Rachel Gordon reports on the growing trend for motor insurers to offer cover to drivers holding a provisional licence.
According to road safety charity Brake, one of the reasons more young drivers crash is that the frontal lobe of the brain — which helps control instincts and emotions — is not fully developed until a person's mid-20s. Clearly, this is just another headache for insurers trying to control and quantify one of the motor industry's worst risks.
Brake gives numerous other reasons including over-confidence, feelings of invincibility, a love of speed, predilections for alcohol, tendencies to show off in front of friends and being poorer at assessing risks.
But before a young driver is let loose on the road, many will have driving lessons while holding a provisional licence and, in addition to this, practice sessions. Bearing in mind learner drivers must always be accompanied, coupled with the fact they are likely to be more cautious prior to passing their test, the risk they present is likely to be lower — and insurers have cottoned on to this, with a number now providing insurance for those holding a provisional licence.
Perennial problem area
Ian Crowder, spokesman for AA Insurance, says: "Young drivers are a problem area and we've been having a lot of discussions with our panel about different solutions. This includes launching a provisional driver product in the next few months, which may include some type of telematic solution and/or a reward system."
Much of the attention in this sector to date has been grabbed by Provisional Marmalade. This is an offshoot of Young Marmalade, a scheme that provides small-engine quality cars for young drivers with insurance combined and also requires them to take additional training.
Provisional Marmalade, underwritten by Chaucer, allows the young driver to have their own insurance while they practice supervised in a family or friend's car — thereby protecting any no claims bonus held by the car owner.
Co-founder of Provisional Marmalade Nigel Gray, comments: "We can provide cover for around £3 a day, and it is made even more affordable because learners can buy cover for short periods, such as when they are on school or university breaks."
However, he emphasises that concerted efforts must be made to ensure that when the driving test has been passed, and a full licence can be obtained, provisional cover becomes invalid. "There are already young people driving around with no insurance as a provisional policy has become void. The industry must make sure there is full understanding."
Meanwhile, Quinn Insurance, which has been put into provisional administration in Ireland, was told last month by the Irish regulator that it could again start writing cover for provisional drivers in the UK — the first product line it was allowed to re-enter after suspending operations here.
Jeremy Moll, commercial director for price comparison site Compare the Market, says: "One of the provisos for this was that Quinn has had to increase its pricing on the product and premiums have gone up noticeably. It's a sensible move as bodily injury claims have increased substantially and we want to see a sustainable market."
Graeme Trudgill, technical and corporate affairs executive for the British Insurance Brokers' Association, adds: "There has been tinkering around the edges and, clearly, products like provisional driver cover are helpful. In particular, being able to buy insurance for a few months while having lessons is going to be an easier option, but there is also a lot more work to be done in the wider area of young drivers and accident prevention and this could be tied in when taking lessons."
He points out that while some insurers offer discounts for completing a Pass Plus programme, this has had negligible impact on claims. "There has to be more education. Newly qualified drivers are often finding premiums to be in excess of £4000 and some of those caught driving without insurance try to use this as an excuse. We've spoken to the Department of Transport about refreshing Pass Plus so it is more stringent and has more on hazard perception. There also needs to be more in schools and irresponsible driving must be shown to be socially unacceptable."
Mr Crowder adds that the AA is also working on a number of educational initiatives, including linking up with police forces to provide free driving lessons through its driving school, to those deemed at risk. "It's provided by the AA Charitable Trust and based on our Drive Smart training, which includes sessions on safety and being a more fuel-efficient driver. The problem is, those who are likely to be the most dangerous drivers can be opposed to tuition — and we need to find ways to get round that."
Steve Sweeney, head of motor insurance at price comparison site Money Supermarket, agrees education is key. "Some young drivers will start getting quotes after they have bought a car — but a Golf, for example, is going to be way more expensive than a Polo. Small, low power vehicles should be what they are thinking about when they are learning."
He believes aggregators are likely to be first choice for most young drivers whether buying provisional cover or cover for their first car. "It's what they are used to and we are talking to providers currently about ways to boost accessibility. Telematics has to be one of the answers."
Insurance with restrictions
Matt Munro, managing director of Igo4, which provides products for aggregators, says UK insurers are likely to be looking to the US, where there is a well-established industry providing insurance with restrictions — for example, limited mileage and not driving at night. "Telematics still involves the hassle of getting a box installed, but there is progress in this area and costs are coming down. Beyond this, provisional cover is growing and I also see potential in a new product for drivers who have had a year or more of no claims driving, and who are perhaps in their early 20s."
Ian Hughes, managing director of research consultancy Consumer Intelligence, has a 17-year-old daughter about to start driving lessons and is a potential provisional driver policyholder. "This is a sensible product but, beyond this, it is a bigger issue when they pass. While there are some sensible young drivers you also get some horrific accidents, so more does need to be done in terms of car manufacturers, insurers and parents getting involved. Perhaps in the future, we could see a young driver having a car key that would mean they are restricted in the speed they can drive at or not be able to have excessively loud music."
As Mr Crowder concludes: "Government figures show eight out of 10 accidental deaths, from any cause, of men aged 15 to 19 are on the road — as drivers or passengers in cars. This is much, much more than drugs, stabbings or work-related accidents, which tend to grab headlines. This is something that is talked about a lot — now we also need to see more action."
Insurers on a learning curve
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