Motor insurers act against “fronting”

by Gill Montia

Story link: Motor insurers act against “fronting”

Motor insurers are tightening up on parents who add children as drivers on their policies, to save costs.

The practice is known in the insurance industry as “fronting” and Royal Bank of Scotland, which owns Churchill, Privilege and Direct Line, is reviewing its underwriting criteria to exclude the loophole.

Churchill will still provide “young additional driver” cover but has amended the questions completed on its proposal form to identity potential cases of fronting.

Esure has also changed its underwriting criteria and now bases its premiums on the highest-risk driver named on the policy, as opposed to the “main” driver.

This means that where a risk would have been based on a parent as the policyholder with, for example, a 17-year-old named as an additional driver, in future the premium will be based on the 17-year-old as highest-risk driver.

According to a recent survey by Gocompare.com, the price comparison website, two-thirds of the 1,733 adults questioned would consider “fonting” even though it is fraudulent.

Insuring a car in a name other than the main driver and adding other higher-risk motorists can have serious consequences.

Insurers who uncover cases of this nature are at liberty to repudiate a claim, cancel the policy or charge the correct premium as a lump sum.

Drivers who have had a policy cancelled are obliged to declare the fact in future applications and this can increase premiums or even make it difficult to find cover.

“Fronting” also prevents young drivers from building up a no-claims discount, although, both Direct Line and Norwich Union do allow additional drivers to accrue no-claims discount.