lot of people would be doing something | :38:07. | :38:09. | |
illegal which is something you would not expect to be that high. There is | :38:10. | :38:19. | |
something that we need to be raising awareness. Does that have a | :38:20. | :38:22. | |
significant reduction on people's premiums? I am afraid I do not know | :38:23. | :38:31. | |
the percentage reduction. We have talked a bit about telematics, as | :38:32. | :38:36. | |
one option. For reducing the cost of insurance the young people. What are | :38:37. | :38:40. | |
some of the challenges that you think there are in getting young | :38:41. | :38:44. | |
people to take this on board, what are the barriers? The RAC report on | :38:45. | :38:52. | |
motoring looked at public acceptance of telematics and other tracking | :38:53. | :38:57. | |
type technologies. Back in 2010, over 50% of people said they opposed | :38:58. | :39:02. | |
it, they do not want it at all. The most recent survey, in September | :39:03. | :39:09. | |
last year, said 33% of people would oppose it. So there is now more | :39:10. | :39:13. | |
acceptance and I'm telematics. I think it is because young people in | :39:14. | :39:17. | |
particular see the benefit of what they are getting as a result of | :39:18. | :39:21. | |
buying into that process, they are getting a good discount on the | :39:22. | :39:23. | |
insurance because it is based on how they drive as an individual, not the | :39:24. | :39:28. | |
fact that they are a young person. It is an individually tailored | :39:29. | :39:31. | |
system, rather than an overarching thing. The only point I would make | :39:32. | :39:40. | |
is that it is about raising awareness of all the things that are | :39:41. | :39:45. | |
available out there. And demonstrating that they can work. | :39:46. | :39:56. | |
So, in terms of the impact that a cap on car insurance would have on | :39:57. | :40:03. | |
young drivers, what impact do you think it would have on drivers' | :40:04. | :40:11. | |
behaviour? I think that is an interesting question. It would be | :40:12. | :40:14. | |
interesting to get research to understand what impact it would | :40:15. | :40:20. | |
have. I suppose regular insurance as it stands at the moment, if you have | :40:21. | :40:25. | |
got a very expensive insurance product that you are paying for, it | :40:26. | :40:29. | |
would not affect your behaviour because you have paid for it | :40:30. | :40:31. | |
regardless. So a cap would be similar. It seems to be the | :40:32. | :40:36. | |
telematics insurance and has the most potential to influence | :40:37. | :40:42. | |
behaviour because it is all about providing feedback to the driver and | :40:43. | :40:45. | |
the parent. Many insurance companies, as part of the package | :40:46. | :40:52. | |
the parent has access to the records and can talk about them. I think | :40:53. | :40:57. | |
that would have more of an impact on the mobility side of young people | :40:58. | :41:05. | |
having the affordability to drive, it would not have an impact on | :41:06. | :41:11. | |
safety, and it could make it more expensive for other drivers because | :41:12. | :41:14. | |
the cost has to come from somewhere. Do you have examples as where a cap | :41:15. | :41:23. | |
has been incremented abroad, or is it just telematics? There are a | :41:24. | :41:28. | |
number of different examples abroad, we have got a report coming out soon | :41:29. | :41:32. | |
which is going to look at a cap on insurance markets for young drivers | :41:33. | :41:37. | |
in France, Germany, Spain, Netherlands and Sweden. In France, | :41:38. | :41:41. | |
it is interesting because it is quite a rural area, sparsely | :41:42. | :41:44. | |
populated, they note the importance of getting people access to | :41:45. | :41:50. | |
employment. So they have a young driver insurance and then I premium | :41:51. | :41:55. | |
of that of 100% then each year it goes down, the second year is 75%, | :41:56. | :42:00. | |
then 50%, then 25%, and if you do not have any accidents you get a | :42:01. | :42:07. | |
coefficient added that it reduces. It is quite regulated environment. | :42:08. | :42:13. | |
The first insurance they get is the same is that one else but then it | :42:14. | :42:17. | |
has a young driver aspect added onto it. Again it is on the price of the | :42:18. | :42:22. | |
vehicle. In Germany, if everybody on the vehicle insurance, if someone on | :42:23. | :42:29. | |
the insurance is under 25, they based the insurance on that | :42:30. | :42:35. | |
individual. If everyone is over 25, it is on that individual. So it is | :42:36. | :42:38. | |
priced on the vehicle but it is looking at the individual as well. | :42:39. | :42:43. | |
There are interesting concept and ideas which are more about | :42:44. | :42:47. | |
regulating how prices are capped. Do you find in the UK there are | :42:48. | :42:51. | |
significant differential insurance rates based on geography, or is it | :42:52. | :42:59. | |
predictable for a young person, or is it different depending on how | :43:00. | :43:06. | |
they have shopped around? You talk about a regulated model, Alice, | :43:07. | :43:11. | |
presumably, is the opposite. -- hours presumably if the opposite. In | :43:12. | :43:20. | |
other countries, the insurance is usually done through brokers and | :43:21. | :43:23. | |
some do not have comparison sites at all, and in the UK it is more | :43:24. | :43:28. | |
competitive and it is more about risk. We have not researched on how | :43:29. | :43:34. | |
it this is by area but we know it is location -based. I think the West | :43:35. | :43:39. | |
end up with quite high figures. It is geographically specific because | :43:40. | :43:45. | |
thinking about theft of the vehicle and the extent of cost to repair, | :43:46. | :43:51. | |
that is different throughout the country. So you could argue of that | :43:52. | :43:59. | |
young people of some of the most challenging communities, they can | :44:00. | :44:01. | |
find access to car insurance even more difficult than those who live | :44:02. | :44:07. | |
in more affluent part of the country, compounding social | :44:08. | :44:13. | |
inequality? I think that is the case potentially, but it is for | :44:14. | :44:17. | |
everybody. Thank you very much indeed for your evidence and for | :44:18. | :44:19. | |
answering our questions, thank you. Welcome to the committee, could you | :44:20. | :44:29. | |
give us your name and organisation? I and Simon Allsop from Aviva. | :44:30. | :44:38. | |
Graeme Trudgill, British insurers Association. Nick Moger, Marmalade. | :44:39. | :44:45. | |
James Dalton from the Association of British insurance. Some people have | :44:46. | :44:50. | |
told us they are paying over ?4000 for car insurance, young people, why | :44:51. | :44:56. | |
should it be so high? If I talk about how car insurance premiums are | :44:57. | :45:01. | |
made up. The insurance company will look at claims experience, history, | :45:02. | :45:06. | |
