Young motorists are unaware of how their driving behaviour affects the cost of cover. Nigel Bartram (senior motor strategy manager at Aviva) looks at what can be done to counter this.
In the UK, the government continues to try to articulate and drive forward its Big Society scheme. David Cameron’s agenda could be described as individuals showing more personal responsibility for their wider community.
However, from an insurance perspective, this aspiration to greater personal responsibility has been increasingly absent from the private motor arena. It comes as no surprise to our sector that the modern motorist looks after themselves, wants to pay the lowest premium and ignores the knock-on effects of making a claim.
All motorists contribute to outcomes, and every time a driver inflates or makes a false claim, it simply fuels the fire of claims inflation. But it doesn’t have to be this way. It is not looking through rose-tinted glasses to say, at one time, people had a different attitude to insurance. For example, there has always been an issue with uninsured drivers, simply not at the present level.
Educational imperative
Some of us will remember when loyalty to insurance companies existed, with motorists maintaining long-term policies with one provider. With that came a more stable commercial environment, customer loyalty and a culture of taking personal responsibility by not making unnecessary claims. It was a far cry from today’s phenomenon of multi-party whiplash claims.
Clearly society, the industry and competition has moved on. However, as an industry, we have failed to explain clearly that people’s claims today are their insurance premiums tomorrow. And one of the areas where this is needed most is with young drivers’ insurance.
There is a public perception that insurers are making huge profits from young drivers — and who can blame them for their thoughts? The differential in claims costs between a 17-year-old and a 50-year-old driver is higher than it’s ever been. Also, there are more claimants per claim. Consequently, premiums reflect the industry-wide claims spend and the risk we have to cover.
Understanding motor insurance — and personal finance generally — should be on the school curriculum from early teenage years in order to develop practical knowledge of how insurance works. If we show young people how a premium breaks down, where the money goes and combine that understanding with road safety training, it should sow the seed of better driving behaviour in the future.
Schooling drivers
At the moment, there is no consistent national approach. A case in point is the Highway Code, which features no more than half a page on insurance. Driving lessons and the eventual test constitute practical elements of vehicle control and road craft while obeying road signs. It has definitely improved, but it’s not necessarily designed to create responsible citizens behind the wheel of a vehicle.
There is, currently, an imbalance between giving young people the right to drive a car and imbuing them with the responsibility that goes with it. And, despite the volume of available data about road accidents, injuries and fatalities, it doesn’t seem to figure in the learning to drive process.
The Department for Transport believes in the post-driving test training and, in principle, it is a good idea but its current focus is on helping young drivers to achieve lower premiums. How likely is it to reduce claims and make a positive difference to accidents, serious injury and death on the road? The existing evidence suggests that it will not.
Ideally, the learning to drive process should start several years before young people reach the age where they can obtain a licence. Consequently, it should lead to fewer claims. Otherwise, adults will have to face the fact that their motor premiums will continue to rise to subsidise the young, which is not an easy idea for responsible drivers to stomach.
Another pressing issue affecting young drivers, and their parents, is making the right choice of car. It’s astounding how many parents will opt for a cheap, old car as their child’s first vehicle “in case they have an accident”. In fact, more than 50% of parents pay £500 or less on a first car for their offspring, which doesn’t buy a lot of safety features.
For parents, funding their child’s car equates to a lot of money, but they don’t always realise how costly it will be. Their attempts to reduce the outlay can result in tactics — such as ‘fronting’ — that only invalidate a future claim. Getting to parents before they start the process means we can influence the choice of car, hopefully leading to the selection of a safer vehicle and obtaining a more affordable premium.
Understanding implications
Beyond young people and their parents taking a greater responsibility for safe driving, however, the motorist at large could also do more to help fight that other unnecessary cost to the motorist — fraud.
Again, if legitimate drivers and members of the public were to better understand how fraud affects what we all pay for the privilege of motoring, they might be more willing to make an anonymous phone call to report a suspected crash-for-cash scam.
That, unfortunately, is only part of the challenge, as the police face ever-stretched budgets and resources to allocate to fraud investigation. The insurance industry is doing much to share data and target known fraudsters. But, meanwhile, members of the public and the police still have a vital part to play.
If the Big Society concept were to apply wholesale to motorists, it would be about every person recognising the outcomes of their actions — how the way they drive and how they teach their children to drive affects the premiums they pay. If a genuine shift in education and, in turn, driving attitudes can be achieved, we will have a very real opportunity to reduce the number of fraudsters, accidents, claims and, therefore, insurance costs.
Source: PostOnline
