Ageas and ingenie have today supported the call from the Road Safety Foundation for the Government to introduce plans immediately that aim to:
- improve road safety for younger drivers;
- lower insurance premiums for young drivers under 25; and
- save the economy £500m.
Ageas, the third largest motor insurer in the UK has endorsed a Road Safety Foundation proposal to HM Treasury ahead of the Government’s Autumn Statement, supporting the call for the removal of the six per cent Insurance Premium Tax (IPT) for telematics based insurance policies. The zero IPT rate is being requested for a minimum of seven years for those under the age of 25. ingenie, a telematics partner to Ageas, is a leading provider of this form of insurance to young drivers, its customers having collectively driven more than 210 million miles.
Road crashes are sadly the leading cause of death and life changing injuries in young people . In 2012, 32,400 reported crashes involved drivers under 25 and resulted in 350 deaths and more than 4,100 serious injuries . The average economic cost of a crash causing death or serious injury is £400,000 .
Yet telematics insurance, and the feedback on driving behaviour it provides, has the potential to save lives. Data from Ageas’s telematics partnership with ingenie shows that young driver engagement with driving behaviour feedback is high with 90% of policyholders regularly checking their performance and 70% of policyholders driving safely enough to earn insurance discounts .
Based on a business case put together to support the recommendation, a zero IPT rate for telematics has the potential to provide multiple benefits including:
- Creating nearly a quarter of a million additional young driver insurance policies that encourage and reward safer driving behaviour;
- Eliminating over 2,500 personal injury crashes a year by year 7 and over 25,000 damage crashes;
- Saving the economy £500 million over seven years with a cost benefits ratio of over 3; and
- Lowering the typical average young driver motor insurance premium by £60 per annum in addition to ongoing further discounts as a reward for safe driving .
As part of an in-depth wider study into road safety, due to be launched in Parliament in November 2014, the Road Safety Foundation has concluded that telematics based insurance products can improve the safety of young drivers, by effectively combining practical feedback on their driving behaviour with financial incentives in the form of lower insurance premiums.
Telematics technology can measure the forces induced by braking, cornering and acceleration in real time and assess how a vehicle is being driven. The information is then fed back to the driver who can see how they are driving, where they can make improvements and acts as an early warning system on driving characteristics before serious crashes occur and give premium discounts for safe driving. ingenie will be releasing a report with data detailing the success of telematics in improving road safety in late October.
Commenting on the recommendation, Andy Watson, Ageas UK CEO said: “Too many young people are still falling victim to serious and life changing road crashes. We support the Road Safety Foundation’s proposal to Government which will improve road safety for young drivers and lower their premiums. We believe that increasing the uptake of telematics for young people will encourage and incentivise more of them to drive more safely. Removing Insurance Premium Tax for telematics policies will signal strong support in this important area and is a clear and simple action which the Government can implement quickly.”
Welcoming Ageas’s support for the proposal, Road Safety Foundation Council Member John Dawson said: “Telematics insurance is a 21st century solution for a problem which governments admit they have wrestled with for 20 years. Governments have been unwilling to implement restrictions such as bans on night time driving or carrying passengers. Telematics insurance is relatively new but already a quarter of all under-25’s are insured in this way and it means we can make young driver insurance cheaper. There are now more than a dozen products on the market and all major insurers provide some form of offering. We can now accelerate the take-up in a competitive market and save thousands of deaths or injuries annually.”
Supporting the proposal, Richard King, Founder and CEO, ingenie said: “ingenie has been working with young drivers over a number of years to positively incentivise a change in their behaviour on the road and improve driver safety. Through our telematics proposition, we have found an effective way of engaging with young drivers based on popular communications channels, which has had a significant impact on driver behaviour with 40% fewer crashes in the first few months of driving than the national average. Further encouraging the take up of telematics based insurance will no doubt make a real difference to road safety.”
i AM Best Database of UK based insurance companies submitting PRA returns (FY 2013) by volume, includes internal analysis for overseas returns.
ii Road Safety Foundation
iii Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/269601/rrcgb-2012-complete.pdf
iv Source: DfT, 2014. Average value of prevention per reported casualty and per reported road accident: Great Britain, latest available year https://www.gov.uk/government/statistical-data-sets/ras60-average-value-of-preventing-road-accidents
v Source: Ingenie
vi Based on an average annual premium of between £1,000 to £2,000 for 17 year olds. Source: Towers Watson and Confused Q2 2014 Price Index and AA British Insurance Premium Index Q2 2014.