The launch of the Motaquote’s Fair Pay Insurance scheme is the latest attempt to more accurately price car policies so that younger drivers are treated as individuals rather than merely a member of a high-risk road-user group tarred with the same brush.
The company’s tie-up with sat-nav provider TomTom will allow members of the most vulnerable group on the road to reduce their insurance premiums by being better and safer drivers. Black-box technology – bought upfront by the driver for £299 – will record several factors related to bad driving behaviour and hence risk: speed, braking, time and location, cornering and types of road. Drive smoothly and carefully, during the least dangerous parts of day and you will benefit from lower premiums. Drive aggressively and dangerously and at night and you will be penalised financially.
In principle there should be a big market for these products. According to data from Confused.com, at the end of 2011 the average third party, fire and theft policy for men between 17 and 20 years of age was an eye-watering £3,413. For women it was £1,782.
It is not difficult to understand why the premiums are what they are. Young drivers – especially males – are far and away the most likely to be killed or seriously injured in a road accident. More generally those in the 15-24 category are four times more likely to die in a road traffic accident than from drug, alcohol or other substance abuse poisoning.
Given that schemes like Motaquote’s are voluntary to sign up to, privacy issues are unlikely to be a major problem. Indeed better recording of time, place, speed, etc. offers drivers the chance to prove they are in the right should they be involved in an accident responsibility for which might be disputed. But it does raise questions as who else gets access to the data – other than the insurance company – and when.
According to Motaquote’s Ian Brown:
“The police would have to complete a formal data protection information request form for the prevention and detection of a crime, so it would have to be for a serious incident. In the five years the firm has been running its other telematics-based proposition iKube we have never been asked for data related to a simple speeding offence.”
Anything that brings premiums down for good drivers has to be a good thing. It will also do something to compensate for the European Court of Justice’s ruling that from the end of 2012 gender-based insurance pricing will not be allowed. The big question is: what does all this mean for those young drivers who do not sign up for this type of monitoring? Will they actually see their premiums rise yet further as insurance companies regard them as having something to hide?