Abolishing telematics insurance premium tax for young drivers could save £500m

Telematics policies for drivers under the age of 25 should have no insurance premium tax (IPT) for at least the next seven years, according to a campaign supported by Ageas and Ingenie.

The Road Safety Foundation has called on government to abolish the 6% IPT for young driver telematics policies in an effort to improve road safety, reduce the cost of premiums and save on the costs of serious accidents.

Research from Ageas and Ingenie estimates that the move could reduce the number of serious crashes by as much as 30% over seven years due to a further 245,000 young drivers taking up telematics policies and having their driving style monitored by their insurer.

This could result in net savings of upto £500m and a £60 reduction in the average young driver telematics policy.

Road Safety Foundation council member John Dawson said: “Telematics insurance is a 21^st century solution for a problem which governments admit they have wrestled with for 20 years.  Governments have been unwilling to implement restrictions such as bans on night time driving or carrying passengers.

“Telematics insurance is relatively new but already a quarter of all under-25’s are insured in this way and it means we can make young driver insurance cheaper.  There are now more than a dozen products on the market and all major insurers provide some form of offering. We can now accelerate the take-up in a competitive market and save thousands of deaths or injuries annually.”