23 January 2008
“Insurers put the brakes on teenage drivers”
Patrick Crozier

I had a double take when I saw this headline in the Telegraph.  I had another when I saw some of the premiums being quoted (some were over £4,000).  I even checked them for myself - £2,300 was the best I could do for a 17-year old with an ancient Ford Fiesta.  Lower but still very high.  I certainly can’t remember this being an issue when my generation were driving for the first time.

So, what’s going on?  When government ministers are losing their heads(1), I tend to look to actuaries and their world of real, actual numbers for some sanity.  My guess is that something is going on and for some reason young drivers are having more accidents although in the murky world of government regulation and the threat of government regulation it is just possible that nods and winks are having an effect.

Does anyone know for sure?

Notes
1. They want to increase the age for driving to 18.

Feedback

  1. I think the UK car insurance market is one of the freer ones in the world and as such probably comes closest to meeting actuarial realities. Teenagers (particularly males) tend to be quite aggressive and lacking in long term focus, so that likely explains the higher premiums. I’m often blown away when I read Brit car mags at the sheer number of difference companies and their aggressive advertising. Lawrence Solomon (transport / environment / urban planning pundit) had a good article a while back on where car insurance markets work and where they don’t work.

    Posted by Jay Jardine on  23 January 2008 at 09:13 pm

  2. I remember this being the case when I started driving in 1990. So for an ancient car, the insurance for a year costs more than the car. I also remember every one of my friends who had regular use of a car being involved in a crash of some severity. The big distortion comes out of compulsory insurance in the UK, removing a real zero.

    Without turning to government conspiracy, there is a range of reasons why insurance is high including under-developed high-level skills in young people, high levels of impulsivity, thrill-seeking, and of course a shortage of experience. To add to this, cheap old vehicles have poor levels of both primary and secondary safety features meaning the car is more likely to be involved in a crash and more likely for that crash to result in injury.

    Posted by Neil on  24 January 2008 at 05:45 am

  3. When I was faced with the problem of insuring two seventeen year olds on our clapped-out family hack in the late 1990s, I shopped around and after getting some horrendous quotations ended up with the Co-op who quoted a very reasonable £400 for third party only, by far the cheapest. I’ve been with the Co-op ever since for all our car insurance. When we paid our premium on the family car just before we moved out of London some years ago, the Co-op, without being asked, gave us a £250 rebate the next year because we had spent most of the previous year in a much lower risk area. We’ve since had two rear end shunts caused by idiots on the road and the Co-op has been excellent each time. I cannot praise them highly enough. Please note - I have absolutely no connection with the Co-op other than as a customer.

    Posted by Richard Buckley on  28 January 2008 at 09:40 pm

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