and compare that the claims experience to the rating factors | :45:07. | :45:10. | |
that we get on the drivers and that will include age, location, make and | :45:11. | :45:16. | |
model of vehicle, driving experience, claims history, things | :45:17. | :45:22. | |
of that nature. We compare the claims cost with those two work out | :45:23. | :45:28. | |
what the relative factors are for working out factors and setting a | :45:29. | :45:32. | |
premium to cover costs. The high cost of motor insurance for | :45:33. | :45:39. | |
young people causes many difficulties. Do you think the | :45:40. | :45:43. | |
insurance industry has any responsibility in that regard? I | :45:44. | :45:47. | |
think we have a responsibility in the sense that we should be charging | :45:48. | :45:51. | |
the appropriate premium for the risk the customer brings into the pool. | :45:52. | :45:55. | |
So insurance is about collecting the premiums of the many to pay the | :45:56. | :45:59. | |
claims of the few. That is the pool in principle, but in order to get | :46:00. | :46:04. | |
into the pool, you need to pay an appropriate premium for the risk | :46:05. | :46:08. | |
that you bring. So the danger would be if we couldn't charge an | :46:09. | :46:11. | |
appropriate premium, then we would shrink the size of the pool and say | :46:12. | :46:15. | |
we can only have drivers aged between 40 and 50 in the pool to | :46:16. | :46:19. | |
make sure everyone is paying an appropriate premium for the risks | :46:20. | :46:23. | |
they bring. Yesterday, the Justice Secretary announced a reduction in | :46:24. | :46:29. | |
Piper sent to minors no .7%. It is Piper sent to minors no .7%. It is | :46:30. | :46:39. | |
reported that is going to have a big impact on young drivers -- from 2/5% | :46:40. | :46:52. | |
to -0.7. The single biggest factor that is driving higher large claims | :46:53. | :46:56. | |
compared to other drivers is age and it has been widely reported by PWC | :46:57. | :47:02. | |
that young drivers aged 18-22 would expect a ?1000 increase in their | :47:03. | :47:07. | |
premium just from a single stroke of the Lord Chancellor's pen. So for | :47:08. | :47:13. | |
people paying ?4000, it could go up to 5,000? From the assessment made | :47:14. | :47:17. | |
by PWC, yes. You think that is acceptable? Isn't this going beyond | :47:18. | :47:23. | |
the bounds of reasonableness? Jor want me to take that? The Lord | :47:24. | :47:27. | |
Chancellor's decision is absolute madness. As you have rightly pointed | :47:28. | :47:35. | |
out, add significant cost to the cost of the young drivers' car | :47:36. | :47:40. | |
insurance premiums. As Simon has articulated, the PwC estimate was | :47:41. | :47:48. | |
around ?1000. It is really important that this group of MPs, and I would | :47:49. | :47:53. | |
urge you to grasp this issue and make very clear to the Lord | :47:54. | :47:57. | |
Chancellor these significant impact that this is going to have on young | :47:58. | :48:06. | |
drivers, and you have a petition of 180,000 people who indicated their | :48:07. | :48:10. | |
concern at the cost of car insurance and I think all of the market | :48:11. | :48:15. | |
estimates that have been put out of the past 24 hours would indicate | :48:16. | :48:20. | |
that the Lord Chancellor's decision yesterday is going to bed car | :48:21. | :48:22. | |
insurance the young drivers skyrocket. I don't get the whole | :48:23. | :48:28. | |
madness point, because the whole idea of this is to make sure that | :48:29. | :48:34. | |
people who are involved in serious accidents and need long-term care | :48:35. | :48:37. | |
have enough return on their investments, so therefore it kills | :48:38. | :48:42. | |
not giving a good enough return, something has to be done, but can I | :48:43. | :48:46. | |
come back to the ?1000 question what it leads through to the concern | :48:47. | :48:50. | |
about scaremongering. According to our documentation, the average cost | :48:51. | :48:55. | |
of insurance is ?850 for a young group of drivers. So if we have got | :48:56. | :49:00. | |
the differential that we actually need, because of the yield on | :49:01. | :49:06. | |
Guilds, how on earth can it be over 44 young person's insurance coach | :49:07. | :49:10. | |
Mark because you are only talking about a small number with larger | :49:11. | :49:17. | |
claims. How can it be double the premium? The Lord Chancellor has | :49:18. | :49:26. | |
announced a negative discount rate of -0.5%. What claimants do with | :49:27. | :49:32. | |
their lump sum awards damages is known only to them, I can't tell you | :49:33. | :49:38. | |
what they do with that in practice but my is that they do not go back | :49:39. | :49:43. | |
into Government securities, for a whole range of reasons. But the | :49:44. | :49:45. | |
supposition that they do, which is supposition that they do, which is | :49:46. | :49:51. | |
what the Lord Chancellor has made, would end at a rate of -0.5% makes | :49:52. | :49:58. | |
an assumption that those people making investments are investing in | :49:59. | :50:01. | |
order to lose money, and that simply cannot be right. And this goes to | :50:02. | :50:06. | |
your point about the differential. What we are asking you for and what | :50:07. | :50:11. | |
we are asking the Lord Chancellor for is an urgent review of the | :50:12. | :50:17. | |
damages act 1996, which sets the rate so that young drivers in | :50:18. | :50:23. | |
particular are not forced to pay these extraordinarily high car | :50:24. | :50:25. | |
insurance premiums, which is only going to get worse when the decision | :50:26. | :50:31. | |
takes effect. My point here is that the best way for young persons' car | :50:32. | :50:37. | |
insurance premiums to reduce is to make young drivers safer. Could you | :50:38. | :50:40. | |
are somebody to provide some evidence to show how an ?850 premium | :50:41. | :50:47. | |
can go up by ?1000 due to this factor? Can somebody provide a | :50:48. | :50:52. | |
model? Because I would be concerned that young people are being ransomed | :50:53. | :50:57. | |
in return for pressure on Government to change this policy, which is | :50:58. | :51:00. | |
designed to make sure that people in serious accidents have enough care | :51:01. | :51:03. | |
for the rest of their lifetime. So someone from your bureau could | :51:04. | :51:05. | |
provide that information, I would be happy to take up the matter. Simon | :51:06. | :51:15. | |
may have some comment on that. Why PWC, a firm that act as consultants, | :51:16. | :51:19. | |
would put out something to scaremonger... Incredibly quickly | :51:20. | :51:24. | |
and secondly, it is like anything in life, if we haven't got the | :51:25. | :51:27. | |
information and see the methodology, why shouldn't we question it is | :51:28. | :51:31. | |
accurate question mark the table and the range was from plus 2.5 and | :51:32. | :51:39. | |
minors no .5, they selected a number from a table they had chosen. | :51:40. | :51:46. | |
