Young drivers insurance

YAZZ_2

Why do all young drivers have to be punished???? I can not get insurance for my son under 2500!!!:mad:
He has worked hard for his test and has pass plus but still he is classed as a bad driver!!! He is in school but also works part time. Yes I understand that statistacially they are more lkely to have an accident.....but we cannot class all in same box.
Why can'there be a fairer system???

example;
1;offer only 3rd party insurance. Possibly stop them buying fast expensive cars. Allow them to build up to Third party fire theft after number of clean years and further to comprehensive later on.
2; And/or put the excess up to 1000,2000
3; Have guarantors??? I'd be happy to back my son as I have every confidence in him.

Major problem now, is that these loonatic drivers are driving without insurance, and who's paying the price for that???
I know we will never stop ar**holes avoiding insurance but there HAS to be a better way.

CLAPTON

YAZZ wrote: »

Why do all young drivers have to be punished???? I can not get insurance for my son under 2500!!!:mad:
He has worked hard for his test and has pass plus but still he is classed as a bad driver!!! He is in school but also works part time. Yes I understand that statistacially they are more lkely to have an accident.....but we cannot class all in same box.
Why can'there be a fairer system???

example;
1;offer only 3rd party insurance. Possibly stop them buying fast expensive cars. Allow them to build up to Third party fire theft after number of clean years and further to comprehensive later on.
2; And/or put the excess up to 1000,2000
3; Have guarantors??? I'd be happy to back my son as I have every confidence in him.

Major problem now, is that these loonatic drivers are driving without insurance, and who's paying the price for that???
I know we will never stop ar**holes avoiding insurance but there HAS to be a better way.

the current system is that
-they do often only offer 3rd party
-they do refuse to insure fast cars or charge huge tariff (£6,000 +)
-they do build up no claim bonuses for accident free years just like anyone else
-the excess is often 1000 or more
-whatever purpose is a guarantor... are you going to guarentee he would write off some-elses expensive car or that you will pay out say 50,000 or more in the event of an accident?


remember the insurance costs are mainly to cover the cost of the damage he may do to other people or their cars and not to himself or his car

has he taken an advanced driver test ?

what is he being charged and for what sort of car?
read the local papers... most weeks there is sadly a tale of some young person involved in a serious accident

YAZZ_2

well none of the insurers I have tried have asked for 1000 excess. THEY HAVE ALL OFFERED COMPREHENSIVE some insist on it!!! (and I have spent weeks going through 1000's!!!) Wasn't talking about NCB if you read my post correctly!!
And as for reading local papers????? Why the attitude???? I am a mum of 2 children and am the first to knock low life drivers!!! Their safety and those around is paramount so don't dictate unconstructively!!!

dacouch

I'll answer your post with facts so please do not take offence.

1) The vast vast amount of the cost of claims from young drivers (Especially young male drivers) is from the damage they do to other vehicles / property and especially injuries. A very significant amount of this is for injuries to the other drivers and especially the young drivers own passengers (They tend to have more passengers in a car than a normal driver). If they do serious injury to their own passengers who are often of a similar age the cost of lost of earnings for the rest of their working life and the possible 24 hour nursing costs for the rest of their life can and do run into many millions of pounds. Just one claim like this (They are surprisingly frequent for young drivers) can have a very significant effect on an Insurer financially.

Because of the above the vast majority of a young drivers premium goes into the premium for the third party element of the premium so just offering third party (Which many insurers do) would not make any difference to young drivers premiums.

2) Insurers can put an excess of £1000 or £2000 on a comprehensive policy for damage to the policyholders own damage but it puts customers off buying the cover. The chances are a young driver who has comprehensive and has an accident will not make a claim for their own damage with that size excess but the Insurer would still have to pay the claim out for the other parties.

The Road Traffic Act does not allow an Insurer to apply an excess to claims by third parties claims, the Insurer can however impose an excess and then ask their policyholder to pay them back the excess after the accident, however few companies do this as they often have problems actually getting the young drivers to pay the excess after the event.

3) Guarantors is an idea but how would you do it, the parent agrees to pay the first say £10000 of a claim, I cannot see many parents agreeing to do this especially if they actually understood how likely they chances of them having to actually fork out the £10000 is. If they did understand the risk the chances are they would rather pay the say £2500 in premium for their son.

Insurance in the UK is arguably the most competitive in the world, if there was an opportunity to make money by cutting young drivers then Insurers would be doing it. It's worth noting that an Insurer who did try this (Quinn) nearly went bankrupt this year and were only saved by the Irish government, as part of the agreement of coming out of temporary administration they had to agree to increase their premiums for young drivers to an amount that was not losing them money.

Insurance works on a pooling of risk basis, if every Insurer in the UK agreed to accept young drivers and reduced their premiums to an affordable amount it would mean they would have to drastically increase their premiums for all of the rest of their policyholders. Would you be happy if your premium of say £300 increased by £50 to make it cheaper for young drivers ? (I suspect the answer will vary from people with teenage children and people without teenage children).

The cost of Uninsured drivers adds approximately £30 to each motor policy in the UK.

