Do you think car insurance is expensive for young people?

dacouch

Andybez38 wrote: »

I think car insurance has always been expensive for young drivers. I passed my test in 1988 and paid about £600 then. In today's money that would be well over £1100 now. Don't make it cheaper for younger drivers and expect to make older/experienced drivers foot the bill.

To help explain why there is a major difference between young driver's premiums now days and young drivers in 1988 I'll explain.

Ignoring inflation which would increase a £600 premium to £1500 and Insurance Premium Tax which was not around in 1988 but now adds 9.5% to a premium

The main reasons are that in 1988 personal injury claims were extremely rare. The introduction of allowing solicitors to advertise for customers and "No win no fee" meant that injury claims became common place.

The other reason was the "Knock for knock agreement" this meant that Insurers such as Pegasus whose client base was 95% Third Party Only and TPF&T premiums were subsidised. Their young drivers were more likely to have an accident with say Norwich Union but NU's client base was more like 85% comprehensive.

The agreement allowed Pegasus to pay their own customers losses which being TPO and TPF&T were nil and NU pay their customers losses which being comprehensive cost money. So in effect NU (And other comprehensive based insurers) were subdising Pegasus's premiums.

Knock for Knock was withdrawn when the big Insurers realised that it was being abused

Joe_Horner

Fair comments, especially about incomplete data.

Still, the point of this thread was to raise opinions and suggestions for consideation by Parliament and I'm sure the industry will be happy to provide any data needed to support or refute any suggestions put forward

After all, the whole basic bank account thimg sprung of a similar necessity to provide access to a product for people who were otherwise too high risk for the industry and the banks seem to have found it remarkably easy to come up with a solution that avoided the need compulsory regulation to provide that access

arcon5

What will a limit on engine size achieve? As mentioned by another poster.
You can be as reckless in a 1.4 turbo charged engine as a 2.5 V6 NA Petrol. A lot of smaller cars are quite nippy now, and most certainly go well above the fastest road in this country so you probably preventing somebody doing 120mph but even a corsa will give a 100 a wave from a mot so far distance.
Smaller engine doesn't mean they'll judge stopping distances any better. Doesn't mean they'll leave larger gaps between cars and doesn't mean they won't speed or try to race.

It's pointless

dannyrst

I think you're all analyzing too deeply.

Car insurance is a competitive market, in that there are multiple suppliers who are vying for business. If insurance companies are making so much money from young driver policies, why doesn't a new firm come in and mop up the entire 17-25 group by offering a lower profit margin for a guaranteed market share?

The answer is quite simply that there isn't a massive profit margin. Don't forget, these are companies that ultimately need to make money to continue trading, so they need to make some profit.

EDIT

If the insurance premiums are too high that is because the people in that group aren't being taught to drive well enough or they are too immature to drive (as a group).

But hey, learning to drive is about learning to pass a test like every other aspect of being taught things in this country. Don't learn about mortgages, renting, politics, voting etc, but learn about sin cos and tan curves? Great!

AdrianC

dannyrst wrote: »

I think you're all analyzing too deeply.

Car insurance is a competitive market, in that there are multiple suppliers who are vying for business. If insurance companies are making so much money from young driver policies, why doesn't a new firm come in and mop up the entire 17-25 group by offering a lower profit margin for a guaranteed market share?

The answer is quite simply that there isn't a massive profit margin. Don't forget, these are companies that ultimately need to make money to continue trading, so they need to make some profit.

Hush with your unwelcome facts and reality!

DigForVictory

I think insurance is fiendish expensive, but that is the price we pay for uninsured drivers & compensation culture. If the young want to drive then it has to be paid for, & that's either a tax on everyone or on other drivers.

Happily telematics and much better driving instruction & tests mean they probably are safer than some other older drivers but the idiots spoil it.

I wish it was possible to tweak insurance by postcode so those who have the least choice in pubic transport *could* get cheaper insurance, but they do more miles and doubtless include their percentage of idiots.
We need much more clarity on how much it costs to insure with a parent & maybe consider the Canadian model of first year drivers may only carry one passenger & may not drive after midnight. It won't stop the lawbreakers, but it might protect the majority a little more. Limiting permitted vehicles/engine sizes may also be a positive step.

The Australian limits seem pretty draconian at first then entirely reasonable If It Helps Get The Costs Down. Just which insurance company would start?

phoenix_w

arcon5 wrote: »

What will a limit on engine size achieve? As mentioned by another poster.

A limit on engine power output is more sensible. Putting new drivers in something a bit crap but functional will only improve their driving, awareness of what's going on around them and outlook towards other drivers.

takman

The profit margin of the large insurance company companies are freely available online and they show that when the make a profit it is only a very small margin and if they reduced their prices they would be loosing money. Like the poster above said if prices were artificially increased a new company could easily come in and undercut everyone. But the simple fact is that due to comparison sites insurance has never been more competitively priced.

So this means that any cap on insurance prices would have to subsidised by the government. If the government decide to go down this route then it would be much better for them to put more money into public transport instead as this benefits far more people.

But one thing I completely disagree with is stupid restrictions on young drivers suggested in this thread. The worst one had to be the person who suggested a 50MPH speed limit for the first 2 years no matter what road they are on. Just imagine how much congestion that would cause and how much aggression they will face from other drivers for going along so slow.

Restricting passengers and driving at night is also unreasonable because what's the point in paying so much for a car and insurance if you can't even take people with you or drive at night!.

Restricting engine size is also a silly suggesting considering you can get a 1.0 litre car with more BHP than an older 2.0 litre car. Restricting engine power is more sensible but I don't really see how that will achieve much because they are already limited by insurance prices anyway. So you would have to set it pretty low and that would then limit them to a choice of rubbish older cars which won't be as safe as newer cars with slightly more BHP.

Norman_Castle

What about cheaper insurance for drivers willing to self insure the first 1-10K? of any accident claim. This could be held in a bond similar to rental deposits.
I expect having to pay a substantial amount for the damage caused rather than relying on insurance would help reduce accidents.

AdrianC

Norman_Castle wrote: »

What about cheaper insurance for drivers willing to self insure the first 1-10K? of any accident claim. This could be held in a bond similar to rental deposits.

So somebody who can't afford a hundred and fifty quid a month is going to be willing and able to tie up ten grand in a bond...?