Do you accept that the increase is actually what is going to happen? A | :51:47. | :51:55. | |
?1000 increase? It seemed like the right magnitude according to the | :51:56. | :51:59. | |
calculations I have seen elsewhere. I think it is real. To be absolutely | :52:00. | :52:03. | |
clear, I have huge sympathy for people who are trying to use their | :52:04. | :52:07. | |
vehicle to get to and from work who are driving sensibly. As an insurer, | :52:08. | :52:12. | |
when you are presented with a risk, an 18-year-old, to be able to | :52:13. | :52:15. | |
differentiate those people who want to drive their vehicle from and to | :52:16. | :52:20. | |
work or college and those who want to drive it with six people rammed | :52:21. | :52:23. | |
in it at three o'clock in the morning is impossible without | :52:24. | :52:29. | |
interventions such as the telematics boxes that marmalade are presenting. | :52:30. | :52:36. | |
So you are saying young people should take the brunt of this | :52:37. | :52:41. | |
change? I am not saying that at all, I would rather the change hadn't | :52:42. | :52:44. | |
happened at all but what I'm saying is people who are coming into the | :52:45. | :52:48. | |
insurance pool should pay a premium appropriate to the risk they bring. | :52:49. | :52:54. | |
I just wanted to follow up to one of the very end questions we had on the | :52:55. | :52:59. | |
figures and how we get these extremely high cost of 4,500. I am | :53:00. | :53:06. | |
grateful for the tables as to the average premiums, average claims and | :53:07. | :53:09. | |
the frequency in age groups but when I look at that, the youngest and | :53:10. | :53:15. | |
riskiest group, the average premium, ?993, is a fraction of ?4500 that | :53:16. | :53:20. | |
people have claimed, so how do we get to that and what is the actual | :53:21. | :53:24. | |
range of premiums people are paying if the average is that and others | :53:25. | :53:29. | |
are paying 4,500. Are they getting free insurance at one end and deals? | :53:30. | :53:34. | |
As a follow-on to that, I will give it all at one time, the bit that | :53:35. | :53:38. | |
interests me with the information we got from the EBI is the profit | :53:39. | :53:44. | |
margin on the different age ranges that the companies make, is that | :53:45. | :53:47. | |
consistent across all ages or is there a variation in that as well? I | :53:48. | :53:54. | |
don't have information about the profit on particular lines of | :53:55. | :53:56. | |
business, that would be very commercially sensitive information | :53:57. | :54:02. | |
for each individual insurer. Going to your first question on averages, | :54:03. | :54:07. | |
averages are by definition an average, so there will be people who | :54:08. | :54:10. | |
pay lower car insurance premiums and people who pay higher. There are a | :54:11. | :54:16. | |
whole range of ways that young drivers can reduce their car | :54:17. | :54:20. | |
insurance premium. For example, they can drive smaller cc cars, they can | :54:21. | :54:27. | |
spend a lot of time thinking about telematics and the increase uptake | :54:28. | :54:31. | |
of telematics through mobile phone technology has helped reduce car | :54:32. | :54:36. | |
insurance premiums for young drivers, but my point is the average | :54:37. | :54:43. | |
is the average. We talked about this earlier, in the previous session, | :54:44. | :54:48. | |
but the rate of reduction in risk with age is very significant. So in | :54:49. | :54:52. | |
the age range we have got there, the 18-year-olds, at the beginning of | :54:53. | :54:55. | |
the age range and of course there are 17-year-olds driving legally in | :54:56. | :55:03. | |
cars, it goes down very quickly. Other things that reduce risk length | :55:04. | :55:06. | |
of time driving, surpassing your driving test and not buying your | :55:07. | :55:11. | |
first insurance on your own vehicle until a year later makes a huge | :55:12. | :55:14. | |
difference to the premium you will pay, so that is why you are getting | :55:15. | :55:20. | |
that shape in those averages. In terms of the average profit margin, | :55:21. | :55:24. | |
Ike then I can't speak to the market, but I can make an | :55:25. | :55:27. | |
observation about the market and that is that the motor insurance | :55:28. | :55:30. | |
market has only made money as a market in years out of the last 20 | :55:31. | :55:36. | |
years and only Maka the late actually, some of those profits will | :55:37. | :55:40. | |
be wiped out by yesterday's announcement -- and actually. The | :55:41. | :55:43. | |
other fact is that the younger drivers, the market, if it is not | :55:44. | :55:46. | |
telematics, is becoming smaller because more and more insurers are | :55:47. | :55:49. | |
finding themselves unable to make any profit at all, even at those | :55:50. | :55:54. | |
very large premiums. I think the difficulty the young drivers is the | :55:55. | :55:58. | |
claims ratios there are ten times more likely to have an accident and | :55:59. | :56:02. | |
for that accident to be more costly, so our members to give lots of | :56:03. | :56:06. | |
advice as to why there are different averages you can hear and they would | :56:07. | :56:10. | |
be about driving a more modern car with autonomous emergency braking | :56:11. | :56:17. | |
and using telematics policies. Our latest ads show over 750,000 live | :56:18. | :56:23. | |
policies exist with a telematics box or downloadable app and those are | :56:24. | :56:27. | |
about 25% cheaper. When you are a young driver, our experts who work | :56:28. | :56:37. | |
in telematics show that you are half as likely to have an accident in | :56:38. | :56:41. | |
your first year of driving and ten times less likely in your first six | :56:42. | :56:44. | |
months one of the recommendations we have in this committee is to | :56:45. | :56:47. | |
consider having an IPT insurance tracks premium rate of zero for | :56:48. | :56:51. | |
those young drivers that are prepared to have a telematics box in | :56:52. | :56:57. | |
their car. An average premium of ?1500, the IPT rate having doubled | :56:58. | :57:01. | |
over an 18 month period, is going from 6% up to 12%, meaning their IPT | :57:02. | :57:07. | |
is going from ?90 to 180,000 we have done the cost benefit analysis with | :57:08. | :57:11. | |
others in the industry and this shows that there is going to be a | :57:12. | :57:15. | |
?212 million saving to Government over a seven-year period, about | :57:16. | :57:21. | |
1,000 killed, serious injury and accidents could be averted if you're | :57:22. | :57:24. | |
drivers could be given support in going to have a telematics box | :57:25. | :57:28. | |
Allsopp so perhaps one recommendation we all could consider | :57:29. | :57:32. | |
is zero rate IPT for telematics. And I think in the long-term, bearing in | :57:33. | :57:36. | |
mind what massive affect the discount rate is having, it will we | :57:37. | :57:41. | |