I have seen the claims costs broken down for a major Insurer which showed the third party claims costs for young male drivers, if you had seen these in relation to the amount of premium collected for these drivers and compared against a normal driver you would be amazed. The Insurer in question had lost tens and tens of millions of pounds on young male drivers in one year. Their answer was to increase their premiums for young male drivers to price themselves out of the market as they did not want the risk on their books

mikey72

dacouch wrote: »

I'll answer your post with facts so please do not take offence.

1) The vast vast amount of the cost of claims from young drivers (Especially young male drivers) is from the damage they do to other vehicles / property and especially injuries. A very significant amount of this is for injuries to the other drivers and especially the young drivers own passengers (They tend to have more passengers in a car than a normal driver). If they do serious injury to their own passengers who are often of a similar age the cost of lost of earnings for the rest of their working life and the possible 24 hour nursing costs for the rest of their life can and do run into many millions of pounds. Just one claim like this (They are surprisingly frequent for young drivers) can have a very significant effect on an Insurer financially.

Because of the above the vast majority of a young drivers premium goes into the premium for the third party element of the premium so just offering third party (Which many insurers do) would not make any difference to young drivers premiums.

2) Insurers can put an excess of £1000 or £2000 on a comprehensive policy for damage to the policyholders own damage but it puts customers off buying the cover. The chances are a young driver who has comprehensive and has an accident will not make a claim for their own damage with that size excess but the Insurer would still have to pay the claim out for the other parties.

The Road Traffic Act does not allow an Insurer to apply an excess to claims by third parties claims, the Insurer can however impose an excess and then ask their policyholder to pay them back the excess after the accident, however few companies do this as they often have problems actually getting the young drivers to pay the excess after the event.

3) Guarantors is an idea but how would you do it, the parent agrees to pay the first say £10000 of a claim, I cannot see many parents agreeing to do this especially if they actually understood how likely they chances of them having to actually fork out the £10000 is. If they did understand the risk the chances are they would rather pay the say £2500 in premium for their son.

Insurance in the UK is arguably the most competitive in the world, if there was an opportunity to make money by cutting young drivers then Insurers would be doing it. It's worth noting that an Insurer who did try this (Quinn) nearly went bankrupt this year and were only saved by the Irish government, as part of the agreement of coming out of temporary administration they had to agree to increase their premiums for young drivers to an amount that was not losing them money.

Insurance works on a pooling of risk basis, if every Insurer in the UK agreed to accept young drivers and reduced their premiums to an affordable amount it would mean they would have to drastically increase their premiums for all of the rest of their policyholders. Would you be happy if your premium of say £300 increased by £50 to make it cheaper for young drivers ? (I suspect the answer will vary from people with teenage children and people without teenage children).

The cost of Uninsured drivers adds approximately £30 to each motor policy in the UK.

I have seen the claims costs broken down for a major Insurer which showed the third party claims costs for young male drivers, if you had seen these in relation to the amount of premium collected for these drivers and compared against a normal driver you would be amazed. The Insurer in question had lost tens and tens of millions of pounds on young male drivers in one year. Their answer was to increase their premiums for young male drivers to price themselves out of the market as they did not want the risk on their books

So why the dramatic rise in costs, as I never paid anything like that when I was 17, or can you really going to prove that young drivers are so much worse then a few decades ago?
And what happens when all the insurers price themselves out of the market?
The easy answer will be to buy foreign based insurance, third party, so the young driver has the right paperwork, then leave the uk insurers to sort out the other party after an accident in that case.


Not sure about anyone associated with uk insurance always saying uk is the most competetive.

If you belive what you see, France isn't doing badly, from a report in March of this year.

"According to insurance price comparison website Assurland.com, the average cost of insuring a car has fallen by 15% in the past five years"

however

"The cost of insuring a car in France is set to rise by up to 3% from April 1 as some of the major insurers' annual contracts come up for renewal."

but

"Insurance companies have blamed the rise on a growing number of claims by drivers - many of which are linked to weather conditions such as last January's Hurricane Klaus and the snow disruption earlier this year.
They also say there has been a rise in insurance fraud, car break-ins and arson attacks - and a 4% increase in road traffic in 2009 which has contributed to the extra accidents."

not young drivers to blame there though.

greyteam1959

I think it is very kind of Dacouch to reply to YAZZ the original poster in a clear constructive manner.......unfortunately I think we can all see the aggression in the name YAZZ in capitals.
Says it all really

greyteam1959

Mikey72
I think there are many many businesses that are going to have to build their balance sheets back up to acceptable levels & they are going to use whatever excuses sound plausible at the time.
You are going to see this in the food industry in the coming months.......
Wheat prices are at an all time high & increases are so large they will be passed on plus a little bit more than is actually necessary.
Plus rising fuel costs then the rise in VAT.
Inflation ???? You ain't seen nothing yet .....

mikey72

I don't think the mis-information is helpful though.

