Daily Insurance Industry News
 
 
Daily Insurance Industry News
Monday 20th of May 2019
January 14, 2010

Annual switching helps raise young driver premiums

by Gill Montia

Story link: Annual switching helps raise young driver premiums

Specialist insurer, Young Marmalade, claims that the Internet is partly responsible for the sharp rise in young drivers’ car insurance premiums seen in recent years.

Price comparison websites have meant that loyalty to a particular insurer has been replaced by regular switching.

According to Young Marmalade co-founder, Nigel Lacey, whilst the ability to compare quotes online should sharpen competition, annual switching means insurers can’t rely on a young driver remaining a customer for several years.

As a result, insurers are robbed on the chance to recoup any risk or loss once a young driver becomes more experienced.

With loyalty “gone through the windscreen”, Mr Lacey explains “the insurer now has as little as one year’s premium to recover the risk profile for an individual driver, so it has to increase the price in an attempt to balance the books”.

In addition, the trend has resulted in some providers pulling out of the young driver market altogether, and increasing the minimum age for policyholders to 21 or even 25.

To keep costs down, Young Marmalade is now using GPS technology that loads premiums for young drivers out on the roads between 11pm and 5am, the period when they are most likely to have an accident.

In November the firm announced its intention to try and decrease the number of accidents at this time, 90% of which involve young men.

 

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