very helpful if the Chancellor in the budget next week was to agree to | :57:42. | :57:45. | |
freeze insurance premium tax for this term our parliament because of | :57:46. | :57:47. | |
so much pressure on young drivers and motorists. Included in the cost | :57:48. | :57:58. | |
of telematics and insurance, there was the cost of the box, the cost of | :57:59. | :58:04. | |
the software, is there at the 8020% on that? So for an average premium | :58:05. | :58:10. | |
of ?1500, the Government is taking ?215. -- is their VAT of 20%. So | :58:11. | :58:20. | |
young people really are being penalised by this, combination of | :58:21. | :58:25. | |
the two, VAT and IPT on top of the VAT. | :58:26. | :58:31. | |
Many of the respondents to our online survey fed back that they | :58:32. | :58:35. | |
felt the high cost of car insurance for young people was often based on | :58:36. | :58:41. | |
a stereotype, so I wonder what more the insurance industry could be | :58:42. | :58:45. | |
doing to explain to the public why insurance is so high and also what | :58:46. | :58:52. | |
more they could be doing to demonstrate to young people how they | :58:53. | :58:55. | |
can reduce the costs of their insurance. I think our insurance | :58:56. | :58:59. | |
brokers would be very keen to work with customers and explain how it | :59:00. | :59:02. | |
works and the many things they can do to bring their costs down. The | :59:03. | :59:06. | |
insurance industry collectively all pay towards the money advice | :59:07. | :59:09. | |
service, which is part of our regulatory body, or connected to it, | :59:10. | :59:14. | |
which is supposedly there to give insurance customers advice. That is | :59:15. | :59:19. | |
being replaced by the single financial guidance body and the | :59:20. | :59:22. | |
consultation that has just come out has no mention of insurance in it, | :59:23. | :59:25. | |
so I think there is a lack of advice from Government when it comes to | :59:26. | :59:29. | |
insurance but I think the industry are very keen to help and talk | :59:30. | :59:34. | |
through all the things young drivers can do, telematics, dash cam is in | :59:35. | :59:42. | |
your car, we have a find a broker service which helps over a quarter | :59:43. | :59:45. | |
of a million people every year, including many young drivers, to a | :59:46. | :59:50. | |
suitable broker who specialises in young drivers or telematics. So | :59:51. | :59:54. | |
there is a lot we can do and we are very happy to work with you to do | :59:55. | :59:58. | |
that. If I can add to that, one of the things the ABI has been | :59:59. | :00:02. | |
campaigning for the many years is graduated drivers licenses, picked | :00:03. | :00:07. | |
up in the previous panel. The evidence to support internationally | :00:08. | :00:14. | |
the benefits of the introduction of them is overwhelming, it has been | :00:15. | :00:17. | |
tried and tested in many jurisdictions under this is a | :00:18. | :00:20. | |
publication from September 2012 that we produced, trying to campaign, to | :00:21. | :00:25. | |
improve the road safety outcomes of young people, which, as a result, | :00:26. | :00:29. | |
will reduce their car insurance premiums. It is absolutely critical | :00:30. | :00:35. | |
as a piece of regulatory intervention to improve the | :00:36. | :00:38. | |
catastrophic nature of some of the death and injury that we see on the | :00:39. | :00:42. | |
roads and as I said, reduce car insurance premiums as a result of | :00:43. | :00:43. | |
that. One of the things that we do is that | :00:44. | :00:54. | |
we ensure we have a parent and young driver on the policy so we can | :00:55. | :00:57. | |
afford both of them if they both drive badly. We have a team that | :00:58. | :01:04. | |
specialises and looking at the journeys and if both drivers are | :01:05. | :01:10. | |
driving badly, they can get together and talk about where the problems | :01:11. | :01:13. | |
lie. We have also been doing learner driver insurance. We give reductions | :01:14. | :01:17. | |
for that. The more practice they get, when they are learning to | :01:18. | :01:21. | |
drive, the better. I had accompanied the other day with some driving | :01:22. | :01:24. | |
instructors who are insisting that that pupils to 2000 miles of private | :01:25. | :01:34. | |
practice in addition to lessened and they have proven that the accident | :01:35. | :01:38. | |
levels are less. Practice, practice, practice, these one-week intensive | :01:39. | :01:45. | |
courses, if I had my way, I would stop them immediately. You can pass | :01:46. | :01:50. | |
a test in a week but you have got no experience and those people are | :01:51. | :01:57. | |
having accidents. It is the most important factor, on whether they | :01:58. | :02:01. | |
are going to cause accidents. The thing I observed within drivers in | :02:02. | :02:06. | |
their driving training is more up-to-date than yours on mine, their | :02:07. | :02:10. | |
reaction and reflexes are better but we often see for worse experiences. | :02:11. | :02:17. | |
So part of that is explained by our experience of different road | :02:18. | :02:19. | |
conditions, we are used to it, but a lot of it is the attitude, how you | :02:20. | :02:23. | |
choose to pay by the wheel. The best way is to understand that by | :02:24. | :02:31. | |
observing the driving by some kind of telematics device fitted to the | :02:32. | :02:36. | |
phone or vehicle. I am interested in what you are saying, we do therefore | :02:37. | :02:42. | |
recommend more experience be required before you pass a test? | :02:43. | :02:48. | |
Without any shadow of a doubt. Like getting a pilot license, you need | :02:49. | :02:54. | |
your driving hours? Yes, this group of driving instructors are refusing | :02:55. | :02:57. | |
to take on pupils under the parents agree. Agree to the child doing the | :02:58. | :03:04. | |
minimum they said 2500 miles of practice. Obviously, that creates | :03:05. | :03:11. | |
difficulties for young people that do not have parents that can provide | :03:12. | :03:16. | |
that support. True, true, but at the end of the day, they would rather | :03:17. | :03:21. | |
not have the children maimed or killed, that is the point. The pilot | :03:22. | :03:23. | |
entry killed, that is the point. The pilot | :03:24. | :03:32. | |
-- we have had evidence saying that the premium tax is regressive on | :03:33. | :03:35. | |
young people, we know that you agree, I wanted to see if you all | :03:36. | :03:41. | |
agreed with the suggestion that there is a case for amending the | :03:42. | :03:44. | |
insurance premium young people tax rate. Yes. Absolutely and it is | :03:45. | :03:58. | |
certainly regressive. We have already had evidence on the relation | :03:59. | :04:09. | |
that telematics can have on reducing premium tax, have you had a thought | :04:10. | :04:12. | |
on how that might impact on all young drivers, both those who agree | :04:13. | :04:19. | |
to get the telematics and therefore get potentially a reduction in | :04:20. | :04:22. | |
