Rising cost of claims is driving push towards telematics, says RAC

The rising cost of claims is pushing new and young drivers towards telematics-based insurance policies, according to the RAC’s insurance division.

The RAC believes that there is no foreseeable end to the increasing cost of motor insurance for new drivers, meaning that black box policies, which can lead to lower premiums, are becoming more attractive.

“The cost of car insurance for young and new drivers is unquestionably high due to the high cost of claims, and unfortunately we expect it to increase over the next few years which will make it even harder for young drivers to get motoring,” said RAC Insurance director Mark Godfrey.

“But it doesn’t have to be that way with a ‘black box’ policy which allows new drivers to prove how safe they are. The beauty of telematics is that it is fairer for young drivers as, rather than simply rating them in line with every other young driver, they can be judged on their own driving ability and potentially earn cheaper insurance premiums and renewals as a result.”

The company has also released research showing that more than half of young drivers do not budget enough money to pay for their insurance in their first year of driving.

Fifty-six per cent of the 500 young drivers surveyed for the launch of RAC Black Box Car Insurance expected their first premium to be under £750 when the average insurance cost for 25-year-olds and under is in fact £810 a year.

Average young driver policy costs show 18 to 20-year-olds pay the most at £972 a year, which is in stark contrast to the average UK private car driver premium of £367.

Insurance is seen as the greatest barrier to owning and running a car with 62% of those questioned saying this was the case, as opposed to 22% who felt it was buying a car and 12% who cited day-to-day running costs.

Mark Dugdale