Car Insurance: Young People

Jake Berry Excerpts

Monday 20th March 2017 Westminster Hall

[Steve Double]

I am grateful to my hon. Friend for that intervention. He makes the precise point that I will be making, which is that the cost of insurance is based on risk. The reason the cost of insurance for young people is so high is that the risk is so much higher. Rather than imposing an artificial cap, we instead need to look at why that risk is so high and work to reduce it, as premiums will then naturally come down.

I am afraid I cannot support capping premiums, which would defy the logic of risk that the insurer is taking. Insurers assess those risks from many sources and charge a premium accordingly. It is a competitive industry, and any attempt to cap the price that insurers charge would surely simply result in other groups having to pay more than they should. It would also fail to deal with the cause, which is that novice drivers have a far worse accident record than any other group. One in five young drivers has an accident within the first six months after passing their test. Indeed, I was one of them. They are 10 times more likely to make a claim. That speaks of a systemic failure of our current tuition and test procedures, which I have come to understand is at the heart of this issue. Put simply, the current system teaches young people how to pass a test, rather than how to be a safe and competent driver. If we want to deal with the fruit of high premiums, we must deal with the root cause. Capping premiums will not stop the accidents.

[Jake Berry (Rossendale and Darwen) (Con)]

This is a very important debate, especially for my constituents, who live in a similarly rural area to that of my hon. Friend. Does he acknowledge that black box technology in young people’s cars is a much better way of altering driver behaviour in the long term than the current driving test?

[Steve Double]

Later in my speech, I will talk about telematics and some of the available technology. My response to my hon. Friend is that I think we need both. Yes, we need to embrace technology and use it as much as possible to help people to be safe on the roads, but I am also of the view that we can do better with the current testing regime in helping people at that very initial stage to be safer on the roads.

--- Later in debate ---

[Steve Double]

I am grateful for that point.

[Jake Berry]

I return to the main issue of the debate. Despite all that has been said about changing their behaviour, could young people not legitimately say that when they pay their very large insurance premiums when they first start to drive, they are paying into the Motor Insurers’ Bureau for uninsured drivers? Young people have said to me, “Why should I pay for people who behave badly? Why shouldn’t people who behave well have put money aside to try to reduce premiums in rural areas?” Why are young people compelled to pay for the mistakes of people who insist on breaking our laws?

[Steve Double]

My hon. Friend makes a powerful point. Our young people are penalised for the fact that lots of people behave irresponsibly and even illegally.

I am not saying that nothing can be done to address the issue of premiums. As I said earlier, there are ways in which the industry can drive down those costs and be more competitive, but I am still of the view that the only way we are going to address this issue in the long term is to deal with the cause: the fact that far too many young people who go out to drive having just passed their tests have accidents. Sadly, too many of them die or get lifelong injuries. What drives me to wanting to improve the situation is the need to make our roads safer for our young drivers. That will result in driving down premiums, but I am as focused on saving lives as on saving money.

As we look to the future, we must balance any action with an acknowledgment that, overall, we drive on some of the safest roads in the world. Technology will rapidly come to our aid and help us to be safer on the road, but in the meantime we must close the gap on the high accident rates of novice drivers—not just so we can reduce premiums, but so we can save lives.