insurance premium tax, and the general market for young people, | :04:23. | :04:25. | |
those who do not have telematics devices? Insurance is about | :04:26. | :04:35. | |
risk-based prices, so the evidence that is presented to you, you will | :04:36. | :04:38. | |
then feed the premium back. If they do not have the telematics box, they | :04:39. | :04:42. | |
will have a standard premium, but those who are prepared to moderate | :04:43. | :04:47. | |
their driving behaviour, not break the speed limit, they would be | :04:48. | :04:50. | |
awarded with a cheaper rate because that risk is reduced. The claims | :04:51. | :04:54. | |
will be lower. We do not need to collect that amount of premium. We | :04:55. | :04:57. | |
do not see any negative effects on those drivers that are not choosing | :04:58. | :05:07. | |
to go to telematics. We looked at the figures every year, there is a | :05:08. | :05:15. | |
40% increase on a year ago, so I think the spy in the car words that | :05:16. | :05:22. | |
the only male uses, I think that is passed. -- that the Daily Mail | :05:23. | :05:29. | |
users. I think more and more children use it. And I think parents | :05:30. | :05:34. | |
like it because they can look at the dashboard and see how the child is | :05:35. | :05:37. | |
driving and they are prepared to pay the premium. I think it is | :05:38. | :05:40. | |
responsible and it has definitely become more popular. One of the | :05:41. | :05:45. | |
things to emphasise is that the public policy outcome that we should | :05:46. | :05:53. | |
the -- we should be striving to get here is to improve the young | :05:54. | :05:57. | |
people's Mac driving. Telematics is one way of getting that end point. | :05:58. | :06:04. | |
We should not lose site of making sure the get to that end point to a | :06:05. | :06:10. | |
whole range of policy interventions. The increase of telematics, | :06:11. | :06:14. | |
absolutely, but let's get to the end point of improving road safety | :06:15. | :06:17. | |
outcomes. The absolutely clear international evidence is through | :06:18. | :06:20. | |
the introduction of graduated driving licensing. | :06:21. | :06:24. | |
The insurance sector also always says that the high cost of premiums | :06:25. | :06:31. | |
is to do with fraud. Our young people being unfairly penalised? How | :06:32. | :06:36. | |
much of the premium charge to young people is to do with fraud that they | :06:37. | :06:40. | |
have committed rather than fraud in the whole sector generally? Fraud is | :06:41. | :06:48. | |
a significant costs and the way that fraud gets allocated in a premium is | :06:49. | :06:51. | |
similar to the way that claims cost allocated. You associated with the | :06:52. | :06:58. | |
risk factors that people bring. You do not seek propensity for fraud | :06:59. | :07:02. | |
between customers who are 18 to 25 other than the fraud that the RAC | :07:03. | :07:08. | |
foundation talked about, fronting, Mr presenting risk. And often that | :07:09. | :07:14. | |
-- misrepresenting risk. And that is often inadvertent, think Mum as the | :07:15. | :07:22. | |
main driver and overtime it becomes the child's vehicle. In deliberate | :07:23. | :07:28. | |
fraud, cash for crash for example, we do not see that associated with | :07:29. | :07:31. | |
young drivers. Are you saying that the cost of insurance premiums for | :07:32. | :07:36. | |
young people, there is no evidence that that is his due to fraud in | :07:37. | :07:39. | |
your car collisions? There will be some fraud in there but the | :07:40. | :07:45. | |
propensity for fraud is in other age groups. Is that related to fraud | :07:46. | :07:50. | |
amongst young drivers or more generally? Young drivers are not | :07:51. | :07:53. | |
that associated with fraud. If you look at the cases where fraud is | :07:54. | :07:57. | |
found it is typically people involved who are over the age of 25. | :07:58. | :08:03. | |
We have found the same thing for applications for 17, 18, | :08:04. | :08:06. | |
19-year-olds, fraudulent applications are very low. I am | :08:07. | :08:09. | |
trying to establish whether those high premiums for young people | :08:10. | :08:13. | |
include an element for fraud to do with young people rather than fraud | :08:14. | :08:19. | |
generally. It will include an element of fraud that is to do with | :08:20. | :08:25. | |
young people, not other drivers. The biggest cost are fraudulent whiplash | :08:26. | :08:28. | |
claims from claims management companies who are not currently | :08:29. | :08:32. | |
regular kid by the SCA but are due to be and we are waiting for the | :08:33. | :08:36. | |
bill so I would encourage you to get that. -- they are not currently | :08:37. | :08:42. | |
regulated. That whiplash claim cost is spread over everyone of every age | :08:43. | :08:46. | |
range. So we are very happy to see some bills introduced which will aim | :08:47. | :08:52. | |
to reduce the cost of fraudulent claims. In the past, the insurance | :08:53. | :08:56. | |
industry had said that if changes were made in relation to whiplash | :08:57. | :09:00. | |
claims, premiums would come down and has not happened. It has not become | :09:01. | :09:05. | |
an act yet. This was promises made before when other changes were made. | :09:06. | :09:08. | |
The transport committee look at this issue and a clear promise was made | :09:09. | :09:14. | |
by the insurance sector that if certain recommendations were | :09:15. | :09:16. | |
followed the cost of the premiums would come down and that has not | :09:17. | :09:22. | |
happened. We saw the sentencing and punishment of offenders act, when | :09:23. | :09:25. | |
those changes were made, there were some changes to read insurance | :09:26. | :09:30. | |
premium, which was at -- Road insurance premiums which was | :09:31. | :09:34. | |
downwards, but since then whiplash claims have accelerated and the cost | :09:35. | :09:39. | |
on the industry has been enormous. What we are seeing, and what George | :09:40. | :09:44. | |
Osborne previously announced in the budget for that Karren Brady would | :09:45. | :09:50. | |
do an independent review of the claim management companies, that is | :09:51. | :09:57. | |
coming to fruition. The main changes that can be made to costs has not | :09:58. | :10:05. | |
been in acted. Aviva has said publicly that would be ?40 of | :10:06. | :10:13. | |
people's insurance, and once that is enacted, that will happen. We will | :10:14. | :10:17. | |
see if it happens. I understand in the US, because the | :10:18. | :10:21. | |
insurance market is more heavily regulated, vices are based on | :10:22. | :10:30. | |
actuary evidence, so there is a requirement that the price follows | :10:31. | :10:33. | |
the risk which is determinative whereas the UK has not got this. The | :10:34. | :10:37. | |
difficulty is, coming back to the difficulty is, coming back to | :10:38. | :10:42. | |
employment checks, we think something may happen but it does | :10:43. | :10:44. | |
