Recently we've seen the cost of motor insurance scale new heights, but thanks to the intervention of telematics, young motorists are reaping the rewards of this 'black box' technology.
The word telematics is probably as alien to young drivers as most of the lyrics in modern day songs are to the Baby Boomers. But, in the last few years this technology is slowly finding a place in the hearts of those willing to trade an inconspicuous looking black box for the freedom that a reduced insurance premium affords.
It's been widely reported that the cost of insurance is at an all time high, with a combination of factors being held accountable for the hike. There's the rise in Insurance Premium Tax, the government's decision to cut the personal injury Discount Rate, not to mention growing vehicle repair costs and the recent culture of increased personal injury claims spurred on by the no win no fee solicitors.
Why are premiums for young drivers so high?
It's a common misconception that insurance is only there to cover the cost of a vehicle if it gets damaged or stolen, but when you look into it, there's much more to calculating an insurance premium than meets the eye.
The biggest costs for insurers are 'large losses' which often involve expensive personal injury claims. Unfortunately, young drivers have more crashes than their older counterparts, which mean they represent a greater risk, resulting in more expensive car insurance. In the past, this increased risk has been automatically reflected in the premium charged, until recently.
Earlier this month, the Association of British Insurers (ABI) released new figures stating that during 2015 and 2016, all age groups, except those under 21, faced increases in their average motor insurance premium. But how did the younger drivers manage to avoid the hike? Well, the answer is all thanks to the introduction of telematics into the insurance industry.
How can telematics help?
The UK's rise in telematics usage was highlighted in the British Insurance Brokers’ Association (BIBA) recent report. BIBA stated that in 2016 there were over three quarters of a million live telematics policies in the UK, an increase of nearly 25% on the 2015 figure.
Even though last year drivers aged between 18 and 20 years old paid the highest average premiums, it didn't represent the largest increase in percentage terms. Thanks to the growing use of telematics, premiums for younger drivers are being kept, for the most part, under control.
From an insurance perspective, telematics is essentially about managing those drivers that fall into a high-risk group. Once a black box has been fitted, a vehicle's movements can be monitored enabling the insurance provider to asses a policyholder's driving ability. The insurer will consider elements such as:
- How long a policyholder has been driving.
- The time of day that a vehicle is used. For example, some insurers will specify that a vehicle can only be driven between certain hours when serious accidents are less likely to occur.
- Their location e.g. where a policyholder lives and the areas in which they typically drive.
- How rapid or measured braking and acceleration is.
- How harsh the driver's cornering is.
So, until those premium reductions are on the horizon, here's Admiral's list of the cheapest new cars to insure for drivers under the age of 25 (according to their policy base between January and March 2017).
1. Volkswagen Fox
2. Nissan Qashqai (this surprised us too!)
3. Fiat 500
4. Citroen C1
5. Fiat Panda
Andrew Bennett, CEO at Insure Telematics Solutions (ITS), commented: “Telematics is rapidly changing the nature of the car insurance industry. Having historically been know for just helping young drivers reduce insurance costs telematics is now offering so much more including reducing insurance fraud and lengthy claims processes.”
Want to know more about how ITS could assist your organisation? Please contact us by telephone on 01780 769317, or alternatively by email at firstname.lastname@example.org