The Co-Operative Insurance introduced a new scheme recently, giving young drivers the ability to pay much less for their car insurance than recently forecast.
The Co-Op have revealed that, policyholders will be given a mobile-phone-sized Smartbox, under their Young Driver insurance plan, which, much like the black box technology used on aeroplanes, will collect information such as speed, driving style, driving times etc and this information will then be fed back by satellite so that insurers can more accurately evaluate risk and thus offer fairer premiums.
With a recent ruling by the European Court of Justice having outlawed sex discrimination in insurance industry risk assessment, women, in particular, are facing steep increases in their insurance premium over the coming years, with the law due to be enforced on 21st December 2012. According to the British Insurance Broker’s Association (BIBA), women drivers could face premium increases of up to 25 per cent, with some even facing increases of up to 50 per cent. Some young female drivers under 21 will even be set to see a premium increase of up to 60 per cent, forcing some young women off the road altogether.
Until now, insurance companies have been able to assess the risk of insuring a driver based on their age and sex, with young male drivers under 21, according to BIBA, being twice as likely to have an accident than a female of the same age.
Coming as a concern for some, conversely, those young male drivers who do take risks and who may have been prevented from driving due to their place in a high-risk category could now see their insurance payments reduced by between 10 to 25 per-cent.
Adrian Webb of esure noted: “If young men’s premiums are artificially reduced, this could lead to more opting to choose more powerful vehicles,” he said. “It is particularly alarming given that the head of the Association of Police Officers in the UK in 2005 noted that the biggest killer of young women in Britain is their boyfriend’s and male friends’ driving.”
Head of general insurance at audit company KPMG, Mark Winlow, commented on the future use of Smartbox technology: “The most immediate effect of this ruling will be felt by women who will see their motor insurance premiums increase by up to 50 per-cent. However, of greater concern to the industry is the likelihood there will be further European challenges, particularly around age.”
“This is a more significant factor than gender, as age is used much more widely to differentiate risks. For example, a young male driver can easily be charged 1000 per cent - 2000 per cent more than the same man when he reaches 50. In anticipation of further restrictions, insurers are already looking to alternative methods to understand their customers and risk better.”
KPMG also predicts that many other insurers will enlist the use of telematics in order to more fairly assess risk, much like the Co-Op and its Young Driver policy, in view of the current and predicted changes in the car insurance industry.
In addition Winlow noted: “Telematics is an area being investigated by a number of motor players… [It] is already used extensively in other European markets. Despite the current cost of installing the black boxes, developments of this nature could have far reaching effects on the market, removing the traditional annual renewal in favour of monthly statements determined by that month’s driving habits.”
Compare students car insurance from moneysupermarket online to get the best price and deals with insurance.