Accountancy firm Mazars is the latest company to suggest that last year’s record rises in the cost of cover for newly qualified motorists are likely to continue over the next few years.
Mazars spokesman Craig Scarr believes that the cost of an average annual policy for drivers aged 17 to 20 could hit £3,600 a year by 2013 – an increase of 50 per cent on the figures for the end of 2010.
This view echoes recent findings from Datamonitor, which said that planned government reforms of the personal-injury system – thought to be responsible for a large chunk of premium rises – would not result in lower insurance costs for several years.
Scarr said: “We are already seeing younger adults being priced out of car ownership and this will hit even harder over the next year or so as a typical premium for a young adult rises from £2,400 currently to over £3,600.”
Scarr believes that huge numbers of young people in areas where public transport is unreliable could face severe problems in simply getting around.
He says: “It is pretty unprecedented for insurance changes to have a sudden and dramatic affect socially on Britain, but we are certainly likely to see this in the very near future.”
“Black box” solutions
So what can young drivers do? Scarr says that technology is the answer.
“The insurance industry needs to look at innovative ways to allow young drivers to get affordable insurance, while penalising boy-racers,” he says.
“A good example is telematic trials which allow drivers to be monitored and get reductions for driving safely or not at night. Novel ideas such as this need to become mainstream if these massive premium increases are to be mitigated, otherwise we will see a whole swathe of younger drivers with no, or fraudulently bought, insurance.”
Insurer Young Marmalade is one provider which is already offering customers the chance to cut costs by agreeing to have their driving monitored by an on-board computer, or black box.
The firm’s scheme is known as Intelligent Marmalade, and it uses motion sensors to collect data on each driver’s cornering, acceleration, braking and speed. This is fed back to the customer and the company, and poor or reckless drivers can be penalised with higher premiums.
Young Marmalade is unusual in that is sells car and insurance packages to young drivers, offering models which are relatively inexpensive to cover with good safety ratings.
Young Marmalade is far from the only company offering this kind of innovation, also known as telematics or telemetrics.
Earlier this year, the Co-op entered this market with its “Smartbox”, aimed at 17-25 years olds.
Other insurers offer similar policies, but instead of analysing driver behaviour, premiums are based on the number of miles driven, and at what time of day the car is used (accidents are more likely to occur at night, for example).