Government announces backing for black box car insurers

The Transport Secretary this week urged young drivers to have “black boxes” fitted to their cars in an effort to reduce insurance premiums.

Justine Greening commented that car insurance costs are increasingly bearing ‘little relationship to the real world’. Black box technology, also known as telematics, means insurers can assess speed, braking, acceleration and cornering, which allows them build up a picture of how the car is being driven. The use of technology aims to encourage safer, more responsible driving by new and recently passed drivers. Cost savings made by insurers as a result of reduced claims costs can then be passed onto young drivers in the form of better driving discounts.

Miss Greening said: ‘The Government has already taken tough action to ban referral fees, reform no-win no-fee rules and crack down on fraudulent whiplash claims. But I think we can go further. Why is it, when the overwhelming majority of UK young drivers are amongst the safest in the world and we are seeing faster reductions in casualties for this age group than for all drivers as a whole, that premiums are still sky high?’

Ministers also believe that female motorists could also benefit from the wider adoption of telematics-based insurance. Statistically safer than their male counterparts, female drivers are due to suffer increases in the cost of their insurance as the EU Gender Directive is implemented at the end of this year.

On the EU ruling, young driver specialist ingenie writes, ‘The European Court of Justice has ruled that gender can no longer be used as a factor when assessing the cost of insuring someone. This will see an end to young women receiving more favourable quotes due to their gender. But with ingenie you are rated on how you drive and have the opportunity to lower the cost of your insurance.’

‘There is no getting away from it: the cost of car insurance is bearing increasingly little relationship to the real world.’ The average motor insurance bill today is £410 – a 17 per cent rise on last year. The average premiums for young drivers are £2,977 for a young male driver and £1,682 for a female.

Black box insurance companies originally focused on restrictions, including mileage and time of day; however these often limit young drivers’ independence and ability to learn and improve on the road. More recent entrants to the market use telematics to assess how the car is driven, with the aim of rewarding those who drive well.

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