– Carrot insurance urges the Government to support young drivers in the 2016 Budget
– Plough IPT revenue from U23s into road safety, says Carrot director Ed Rochfort
Carrot, the insurance company for young drivers, has urged Chancellor George Osborne to exempt young drivers from IPT if they purchase an approved safe driving telematics programme within a year of passing their driving test.”
Ed explained that Carrot customers will pay well over £2m in IPT this year, but on average the company saves insurers over £5m each year in lower claims costs because Carrot drivers have fewer accidents than those who don’t use their telematics insurance product.
He added: “If you include taxpayer savings that accrue from making less use of the emergency services, healthcare and rehabilitation, the mutiplier effect of reduced accidents adds up to many millions of pounds of benefit from Carrot alone.”
He said: “Over 80% of Carrot customers are insureds in their first 2 years of driving, and we have reduced accident frequency by 42%, compared with a young driver insurance book with no telematics-led intervention.” The insurance also includes regular advice and intervention from the firm’s risk management team.
Ed added: “If the Government was serious about road safety, it would use IPT revenues in a smarter manner, and take bold steps to encourage youngsters to use telematics when they drive.”
He said that the average premium for 17-22 year-old drivers is nearly £1,360 (i) annually, compared to the national average of approximately £670 (ii), “meaning young drivers pay more than double the amount of IPT than, say, their parents.”
On top of the motor insurance cost, the 400,000+ young people entering the insurance market each year will have also paid £1,128 to learn to drive, if they have followed the DSA’s recommended 47 hours of tuition.
He said: “Driving is a massive financial outlay for young people, but often, and especially in rural areas, a car is essential to find work or travel to college.”
Ed said: “Car accidents are often a tragedy for families, as well as being a significant burden on the public purse, so why not invest in doing something significant and positive which could save lives and reduce costs in the long term? Giving a fiscal nudge to encourage young people to opt for telematics-based car insurance will enable the Government to make a major contribution to road safety.”
(ii) Towers Watson
At Oct 2015, there were 2.149m drivers aged 18-23 with a full licence and 1.673m with a provisional one.
In 2014 the average claim (non bodily injury) for 18-20 drivers was £3667 and for 21-25 £2905 (source ABI).
ABI figures for 2014 state that the overall average claim, for all drivers is £2762 and with bodily injury £11292.