BIBA Response Transport Committee on Road Safety Final

30th April 2019

Dear Sir,

About BIBA:

The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance intermediary organisation representing the interests of insurance brokers, intermediaries and their customers.

BIBA membership includes just under 2,000 regulated firms, employing more than 100,000 staff.  General insurance brokers contribute 1% of GDP to the UK economy; they arrange 70% of all general insurance with a premium totalling £62.4bn and 87% of all commercial insurance business. Insurance brokers put their customers’ interests first, providing advice, access to suitable insurance protection and risk management.

BIBA receives more than 600,000 enquiries per year to its Find Insurance services, online and via the telephone which are directed to member insurance broking firms.

BIBA is the voice of the sector advising members, the regulators, consumer bodies and other stakeholders on key insurance issues.

The below is evidence submitted on behalf of the British Insurance Brokers’ Association (BIBA)

Executive summary

BIBA believe safer roads and enabling the freedom and opportunities that driving brings are not mutually exclusive. Young drivers in particular face higher insurance premiums due to the increased frequency and cost of accidents they’re involved in and this cost can be prohibitive for some people – restricting their ability to work and socialise.

We propose a much greater promotion of telematics devices – policies which have been shown to moderate driving behaviour and provide savings to those who drive safely. This can be done by giving relief on insurance Premium Tax for young drivers taking a telematics insurance policy. Over an eight-year period, this would not only be cost-neutral for Government, it would provide around £100m in savings to the exchequer through

Recommendations:

  • To promote wider use of telematics as a method of providing an incentive to safer driving
  • Consider the roll-out of driver training and speed courses to young drivers, prior to offences being committed.

The insurance sector has a keen interest in delivering safer roads. As a risk-based industry, those who pose the most risk pay a greater share in to the risk pool. For this reason, young drivers, who are over represented in terms of numbers of accidents and cost of accident, often pay the highest premiums. BIBA and the industry as a whole, believe that solution which enable young people to reduce their premium through encouraging safer use of the roads is preferred to imposing further restrictions on the ability of young people to drive on certain roads or at certain times of the day.

Background

In 2017, the UK saw 1,793 fatalities on the roads and 24,831 serious injuries[1]. This tragic loss of life and injury has a huge human impact on those affected; however, there is a significant financial impact upon the Government for such accidents. Department for Transport (DfT) figures show that the average saving of prevention for each fatality is £1,897,129 and the saving for each seriously injured casualty is £213,184[2]. This means that the total value of prevention is close to £8.7bn – a significant saving to Government and society.

BIBA believe that in investing in road safety measures, Government can both prevent needless loss of life and serious injury, as well as seeing a return on that investment in financial terms. In this response, we set out two areas that Government may wish to explore further investment and promotion in to deliver safety on our roads.

Telematics

Telematics is a technology used in insurance to measure driver behaviour and thus determine a risk-based profile which can be used to offer discounts to safer drivers.

The technology was traditionally deployed via ‘black boxes’ installed in to cars. However, there has been a recent increase in the number of app-based solutions which are able to perform the same task using the technology contained on smart-phone devices.

Telematics devices installed in cars are more accurate and less subject to driver fraud; however, they can be expensive to install and transfer from one car to another. App-based telematics policies are not hard-wired in and therefore potentially subject to fraud (such as not turning the app on when driving); however, their ease of use brings great benefits and opens up telematics policies to a much wider audience. Insurers are increasingly comfortable now with app-based technologies as generally, these are used in accordance with the terms of the policy.

A report by BIBA member Ingenie in 2014, found that the risk of crashing in the first six months of driving fell from 1 in 5 to 1 in 8 for young drivers using a telematics device – a 46% reduction. Further, the same report found that over 90% engage with automatic telematics feedback about their performance and those who engage with it most frequently are the least likely to crash. [3]

Anecdotal evidence also supports the assertion that telematics devices help to moderate driving behaviour. There are a growing number of bumper stickers appearing on vehicles which, often amusing, apologise for driving slowly because they have a telematics device installed. A great many of these can be widely bought on websites such as eBay. [4],[5],[6] & [7]

The fact that these stickers, on the whole, apologise for driving slowly, demonstrates that young drivers would prefer to drive quicker than they are allowed, but are being tempered by the telematics device.

The use of telematics devices in motor insurance is growing. Each year, BIBA collates figures from across the industry to determine the number of live telematics policies in operation. Last year, BIBA found there to be almost 1m live telematics motor policies in operation. [8]

In summary, through telematics we believe that we can offer a road safety solution that helps young people to get on the road, reduce needless road casualties whilst enabling young people to travel more affordably for work or other life opportunities.

