A lower accident rate 'will bring down insurance costs'

By lowering the accident rate in the UK motorists will be able to bring down the cost of car insurance, one expert has claimed this week.

According to the Association of British Insurers (ABI), reducing the number of road accidents is the most-effective long-term plan for cutting the cost of car insurance.

The organisation noted that another factor affecting the cost of car insurance is the number of motorists who are uninsured. These individuals bump up the cost of car insurance for the general public, the ABI claimed.

Research published in the latest edition of Advanced Driving, the IAM members’ magazine, on 12th November 2008 shone some light on this issue.

It found that young male drivers were "most likely to be uninsured and unlicensed". The report said uninsured drivers are typically young males living in urban areas – 60 per cent of those convicted of uninsured driving are under 25 and half are under 20.

However, according to government statistics, the average quoted premium for third party, fire and theft (TPFT) cover, typically bought by young drivers, has reduced fractionally (by just 0.6 per cent to £879).

Despite this, the government says that young and inexperienced drivers are finding fewer insurers prepared to quote for TPFT risks and Allianz is the latest to withdraw from this market.

This may be due to the long-term cost of insuring these candidates and their likelihood to make a claim.

Statistics show that the greatest insurance losses are amongst young inexperienced drivers, particularly men. Although they pay premiums that are typically up to twice that of women of the same age they also make by far the largest claims.

Furthermore, the average car accident insurance claim for a young male driver is nearly £4,500 compared with £2,700 for their female peers. For drivers aged over 30, the average claim is £1,400 for men and £1,200 for women.

Malcolm Tarling, spokesperson for the ABI, said: "There is a role for insurers because basically insurance companies want to reduce uninsured driving because everyone pays for it at the end of the day.

"At the same time insurers have to set the premiums to offset the risks and young people are a higher risk so it's a bit of a catch 22 situation. If we can reduce the accident rate in the long-term we can reduce the cost of insurance but there is no short-term solution to this."