Car insurance companies need to address the question of affordability, as discount car insurance for young drivers is currently so hard to find that few young motorists can actually afford to insure their car, experts say.
According to Cobra, a vehicle telematics firm, something must be done or the motor car insurance industry will end up losing even more money through a decrease in the number of policy buyers. Cobra says that figures from the Department for Transport show that only 35 per cent of drivers between the ages of 17 and 21 years of age are full licence holders.
For the 65 per cent of those that did not have a full driving licence, more than one out of every three said exorbitant car insurance rates have effectively priced them out of the market. Cobra says that UK insurers could feel the pinch financially through a decline in sales unless insurance providers transition to a different model for younger drivers that focuses on determining how risky each driver is, instead of simply using statistical data.
Younger motorists typically pay more for car insurance cover due to a higher statistical likelihood for being involved in a costly accident. According to the latest AA Insurance Premium, the average driver between the ages of 17 and 22 pays nearly £2,500 for insurance, while the overall average for all drivers in the UK is around £925.
One alternative put forward by Cobra was for car manufactures to fit alarms, parking sensors, and speed limiters into new cars in order to reduce premium prices. As Cobra already provides telematics services such as those used by a handful of insurers specialising in younger drivers, the firm is well-versed in the concept, said one spokesperson.