Driver training

Speed is a significant contributor to road accident fatalities serious injury. Some 3,121 people were killed or seriously injured in accidents where ‘exceeding the speed limit’ or ‘travelling too fast for the conditions’ was recorded as a contributory factor by the police [9].

When a speeding driver is caught by the police, they can often be offered participation in the National Speed Awareness Course (NSAC). The course encourages people to alter their attitudes towards excessive or inappropriate speed.

Offered as an alternative to a speeding fine and penalty points, the speed awareness course runs for a duration of four hours and helps drivers to understand why people drive above the speed limit and the potential consequences of speeding. BIBA member, the AA is a provider of these courses through its DriveTech arm[10].

A report commissioned by the Department of Transport in May 2018 found:

“NSAC has been found to reduce the reoffending rate (and other studies show that greater speed limit compliance reduces collisions), it may be reasonable to anticipate that participation in the course also encourages and facilitates safer driving behaviour generally, indirectly reducing the injury collision risk.[11]

Further, the report found that the NSAC delivers a NET cost benefit after just three years.

Anecdotal feedback from drivers who have been on the course shows that it provokes strong reflection upon their speed and a tangible positive change in driving behaviour compared to before the course.

Such courses are only offered after someone has been caught speeding; but are not offered before. It does seem strange that from a risk management point of view, we offer these courses only after someone has already presented themselves to be a risk – given the role speed plays in the causation of road traffic collisions.

DriveTech also offers a specific young driver course in some police areas, which includes e-learning modules.[12] We believe that rolling out such courses as part of a post-test programme of education would have a significant impact on the behaviours of young drivers, reducing the risk of fatal and serious collisions.

If you require any further information, please don’t hesitate to get in touch.

Yours sincerely,

Andy Thornley

Head of Corporate Affairs

[email protected]

020 7397 0238

[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/744077/reported-road-casualties-annual-report-2017.pdf

[2] https://www.gov.uk/government/statistical-data-sets/ras60-average-value-of-preventing-road-accidents

[3] https://www.ingenie.com/wp-content/uploads/2014/11/ingenie-young-driver-report-2014.pdf

[4] https://www.ebay.co.uk/itm/MY-DRIVING-MAY-ANNOY-YOU-FUNNY-CAR-STICKER-BLACK-BOX-INSURANCE-WINDOW-BUMPER/292394003527?_trkparms=aid%3D555018%26algo%3DPL.SIM%26ao%3D1%26asc%3D57478%26meid%3D5608d95bc540419d8d3cfaefd661402e%26pid%3D100005%26rk%3D7%26rkt%3D12%26mehot%3Dpp%26sd%3D251514272888%26itm%3D292394003527&_trksid=p2047675.c100005.m1851

[5] https://www.ebay.co.uk/itm/Black-box-fitted-car-window-sticker-car-insurance-young-driver-windscreen-decal/283198562639?_trkparms=aid%3D555018%26algo%3DPL.SIM%26ao%3D1%26asc%3D57478%26meid%3D5608d95bc540419d8d3cfaefd661402e%26pid%3D100005%26rk%3D12%26rkt%3D12%26sd%3D251514272888%26itm%3D283198562639&_trksid=p2047675.c100005.m1851

[6] https://www.ebay.co.uk/itm/BLACK-BOX-MONITORED-Young-Driver-Car-Insurance-Warning-Sticker-Decal-1-off-180mm-/251514272888

[7] https://www.ebay.co.uk/itm/BLACK-BOX-MONITORED-CAR-WINDOW-STICKER-VINYL-DECAL-YOUNG-DRIVER/132992993150?_trkparms=aid%3D555018%26algo%3DPL.SIM%26ao%3D1%26asc%3D57478%26meid%3D5608d95bc540419d8d3cfaefd661402e%26pid%3D100005%26rk%3D1%26rkt%3D12%26sd%3D251514272888%26itm%3D132992993150&_trksid=p2047675.c100005.m1851

[8] https://www.biba.org.uk/press-releases/biba-research-reveals-telematics-almost-reach-one-million-mark/

[9] https://www.think.gov.uk/road-safety-laws/#speed

[10]https://www.drivetech.co.uk/driver-awareness-courses/courses/national-speed-awareness-course

[11]https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/706208/national-speed-awareness-course-evaluation.pdf

[12] https://www.drivetech.co.uk/driver-awareness-courses/courses/young-driver-course