not, because you come up with the price without having to demonstrate | :10:45. | :10:47. | |
it is absolutely following risk. That is why I come back to this | :10:48. | :10:52. | |
point, why does it cost so much for young people. That is true, my | :10:53. | :10:56. | |
understanding is that in most states the price is regulated and the way | :10:57. | :11:03. | |
to get the costs decided is to prove that the statistics are working as | :11:04. | :11:08. | |
required. Shouldn't we have the same thing in this country so we can | :11:09. | :11:12. | |
absolutely tell that the price is based on risk as evidence, rather | :11:13. | :11:17. | |
than your industry saying this is the cost? I think there is a lot of | :11:18. | :11:21. | |
evidence that price regulation is a barrier to competition in those | :11:22. | :11:24. | |
markets. In the UK with price comparison website, we have the most | :11:25. | :11:28. | |
competitive insurance market in the world and that in itself will act as | :11:29. | :11:32. | |
the pressure valve which make sure that nobody tries to make too much | :11:33. | :11:36. | |
profit on young drivers. If anyone can see a way of ensuring driver who | :11:37. | :11:42. | |
is young more cheaply, they will bring down the price, which is why | :11:43. | :11:49. | |
the telematics have been so successful, as soon as someone did | :11:50. | :11:52. | |
it, the prices came down and the market starts to grow and become | :11:53. | :11:57. | |
competitive. It taken to another point, because we do not know. In | :11:58. | :12:04. | |
years come by, it is assumed that young drivers are risky because they | :12:05. | :12:11. | |
are inexperienced and more foolish and less mature. And now older | :12:12. | :12:15. | |
drivers playing around with gizmos inside their cars, more technology | :12:16. | :12:19. | |
around you, strikes me that our aged traffic has changed and we are all | :12:20. | :12:24. | |
more naive. But it is still weighted towards young people | :12:25. | :12:26. | |
disproportionately. Because we cannot get to the evidence on it, I | :12:27. | :12:30. | |
struggle to understand whether it is the case or not. I do not dig it is | :12:31. | :12:37. | |
disproportionate, the risk is, the premium goes where the risk is | :12:38. | :12:39. | |
presented. I take your point that a cart as an environment is coming | :12:40. | :12:44. | |
more distracting and that causes accidents but in terms of the data | :12:45. | :12:49. | |
and what we see, we do not seek that older drivers are being distracted | :12:50. | :12:52. | |
and having many more accidents. In fact the frequency of accident in | :12:53. | :12:56. | |
general in the UK is coming down over time. The place where you see | :12:57. | :13:01. | |
an increase in risk is at very old age is where it is difficult to | :13:02. | :13:04. | |
predict where somebody will become less able to control their vehicle. | :13:05. | :13:08. | |
Another point is that the cost of care long-term for a young driver | :13:09. | :13:15. | |
for the next 50 years, it is going to cost an insurer much more than an | :13:16. | :13:22. | |
older driver. That is a key factor on why it will cost so much more. In | :13:23. | :13:27. | |
particular we have been discussing calls for a cap on current rents for | :13:28. | :13:36. | |
18-25 -year-olds. -- on car insurance. Why do you think that is | :13:37. | :13:41. | |
a bad idea? I think the cost will be hot on to other motorists which I am | :13:42. | :13:44. | |
sure they would not agree with. When we looked at the online survey that | :13:45. | :13:48. | |
this committee were involved in, we saw many respondents saying they | :13:49. | :13:52. | |
they did not want the cost part onto them. We also believe that there is | :13:53. | :13:58. | |
no incentive for risk management, so young drivers could get high-powered | :13:59. | :14:03. | |
cars, drive badly, get convictions, and still get a cap premium which is | :14:04. | :14:09. | |
not sensible. The other point is that some insurers would say it is | :14:10. | :14:12. | |
not affordable, it will cost them far more in claims and they are not | :14:13. | :14:16. | |
going to provide capacity for young drivers any more. That is very | :14:17. | :14:24. | |
strong reasons from a perspective. Touching on telematics, you have all | :14:25. | :14:27. | |
given anecdotal evidence about how telematics improve driver behaviour, | :14:28. | :14:32. | |
particular in younger drivers, but what evidence exists? The Road | :14:33. | :14:38. | |
safety foundation did some research with an insurance company and a | :14:39. | :14:43. | |
broken member, and the evidence they have had has produced a report which | :14:44. | :14:47. | |
I have -- a member who is a broker, it hasn't juiced a report I -- has | :14:48. | :14:55. | |
produced a report J have here. There is a 40% reduction in crash risk | :14:56. | :15:03. | |
which is most welcome. The cost benefit analysis was done and it | :15:04. | :15:08. | |
showed that if you could reduce the rate to zero over a seven-year | :15:09. | :15:13. | |
period, there was a ?699 million benefit for that. Because of the few | :15:14. | :15:21. | |
incidents, 1000 fewer serious incidents, the cost for the | :15:22. | :15:26. | |
government losing taxes ?487 million so there is a net profit for the | :15:27. | :15:31. | |
government. There is accosted analysis. I know that Marmalade has | :15:32. | :15:33. | |
some positive statistics as well. One in 16 have an accident in the | :15:34. | :15:43. | |
first six months, rather than the one in five over the national | :15:44. | :15:50. | |
survey. We send e-mails out at 2.00am so they have it when they | :15:51. | :15:55. | |
wake up and found both drivers registered on the policy, and can | :15:56. | :16:00. | |
say if one is driving badly. 99% of the time we are getting support from | :16:01. | :16:06. | |
the parent and it is sorted out. Occasionally we don't, some parents | :16:07. | :16:10. | |
seem oblivious to what their little darlings are doing. One recently | :16:11. | :16:14. | |
told us that the system was not calibrated to her son's style of | :16:15. | :16:22. | |
driving! But what was worse, 48 hours later, he wrote off two cars. | :16:23. | :16:26. | |
Oh, dear. This is positive but what I would be | :16:27. | :16:32. | |
interested to know is why, according to the survey, 46% of those that had | :16:33. | :16:38. | |
telematics so a decrease or reduction in the insurance premium? | :16:39. | :16:44. | |
Ours are significantly reduced. On renewals, we are down to an average | :16:45. | :16:49. | |
of 40% of the first year's premium, we have gone up to 66% in some | :16:50. | :16:54. | |
cases. So we do look at how they have been driving and work it out at | :16:55. | :16:58. | |
the end of the year. If you are driving well, the premium is down. | :16:59. | :17:02. | |
. There are three times of the system. The mileage base, the lower | :17:03. | :17:09. | |
