Summary

Insurance companies have been working hard to come up with affordable policies for younger drivers and to help them start their own No-Claims bonus.  We explain below how the insurance companies are trying to encourage younger drivers to do this. (cheaper loan)

Honesty is the best Policy.

Norwich Union has introduced some attractive policies for 17-29 year olds to help them with their No-claims bonuses. "We offer a rapid bonus scheme. Basically, you insure the car in a block of nine months, at the end of which you are credited with a full years no-claims bonus," explains Norwich Union’s Mr Nelson. "In effect, you can build up a full five-year bonus in less than four years."

They had to re-think their ‘Pay-As-You-Go’ insurance initiative which was reliant on GPS systems installed in drivers cars.  Monthly, their driving would be assessed based on the time of day the car was used and the mileage and a bill sent according to their results.  So, if a motorist did fewer miles at off peak travel times, they would be less likely to have an accident, therefore lower risk and should pay less for their car insurance. (best value loan)

Mr Nelson said, "The scheme was open to young drivers and we were able to cut their premiums. We saw a 30 per cent fall in accident rates as people thought about their car use.  We had hoped, though, that the car manufacturers would start offering the GPS boxes as standard. Ultimately, the expense meant we had to call a pause."

More Than offers cheaper premiums to 17 – 22 year olds who agree not to drive between 11pm and 6am using the GPS technology to check whether the car is used during ‘curfew’.  If it is they will incur a £25 penalty.  Mr Maxwell at More Than said’ “People can drive during the night time but they will have to pay for the privilege." 

"We are trying to understand the dynamics of the young driver market and see what technology can do for us and the policyholder. The big idea is to price more accurately, so responsible younger drivers can avoid very high premiums."  They estimate that to install the GPS technology costs £250, but, Mr Maxwell says it is worth it. (mppi)

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