UK Motor Focus: Should the government remove IPT for young drivers using telematics policies?

WE ASKED: “Should the government remove or reduce insurance premium tax (IPT) for young drivers using telematics policies?”

Graeme Trudgill, executive director, Biba

”Young drivers are three times more likely to be involved in a crash as a result of excessive speed and loss of control, but there is clear evidence that telematics improves road safety for young drivers. To provide additional incentives and increase market penetration, IPT should be zero rated for young drivers using telematics.

”IPT has doubled in five years and impacts young drivers the most. An IPT break will not only save young drivers money, but will encourage safer driving and be cost neutral for government – the latest Road Safety Foundation report showed that over a seven year period, an IPT break could reduce the number of incidents where road users are killed or seriously injured by 1,036, without any tax loss to the government.

”The nature of telematics means that drivers moderate their driving – accident rates reduce from one in five to one in 18 within the first six months of passing the driving test. Telematics users are three times safer on the road, according to Marmalade, while Carrot says young driver accidents are reduced by 42% through the use of telematics. Ingenie has seen a 46% reduction in claims too.

”The evidence is there: roads would be safer, young drivers’ premiums would reduce and all without cost to the government. An IPT break needs to happen.”

Norrie Erwin, managing director, Carrot Insurance

”We have overwhelming proof that the use of telematics-based insurance reduces accidents involving young drivers by around 40% – that is surely a powerful argument for incentivising this demographic to use it.

”We’ve lobbied the House of Commons’ Transport Committee to encourage novice drivers to insure via a telematics product for their first year by reducing or removing IPT - it’s important to keep that pressure up.

”We operate a rewards system for our customers, scoring them according to how safely they drive; their accident rate is now 42% lower compared to young drivers using conventional insurance.

”This is compelling evidence that technology reduces accidents and improves driver behaviour; with that comes improved road safety for all road users. So, anything that gives young drivers a nudge towards using telematics insurance should be welcomed and cutting the cost via IPT would be a great step.

”There are also wider benefits. All the evidence points to the fact that young drivers who learn to drive safely go on to be better drivers in later life. Plus, fewer accidents mean fewer claims, improving loss ratios for insurers and allowing them to provide more insurance choice and lower premiums.

”It would be good to see the government supporting our ‘carrot, not stick’ approach via a change in policy on IPT.”

Jacquie Boast, group chief executive, Kingfisher UK Holdings

“In short, yes. As the owner of specialist telematics broker Autosaint, we know the removal of IPT for young drivers would make a real difference to both the accessibility of insurance and to overall road safety.

“Young inexperienced drivers face higher premiums as they are at a greater risk of having an accident. They are also most likely to not be able to afford these inflated premiums.

“Whilst the use of telematics devices can help reduce their premium by 30%, the imposition of IPT then significantly re-inflates the cost. And if they cannot afford to buy insurance, they are unable to gain the driving experience they need and their social mobility is also significantly impaired.

“The other issue is safety - there are clear benefits associated with young drivers using telematics devices. At Autosaint, for example, our advisers provide guidance and feedback to inexperienced drivers within the first 90 days of their policy. This helps them identify errors, adjust and improve their driving behaviour and competence quickly.”