miles, the curfew based system, where if you drive at night it costs | :17:10. | :17:14. | |
more and the behaviour base, the acceleration, the breaking and G | :17:15. | :17:17. | |
force and general behaviour over speeding. It depends on the system | :17:18. | :17:23. | |
you have as to what is suitable. If you run a night shift you don't want | :17:24. | :17:29. | |
the curfew policy. But I agree with Nick, in that the telematics, they | :17:30. | :17:33. | |
show a higher success rate than the one you mentioned. They give the | :17:34. | :17:39. | |
customers the discounts for the better driving ratio. | :17:40. | :17:44. | |
The fact you have chosen to have the box in the vehicle, it is means that | :17:45. | :17:50. | |
your starting premium is lowered. So for the curfew, that is fixed for | :17:51. | :17:54. | |
the policy year unless you break the curfew. That is part of the deNamic | :17:55. | :17:59. | |
that is happening there. We found we did it to begin with, | :18:00. | :18:05. | |
and we found that kids were rushing back in the evening. We found a | :18:06. | :18:11. | |
number of young people who are trying to get part time jobs to pay | :18:12. | :18:15. | |
for the cars to pay for insurance. They are working in restaurants in | :18:16. | :18:20. | |
the evening, McDonald's, they have to get home. We found they are more | :18:21. | :18:26. | |
responsible. The once we found the worst are the once where the parents | :18:27. | :18:31. | |
give them everything on a plate. What work is being done so that | :18:32. | :18:37. | |
telematics does not penalise part time workers, people working night | :18:38. | :18:42. | |
shifts, nurses, careers who don't have a choice to work night shifts. | :18:43. | :18:48. | |
We don't penalise for that at all. Sadly, many still do. | :18:49. | :18:50. | |
Many do, yes. There are insurance policies selling | :18:51. | :19:06. | |
fewer units, the behaviour ones give the driver control over elements of | :19:07. | :19:09. | |
their people yum, which is what we are after. | :19:10. | :19:15. | |
What we found is that the level of single vehicle accidents by having a | :19:16. | :19:21. | |
telematics box, looking into the acceleration, going into corners, | :19:22. | :19:26. | |
heavy braking, stopping that reduces single vehicle accidents hugely. | :19:27. | :19:31. | |
Three years ago we had 16 in a year, the following year we had one. | :19:32. | :19:43. | |
That issue about driver behaviour, I had an advanced driving lesson to | :19:44. | :19:46. | |
teach me to drive economically, to get the most out of fuel that | :19:47. | :19:52. | |
involved things like slowing down, reading the traffic in advance, | :19:53. | :19:57. | |
making sure I did not speed up and slap on the brakes at the Lewis | :19:58. | :20:00. | |
Hamilton, all of those sorts of things but if we were to do more in | :20:01. | :20:05. | |
the driving instruction, before people pass their tests, to teach | :20:06. | :20:10. | |
them more about the economics of driving, given that fuel is a | :20:11. | :20:15. | |
significant cost in driving, would that assist in reducing the number | :20:16. | :20:20. | |
of accidents especially amongst young drivers by improving their | :20:21. | :20:23. | |
behaviour as they are understanding the machine that they are driving | :20:24. | :20:29. | |
more and more sympathet click. It would but they don't tend to look | :20:30. | :20:34. | |
at the cost that much. That's why we are here? Yes but they don't look at | :20:35. | :20:40. | |
the cost of the future. You and I know if we drive sensible, you get | :20:41. | :20:44. | |
more miles to the gal on but many don't take that into consideration | :20:45. | :20:48. | |
as much as we would like them to. You are right. A member of ours from | :20:49. | :20:57. | |
the AA, who does drivers courses, can show a speed awareness course, | :20:58. | :21:00. | |
the learnings from those are fantastic. We believe that if they | :21:01. | :21:04. | |
could be put into the driving test process, it would help. | :21:05. | :21:08. | |
Northumberland police ran a survey on people that are taking the | :21:09. | :21:12. | |
courses and erevisiting them a year later to see if it has stuck. And | :21:13. | :21:19. | |
the frequent results are that 78% of the people on the course are more | :21:20. | :21:26. | |
likely to keep to the speed limit. 91% learn something new and 96% say | :21:27. | :21:30. | |
that the courses should be offered to others. Our view is not to offer | :21:31. | :21:35. | |
it after they have offended and risked lives but to put it into the | :21:36. | :21:39. | |
driving test to prepare people before they are out there, that will | :21:40. | :21:45. | |
mean fewer claims and cheaper premiums for the young drivers. | :21:46. | :21:52. | |
The RAC Foundation Suggs that premiums could be reduced by | :21:53. | :22:01. | |
introducing driving education -- RAC fun deportation suggestion that | :22:02. | :22:05. | |
premiums could be reduced by introducing driving education, what | :22:06. | :22:08. | |
is your thought on that? It is important for the committee to focus | :22:09. | :22:12. | |
on the quality of the learning that takes place before the test, and the | :22:13. | :22:17. | |
number of accidents that happen afterwards. The evidence suggests | :22:18. | :22:22. | |
that we don't have a robust testing and training system in this country. | :22:23. | :22:28. | |
So picking up the RAC's point and to the nub of your question, I think we | :22:29. | :22:32. | |
must grapple getting a driving test that is fit for purpose, that | :22:33. | :22:37. | |
exposes young people to the variety of different driving conditions that | :22:38. | :22:42. | |
they are likely to experience, especially in the first six months | :22:43. | :22:47. | |
post passing their test when we know that they are most likely to have an | :22:48. | :22:53. | |
accident. So getting the test right, challenging them in the test, to | :22:54. | :22:58. | |
expose them to the raft of driving conditions is critical. | :22:59. | :23:04. | |
And a consequence consequence is allowing people to drive on a | :23:05. | :23:14. | |
younger age but driving with the education post qualification. | :23:15. | :23:18. | |
And we spoke about a driving licence, how much could, or should a | :23:19. | :23:23. | |
young driver expect to save on their car insurance by taking such a | :23:24. | :23:29. | |
course? . There is a document here from 2012, I think from memory we | :23:30. | :23:34. | |
were talking about a 20% reduction on the average premium. So that is a | :23:35. | :23:41. | |
significant cost saving when the premiums are so high. | :23:42. | :23:51. | |
Alt Christmas we were in Israel, we were visiting a company, if I pull | :23:52. | :23:59. | |
out of a lane without indicating, there are sirens that go off in the | :24:00. | :24:08. | |
car. What cost savings could younger people have if they have those | :24:09. | :24:14. | |
