On Wednesday I was given the opportunity to speak at Marketforce’s Motor Insurance Summit. After significant change in the motor insurance market, it was a good opportunity to take stock and look at the changes that have been made and to look ahead at what still needs to be done to create a more efficient market.
There is no doubt that much progress has been made. Continued lower levels of uninsured driving, the introduction of the Legal Aid and Sentencing Act to overhaul the civil litigation system and more progress in tackling insurance fraud have all contributed to lower insurance premiums. Indeed, the AA shoparound figures show motor premiums decreasing 4.1% over the past year.
However, one area where progress seems to be stalling is the issue of young driver safety. It is vital that the Government issue their Green Paper on Young Driver Safety without delay. It is even more important that the Paper is truly consultative, committed to exploring all the options.
The reality is that measures implemented to date to improve young driver safety have only had a limited impact. Enhancing and extending the driving test and a greater focus on the theory test were both welcome reforms but so much more needs to be done. Fundamentally, Britain is out of sync with the rest of the world where countries such as the United States, Australia, Canada and New Zealand all have a form of graduated driver learning.
Safety first
Graduated learning, containing a minimum one year learning period followed by a short period (six months) where newly qualified young drivers face a restriction on driving during night time hours and a restriction on the number of passengers they can carry, is a way of allowing new drivers to build driving experience in lower risk conditions.
The restrictions ensure young people drive at times and in situations known to be lower risk, so that they gain essential practical experience as safely as possible. Indeed, graduated learning is a tried and tested learning technique used in many other areas.
Take for example a potentially dangerous activity such as diving or flying. Both require a period of restrictions to allow the diver/pilot to build up essential experience before experiencing higher risk situations. Indeed, most jobs have a probationary period and it seems daft that, at present, a young driver can be let loose on the roads without having the requisite skills and experience to handle hazardous situations. No one would expect a newly qualified doctor to perform a major procedure on their first day in the job.
Over the last year we have worked with a range of partners such as the Association of Chief Police Officers, Parliamentary Council Advisory for Transport Safety, National Federation of Young Farmers Clubs, Road Safety Analysis and leading academics to make the case for meaningful reform, including the introduction of graduated learning. All of these organisations agree with the ABI’s position that graduated learning is the key reform that is needed.
Lower premiums
Earlier this year, we undertook a research exercise looking at the impact of graduated learning on road safety around the world and we estimate that premiums for young drivers would reduce by 15-20% if such reforms were introduced in the UK.
But those figures will only be reached if the Government introduces graduated learning in full and for this reason it is imperative that when the Green Paper is finally issued, it contains a full range of options, including graduated learning.
The insurance industry want to see young driver premiums fall but the only way to make this happen is for them to become much safer. The ABI is looking forward to the publication of the Green Paper and we fully intend to draft a comprehensive response.