ABOUT NORWICH UNION

  A.  Norwich Union is the UK's largest general insurer with a market share of around 14%. With a focus on insurance for individuals and small businesses, Norwich Union insures one in seven motor vehicles, one in five households; and around 800,000 businesses. Norwich Union is part of Aviva plc who also recently acquired RAC, which incorporates BSM.

  B.  Norwich Union products are available through a variety of distribution channels including brokers, corporate partners such as banks and building societies and via the Internet through Norwich Union Direct. For the first time this year, the internet provided more than 50% of our direct motor insurance sales.

EXECUTIVE SUMMARY

  C.  Norwich Union welcomes the opportunity to submit evidence to this enquiry relating to novice drivers. Our claims statistics prove that these newly qualified and pre-dominantly young drivers are far more likely to be involved in accidents which result in fatalities or serious injuries than other experienced motorists.

  D.  Norwich Union recognises the importance of encouraging safer novice drivers and will continue to develop products that incentivise a change in driving behaviour for this greater risk category. One example of this is our "Pay As You Drive" proposition.

  E.  Amongst the 1,500 young drivers who trialled this product, car accidents fell by 20% against our standard motor product. The proposition gives these drivers the choice to reduce their premiums by up to 30% (and for some up to 50%) by mainly driving during off-peak hours and to minimise road accidents by actively reducing the number of young drivers on the roads at peak accident times. If would appear that the incentive of a reduced premium for this greater risk category is proving popular and appears to be encouraging safer driving. With young drivers accounting for 45% of road fatalities between 11.00 pm and 6.00 am, we are discouraging this sector from driving between these hours by charging a rate of £1 per mile:

—  We recognise that the Government also has a role to play to improve the required training standards of teaching novices the life skills to learn to drive rather than simply learning to pass the test. We support the Association of British Insurers (ABI) call for:


A structured learning programme, covering the different road and traffic conditions learner drivers should experience before taking the practical test.

—  Imposing restrictions on the number of passengers young drivers can carry possibly through the use of ANPR cameras.

—  Encouraging drivers to undertake as much supervised practise as possible without an incentive to rush to take the practical test through a minimum learning period.

  F.  Norwich Union continue to support Pass Plus training by offering a premium discount for drivers completing this training and we welcome the Driving Standards Agency review of this training and are contributing to this review. We also believe that Pass Plus is unlikely to achieve a penetration level in access of 20% of those passing their test in its current form and would welcome a more robust process. The ABI's new research "Pass Plus: Ten years on" underlines that Pass Plus drivers have only a marginally lower accident rate than drivers not participating in the scheme.

  G.  It is still significant to insurers that young male drivers present a greater risk of being involved in an accident compared to young female drivers. Therefore we would seek the Committee's support in allowing insurers to continue to use gender as a rating factor when the EU Gender Directive is transposed into UK legislation in 2007.

NORWICH UNION RESPONSE:  THE NATURE OF THE PROBLEM

1.  To what extent novice drivers are more at risk of being involved in a collision than other drivers, and whether this is primarily a consequence of age, inexperience or a combination of both?

  1.1  Young novice drivers are at a greater risk on the road than any other age group and are therefore generally charged higher insurance premiums. Compared to other motorists, Department for Transport statistics state that young drivers:

—  Account for 45% of road fatalities between 11.00 pm and 6.00 am.

—  Are 10 times more likely to have an accident at night.

—  Are 56% more likely to suffer an injury between 1.00 am and 5.00 am.

  1.2  From an insurers perspective our data shows that a person with:

—  0% no-claims discount (NCD) has an 80% higher risk cost than someone with five years NCD.

—  Additionally, the risk cost of a novice driver who has just passed their test will be 30% higher than someone who has been driving for eight years.

—  So with taking this data into account, and even ignoring their age (that we would potentially suggest is the most influential factor), we would expect someone with 0% NCD and minimal licence length, eg minimal experience, to cost us more than twice as much as someone who has been driving for nine years or more and with five years NCD.

  1.3  Insurers are equally aware that young and novice drivers tend to use older and hence less safe vehicles without safety features such as airbags etc. This means that the injuries when involved in accidents tend to be more serious. These claims can often cost insurers several million pounds in liability claims, particularly if injuries result in long term care. A Government advertising campaign could help to educate novice drivers to consider buying safer vehicles.

  1.4  Our claims experience also shows that young male drivers are a considerably higher risk of having an accident than females. On average men under the age of 30 have a claims history over 10% worse than women of the same age, while their average cost per claim is 25% higher which would lead to young women being forced to subsidise the cost of motor insurance for young men, despite their safer driving records. We would appreciate the Committee recognising the need for insurers to continue to be able to use gender as a rating factor when the EU Gender Directive in brought into UK legislation next year. Currently the price of motor insurance sends a useful signal which acts to discourage high risk motorists (ie young males) from driving high power vehicles. We believe that unisex rates would send a false signal on road safety.

  1.5  Personal observations around driving habits show that generally, driving standards seem to have declined with fewer people observing highway code and attitudes being influenced by poor driving conditions e.g. too many cars on the roads, everyone being overly busy, driving for too long without a break.

  1.6  It would appear that current driving instruction teaches you to pass a test but most people really learn to drive in the year or so post test success. Norwich Union believes that younger people are less aware and so less adverse to risk generally, plus they lack experience to anticipate potential problems. Young drivers passing their test feel generally confident and studies have shown the human brain takes around 25 years to build up risk awareness.

2.  Do young people's attitudes to driving have a significant impact on the collision rates of young and novice drivers?

  2.1  Definitely. Young and inexperienced drivers tend to be of the opinion that once they have passed their test they have gained all the driving experience required. In the age of computer games young drivers treat driving in the same way but this time have a real weapon in their hands that they have not learnt to respect. The poor attitude is evidenced by their willingness to break both formal and informal rules of the road with young drivers committing the highest number of Highway Code violations.

