New Driver's insurance -penalised for passing the driving test?

Alan_Drover

My daughter, who is 21 took out motor insurance with LV when she held a provisional licence. She passed her test and duly informed LV who congratulated her and then demanded an extra £107 premium. When questioned about this, they said that while she was a provisional driver, she could only drive with a full licence holder in the car with her, but now she holds a full licence, she can drive alone, which makes her a higher risk. So, as a person who is deemed competent to drive to DSA's standard, she is now a higher risk than when she was learning how to achieve that standard?:think:
Doesn't sound right to me, but is this common practice with insurers? Or is she being ripped off by a greedy company openly exploiting new drivers?:(

TSx

Alan_Drover wrote: »

My daughter, who is 21 took out motor insurance with LV when she held a provisional licence. She passed her test and duly informed LV who congratulated her and then demanded an extra £107 premium. When questioned about this, they said that while she was a provisional driver, she could only drive with a full licence holder in the car with her, but now she holds a full licence, she can drive alone, which makes her a higher risk. So, as a person who is deemed competent to drive to DSA's standard, she is now a higher risk than when she was learning how to achieve that standard?:think:
Doesn't sound right to me, but is this common practice with insurers? Or is she being ripped off by a greedy company openly exploiting new drivers?:(

It is exactly as they say and the same across the industry. It's logical to assume your insurance goes down when you pass your test but as they say, you are then able to drive without supervision, which is very different to driving with an experienced driver next to you.

purple45

This happened to my son too. I'm not suprised though, imagine what an 18 year old boy is like when he is out without a parent or driving instructor by his side...wince! I know they're not all like that, but with insurance we all suffer on behalf of everyone else don't we! I've never made a claim in 23 years of driving but my insurance costs seem massive.

eddddy

Hi Alan

Based on my experience, some insurance companies increase premiums when the driver passes the test, but others dont.

I was aware of this possibility when I got quotes for my son, so I phoned a the insurance companies and asked what would happen to premiums when he passed.

Many of the premium increases quoted to me were much higher than £107 - probably because my son was 17 at the time (and a boy).

The insurance companies will have based this on their previous claims experience. They must find that they get more/larger claims from young drivers after they pass their test, than before they pass their test.

TBH, I can believe that young drivers will be more cautious and less distracted with their mum or dad sitting next to them, than when they are off to the shops or to a party with with 2 or 3 friends in the car.

thegirlintheattic

Yes it does. No supervision + (in most cases) more opportunities to drive.

forgotmyname

They can now drive when they like and how they like, Whilst learning then they must obey the rules
of the road. After they have passed them its time to actually start learning to drive.

Nobody there to correct any mistakes and explain what to do in situations they have never been there before.

£107 extra sounds cheap. Or is that £107 a month extra?

Im getting quotes of around £400 as a learner but £3000 as a full licence holder for my daughter.

InsideInsurance

Insurers work on statistics and not logic. They will have found that newly qualified drivers have more frequent and/or more expensive claims and thus the premium increases to reflect this.

You can try and rationalise this by saying that a provisional driver has someone experienced watching over them, often an authority figure to them and know they cannot drive well where as a newly qualified driver can do what they like when they like without oversight and often believe they're a great driver because they've past a test.

I found with the wife the premiums went up circa 15% upon passing.

Hub

InsideInsurance wrote: »

Insurers work on statistics and not logic.

Not logic? I beg to differ.

bouncydog1

Any underwriter will tell you that they look at statistics to set rates - what do you think they do? Guess? A bit of guesswork might come in if they are entering a new market together with whatever market statistics are available.

OP - new drivers are not penalised for passing the test - they are simply being asked to pay the premium for the risk they represent when they no longer have an experienced driver looking over their shoulder and helping them with unfamiliar situations.

adi_clarke85

As an ex driving instructor I always recommend a black box system - it is based on how the insured person drives i.e. if they drive regularly in the wee hours of the morning they will pay a premium, if they drive like a loony they will pay a premium, if they drive in a nice controlled manner they will get a reduction. The Co-op offer this.

InsideInsurance

Hub wrote: »

Not logic? I beg to differ.

Having worked with pricing analysts and underwriters for more years than I care to mention, they do, where ever possible, work of statistics. When you are looking at mass market products like Private Motor there is no shortage of statistics for new drivers -v- learner drivers.

When you either get into much more niche products or new product development then the statistics do not exist and so they have to fall back on other elements. Some of that will be logic but underwriting is much more a sales job than to be dictated by cold logic.