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The Association of British Insurers has put forward proposals to the government to improve young driver safety at its 2013 Motor Conference. The ABI claimed that implementing these proposals would result in young drivers insurance premiums being cut by up to 20%.
The ABI's Director General, Otto Thoresen said:
"Every car crash is a personal tragedy for those involved, family and friends. Sadly young newly qualified drivers are at a much higher risk of having a serious crash on our roads which is reflected in the cost of their car insurance. Insurers want to see young drivers become safe drivers which in turn will result in more affordable premiums. If the Government implemented the ABI's proposals lives would be saved and the cost of car insurance for young drivers could reduce by 15-20%.”
The ABI say the average annual premium for a 17-18 year old driver is £1853 and the potential reduction in premiums for 17-18 year old would be up to £370 per year.
Of course, if you have a minimum one year learning period you wouldn't have any 17-18 year olds with a full licence unless the minimum age for learning was reduced. As many young drivers have found out, passing the driving test comes with a massive hike in insurance premiums reflecting the increased risk of driving unsupervised.
Northern Ireland already runs a graduated licence scheme for new drivers where newly qualified drivers have to display an R-plate and be restricted to 45mph. They are currently legislating for changes broadly in line with the ABI's proposals. This will reduce the minimum age for learners to 16½ but enforce a minimum of one year as a provisional driver. Newly qualified drivers will have to display an N-plate for two years and will not be allowed to carry young passengers except immediate family for six months after passing the test.
We ran a few quotes, all based on the same fictitious young driver working as a customer advisor in bank, driving 8000 miles a year in a Toyota Aygo in the Guildford area. A parent with a clean driving history was added as a named driver.
At the age of 17½ years, having just passed the test our young driver gets a best premium of £1,823 with a telematics box.
Putting off driving for a year to 18½ but changing nothing else reduces that premium by £293 to £1,554 again with a telematics box. So there's 15% saved of the ABI's 15-20% already!
Passing at 17½ and either not driving for a year or driving as a named driver on a parent's insurance without any accidents reduced the premium when 18½ to £824.
The lowest premium of £731 was returned for our young driver as an 18½ year old having earned a years NCD.
Why did we add a parent as a named driver? The simple answer is that insurance companies like it if you do. A middle aged driver with a clean driving licence and claim free history is a good risk thus reducing the overall risk profile. There may also be a relationship between safer parents producing safer children.
Removing the named driver parent from the first quote increases the premium by over 20% from £1,823 to £2,213! Obviously it won't work as well if you don't have a parent with a good driving history but older brothers or sisters can help too.
All of these quotes were obtained from the MoneyMaxim car insurance comparison site.