DRIVER EDUCATION AND TESTING

3.  How effective are the existing practical and theory driving tests at identifying safe driving skills and behaviour?

  3.1  Not very effective. See below for comments on hazard perception test. The practical test currently produces drivers with little practical experience and gives newly qualified drivers the opportunity to drive on a motorway as soon as they have passed their test without any prior instruction.

  3.2  The young are excellent at passing exams and reactive tests. The current tests do cover the basics but do not cover behaviours and attitudes and often do not cover all driving scenarios. Some excellent drivers find it hard to pass if they take a cautious approach.

4.  Has the hazard perception test achieved its objectives?

  4.1  In the main, this test appears to be more one of memory as there are combinations of questions and hazard situations presented. In addition it is possible to coach drivers through to pass the test as opposed to actually learning driving skill and standards.

  4.2  Norwich Union support the hazard test as a good approach but it uses graphics that are familiar to young people so we are not convinced that they recognise the hazards in terms of real "live" scenarios with the potential for causing serious injuries.

5.  Could changes to driver education and testing help to make novice drivers safer? Such changes might include:

New pre-test requirements, such as a minimum number of hours' or miles' driving, or a minimum period between obtaining a provisional license and taking the test;

Compulsory professional tuition; or additional training for motorway driving or night driving

  5.1  Norwich Union supports training with a qualified instructor backed-up and encourages more practise pre-test. We believe the experience of driving hours on the road is more important than a specific minimum learning period. The Department for Transport Stats 19 provides evidence that lack of experience increases the risk of being involved in an accident. Insurers have evidence that inexperience leads to accidents particularly when driving at night, negotiating bends, driving at high speeds and driving on wet roads.

  5.2  Norwich Union currently offers a discount on premium for those drivers taking the Pass Plus training. The ABI report on "Pass Plus: Ten years on" suggests that Pass Plus drivers have only a marginally lower accident rates that drivers who do not participate in the scheme so a more robust process should be sort.

  If a graduated licence were introduced Pass Plus could form part of the post test training to accelerate learning to a completely unrestricted license. This graduated scheme should contain:

—  A more robust process including all modules being practical and not theoretical.

—  A practical competency test at the end of the each module.

  The modules should include driving in adverse weather conditions (snow/ice), on motorways/dual carriageways, high speed driving exposure, night time driving. Incentives as described above that encourage young or novice drivers to consider what times of day they are travelling are to be encouraged. The pre-test practise and modules could be recorded using an on-line system or a log book as currently advocated and used by BSM.

  5.3  Norwich Union feels that the currently available intensive "5 day crash" courses should be banned as they are well named and they do not provide sufficient exposure to all conditions to breed a safer driver.

  5.4  Insurers are investigating ways of making it more cost effective for parents to give learners more road hours. At present the cost of adding a young driver to a current policy are putting some parents off doing this, leaving driving lessons as the only exposure.

GRADUATED LICENSING

6.  Graduated licensing schemes involve the phasing-in of driving privileges. Typically, a gradated licensing scheme imposes additional restrictions on new drivers either for a fixed period of time after passing their test or until a second test is passed. Restrictions in a graduated licensing programme might include:

A lower speed limit; a lower blood-alcohol limit; restrictions on the number of passengers who may be carried; and Restrictions on night driving

  6.1  Norwich Union supports the principle of a graduated licence with individual modules being assessed following the initial test. We would welcome a lower speed limit perhaps on dual carriageways/ motorways for novice drivers and restrictions to the number of passengers being carried as well as night time driving. We would also welcome initially limiting driving to lower cc/power to weight ratio cars until experience has been proven.

CHANGES TO THE DRIVING AGE

7.  Would there be any benefit in changing the minimum age at which a provisional or full license may be obtained?

  7.1  If a minimum learning period were introduced, this would effectively change the minimum ago to obtain a full license. Norwich Union feel that the importance of encouraging approved driving instruction and gaining plenty of experience whilst learning is more key to producing safe drivers than age alone.

DIFFERENT TREATMENT OF OFFENDERS

8.  Drivers face disqualification and re-testing if they acquire six penalty points during the first two years after taking their test. Could further, similar provisions for the different treatment of novice drivers who offend be introduced?

  8.1  When the six points was first introduced, the number of speed cameras etc and ways of obtaining points on the novice's license were not as prevalent. We do not feel that speed camera fixed penalties should necessarily count against this as it may not necessarily prove careless or dangerous driving.

  8.2  The Magistrates are witnessing these drivers having their licenses withdrawn and not coming forward to retake their test. Norwich Union remains suspicious that they are continuing to drive without insurance. We feel that a more appropriate process should be developed to encourage safer and more responsible driving from these novice drivers and not lead them to drive uninsured and probably unlicensed as well. The new Road Safety Act should help this situation with continuous insurance enforcement from the record. The Government should be making newly qualified drivers more aware of this legislation.

  8.3  Norwich Union would advocate when a three point penalty is awarded, the novice would be given the opportunity to take some further driving tuition with their points suspended on reaching a competent standard of driving. At six points further training should be offered and perhaps a "free" retest. There is still education required for these novice drivers who believe that insurance is only for the metal and do not give a thought to the personal injury caused. The training could be some half day courses on the results from Accident and Emergency Departments on road crashes and the impact on daily lives, as well as Police demonstrations plus presentations on the legal requirements (including insurance) and consequences of not adhering to driving legislation. This training would be in addition to further time spent with a driving instructor to try to correct "bad" habits that may have developed.

18 December 2006