alarms in the cars? It is recognised by the industry. The car group give | :24:15. | :24:24. | |
ratings to the car. Where there are vehicles fitted with certain | :24:25. | :24:29. | |
technologies, emergency braking, they tend to rate the car groups and | :24:30. | :24:36. | |
that is reflected in the premium. It is taken into account. It is in the | :24:37. | :24:42. | |
newer vehicles, and the more promotion of that, the more support | :24:43. | :24:45. | |
we can give. And the brand I mentioned, Mobili, | :24:46. | :24:51. | |
there can be a retro fit, where it does not brake for you but can give | :24:52. | :24:57. | |
you a warning, which the evidence suggests, that is helpful to cause | :24:58. | :25:06. | |
less damage as possible. Will this reduce the premium? It is | :25:07. | :25:12. | |
something it is harder than if it is fitted from new. As you must be sure | :25:13. | :25:18. | |
as to how and who has fitted it. But there are insurance brokers who | :25:19. | :25:23. | |
consider that. Dash cams and such, so it is something that we can help | :25:24. | :25:28. | |
with. But the problem with that is it puts the cost up. The insurance | :25:29. | :25:35. | |
premium may come down but they have had to pay ?1,000 to get the | :25:36. | :25:38. | |
technology. How much could the premium come | :25:39. | :25:43. | |
down? I don't know. But if it came down by 10%, you are saving on | :25:44. | :25:52. | |
?4,000, you are saving ?400 but it costs ?1,000 for the technology. | :25:53. | :25:59. | |
In four or five years' time it will be not a bolt on but an essential | :26:00. | :26:05. | |
item, and I suppose that the point is will we see the insurance | :26:06. | :26:11. | |
premiums fall or is it something that will be built into the price? | :26:12. | :26:16. | |
There is a package with the manufactures where they give us a | :26:17. | :26:19. | |
discount that pays for the insurance. Those cars with all of | :26:20. | :26:23. | |
this on, the cost of the insurance is considerably less. | :26:24. | :26:30. | |
We are seeing that frequency of coming down that is great. Of course | :26:31. | :26:34. | |
if the cost of paying the claims is going up, that is an off setting | :26:35. | :26:38. | |
factor. Or like the previous promises that | :26:39. | :26:42. | |
the sector made that something was going to come down, it didn't, it is | :26:43. | :26:47. | |
because another factor went up? If we were making money in the market, | :26:48. | :26:52. | |
I would have sympathy but we are not. | :26:53. | :27:00. | |
Mrs Olsson? The really important thing to remember is that the | :27:01. | :27:02. | |
technology that you are talking about tends to be in cars at the | :27:03. | :27:08. | |
higher end. Those are the cars that young drivers tend not to be | :27:09. | :27:13. | |
driving. As time goes on, you will see those cars entering the fleet as | :27:14. | :27:19. | |
they are sold on to second-hand cars and those young people will drive | :27:20. | :27:24. | |
the cars with that technology and the premiums will reduce as a | :27:25. | :27:29. | |
result. But at the moment those cars are at the higher end of the market. | :27:30. | :27:38. | |
A new fiesta still costs ?14,000, the cars with the technology it is | :27:39. | :27:43. | |
about ?21,000. That is a lot of money for a young | :27:44. | :27:46. | |
person. It is but it is all relative. It | :27:47. | :27:52. | |
will come down. I want to get this on the record | :27:53. | :28:08. | |
that the person that created the petition, said: Why don't we make | :28:09. | :28:14. | |
the drivering test better? What are your thoughts on that. I agree. That | :28:15. | :28:20. | |
issue about semiautonomous vehicles, I don't think we will have them as | :28:21. | :28:27. | |
you will never pay out on them. But the if we are to have the | :28:28. | :28:33. | |
semiautonomous vehicles you must have done some research and market | :28:34. | :28:37. | |
research into what the impact that is going to be on your market? | :28:38. | :28:43. | |
Inevitably, once these cars become safers and there are fewer | :28:44. | :28:47. | |
accidents, so what assessment have you made of the impact of | :28:48. | :28:51. | |
semiautonomous vehicles on your market? There is lots of evidence to | :28:52. | :28:56. | |
say that the utility of motoring insurance as we see it will be | :28:57. | :29:04. | |
reducing over time. The timescale is the very first autonomous vehicle, | :29:05. | :29:09. | |
avoiding accidents, could be five years away at the very top end, then | :29:10. | :29:14. | |
another ten years to go through the car pool to the lower models and | :29:15. | :29:21. | |
another 10 years for a replacement of vehicle, so that sort of | :29:22. | :29:27. | |
timescale of 25 years. But what will also happen, rather than people | :29:28. | :29:31. | |
being worried about accidents killing and injuring people, and may | :29:32. | :29:38. | |
that day come quickly, people are worried about getting to one place | :29:39. | :29:43. | |
in a certain of time, and the nature of all of that will change in 25 | :29:44. | :29:46. | |
years. That is interesting. So, basically, | :29:47. | :29:54. | |
if you were in charge of the Government and heaven if forbid if | :29:55. | :29:59. | |
the insurance companies were in charge of the Government but what | :30:00. | :30:08. | |
would you do for the premiums to be reduced for young people? We have a | :30:09. | :30:16. | |
plan for young drivers with telematics, the improvements to the | :30:17. | :30:22. | |
driving tests as mentioned. Greater promotions of the driver advance | :30:23. | :30:27. | |
systems, promotions from the single guidance body from the Government. | :30:28. | :30:36. | |
Advanced driving courses. And getting the whip lash bill through, | :30:37. | :30:41. | |
that will have a massive effect on the premiums. The discount rate that | :30:42. | :30:46. | |
we saw yesterday, that must be looked at and reviewed. And finally, | :30:47. | :30:54. | |
the insurance form taskforce had 26 recommendations to reduce insurance | :30:55. | :30:57. | |
fraud and we need Government to help work us through with that. What can | :30:58. | :31:03. | |
the insurance sector do? It is recognising all of these things. We | :31:04. | :31:08. | |
are sitting with the Government groups with the Department for | :31:09. | :31:14. | |
Transport, the Treasury, giving new products for discounts for | :31:15. | :31:17. | |
autonomous emergency braking and telematics. So the insurance | :31:18. | :31:21. | |
industry is in 2 with the Government, this is a public/private | :31:22. | :31:26. | |
partnership to get the premiums as competitive as we can for the young | :31:27. | :31:28. | |
drivers. Thank you very much. Order. Order. | :31:29. | :32:00. | |
Order, order, thank you very much for coming to see us. As you can see | :32:01. | :32:06. | |
by looking in our direction, the whole committee without exception is | :32:07. | :32:11. | |
operated take | :32:12. | :32:12. |