I just ran a quote for a new driver in france, on a peugeot 106 diesel, 97.
Quotes for my daughter in the uk are about £2k if you are lucky.
France would be £850 third party, rising to twice that for fully comp.
Same price male or female as well.
So if insurance insiders come on and state the uk is the most competitive, I find it hard to believe.
If they come on and state it's been a bad year, and now they're trying to make as much money as possible from a captive audience, fair enough, at least it's honest.
What the uk needs is to be able to use european insurance, and then we'll see competition come back.

dacouch

Mikey72 I'm guessing by your in user name that your in your thirties. If so when you were a young driver very few people sued for personal injury, this changed after your days as a young driver. This was because the government of the time decided to reduce the legal aid budget drastically, to make up for doing this they allowed no win no fee agreements by solicitors to be introduced which brought in a whole industry for personal injuries. (There were also no accident management companies and credit vehicle hire)

When you were a young driver I probably saw two or three injury claims amongst my clients accident in a year, now days you will find around 70% of accidents involve some type of injury claim. When someone is awarded compensation of say £1500 you will find the legal firm handling the case will charge a similar amount in fees.

In addition now days a large percentage of accidents will also involve a credit hire which can typically add upwards of £1000 to the Insurers claim cost.

The other thing that had a large impact on reducing young drivers premiums when you were young was the "Knock for Knock" agreement, this was an agreement amongst subscribing insurers that if their customers had accidents with each other they would not pursue each other for the costs. The idea being that it cut down on administration costs. What actually happened were Insurers such as Pegasus who in effect only offered cover to young drivers for Third Party Only and TPF&T cover were being subsidised by the Insurers such as General Accident who predomoninantly covered Comprehensive. This is because the Pegasus drivers (Being young drivers) had a high percentage of claims than say GA whose target market was mature drivers and Pegasus had no costs to pay for their own policyholders as they were no covered for their own damage. Thus they saved large amounts of money because when their policyholders hit a Knock for Knock subscribing Insurer they did not have to pay them for the damage that their clients caused that they would normally be liable for. This is basically why the Insurers stopped doing knock for knock and had a big impact on young drivers premiums.

With regard to your comments of France (It applies to most of Europe) the vast majority of policyholders buy their cover through a traditional broker and thus tend to be loyal to their Insurers. The UK market is very mature in that we tend to use comparison sites which encourages people to shop around each year and Insurers tend to offer lower prices than are affordable to new customers to gain the business. They also have to pay the comparison sites fairly large commissions to gain the business. Insurers tend to make most money on customers who renew their policy as they have no acquisition costs and very little administration costs, in addition the existing customers are a known risk as they can see their claims history rather than a new customer who is an unknown risk. Using brokers tends to keep premiums fairly static as the costs to the Insurers are often lower as their advertising budgets are much lower and the broker will often recommend renewal if there is little change in the premium. Insurers know that broker business will be rebroked to another Insurer if they increase their premiums too much.

If you look at companies such as Moneysupermarket they are expanding into other markets such as Germany as buying Insurance via the internet and comparison sites are fairly new concepts there so it's good business for them.

Have a look at the actual profits of Insurers for the UK market and then have a look at Insurers profit margins in other countries such as France, you will see a massive difference

dacouch

mikey72 wrote: »

I don't think the mis-information is helpful though.

I just ran a quote for a new driver in france, on a peugeot 106 diesel, 97.
Quotes for my daughter in the uk are about £2k if you are lucky.
France would be £600 third party, rising to twice that for fully comp.
Same price male or female as well.
So if insurance insiders come on and state the uk is the most competitive, I find it hard to believe.
If they come on and state it's been a bad year, and now they're trying to make as much money as possible from a captive audience, fair enough, at least it's honest.
What the uk needs is to be able to use european insurance, and then we'll see competition come back.

If european Insurers started pricing business in the UK they would charge similar premiums to what we have as the markets are completely different. France does not have a personal injury culture / industry like we have and has very little or no credit hire market.

Accident rates in France are very much lower than the UK

mikey72

dacouch wrote: »

With regard to your comments of France (It applies to most of Europe) the vast majority of policyholders buy their cover through a traditional broker and thus tend to be loyal to their Insurers. The UK market is very mature in that we tend to use comparison sites which encourages people to shop around each year and Insurers tend to offer lower prices than are affordable to new customers to gain the business. They also have to pay the comparison sites fairly large commissions to gain the business. Insurers tend to make most money on customers who renew their policy as they have no acquisition costs and very little administration costs, in addition the existing customers are a known risk as they can see their claims history rather than a new customer who is an unknown risk. Using brokers tends to keep premiums fairly static as the costs to the Insurers are often lower as their advertising budgets are much lower and the broker will often recommend renewal if there is little change in the premium. Insurers know that broker business will be rebroked to another Insurer if they increase their premiums too much.

If you look at companies such as Moneysupermarket they are expanding into other markets such as Germany as buying Insurance via the internet and comparison sites are fairly new concepts there so it's good business for them.

Have a look at the actual profits of Insurers for the UK market and then have a look at Insurers profit margins in other countries such as France, you will see a massive difference

So are you saying insurance in france is cheaper through brokers as people don't shop around? And shopping around in the uk has made it more expensive? As that makes no sense, unless it's only the uk that gets ripped off by brokers and insurance overcharging existing customers.

The website I quoted about is a "moneysupermarket" type, so perhaps you are behind with your information as well?