WEDNESDAY 28 FEBRUARY 2007

MR NICK STARLING, MR JUSTIN JACOBS AND MR DOMINIC CLAYDEN

  Q100  Mr Martlew: I live in a part of the city where the crime rate is higher than in other parts, although it has a low crime rate throughout. My insurance would be higher because of that.

  Mr Clayden: Yes.

  Q101  Mr Martlew: Are you saying that you do not increase the insurance premiums of someone who lives in an area where you think they are more likely to have accidents?

  Mr Clayden: No, no, I said the North-West is—

  Q102  Mr Martlew: I am talking about specific areas of a large conurbation.

  Mr Clayden: Yes.

  Q103  Mr Martlew: So you do?

  Mr Clayden: We can do that. Like house insurance we can get it down to a relatively—

  Q104  Mr Martlew: So you actually charge higher premiums in an area of the city where you think there are likely to be more accidents?

  Mr Clayden: Higher claims costs.

  Q105  Chairman: You call for a more robust process than Pass Plus, what do you mean? You actually say that Pass Plus only marginally lowers collision rates, but you support it by offering lower premiums. Why?

  Mr Clayden: Because it marginally does reduce the impact.

  Q106  Chairman: So what is this more robust process that you are talking about, what is it?

  Mr Clayden: I think we support the broad insurance industry perspective to have the log book and the more structured training over a period of time.

  Q107  Chairman: When Norwich Union said: "We seek the Committee's support in allowing insurers to continue to use gender as a rating factor...", is that something you would look at right the way across the board? Are you looking at other, tougher conditions?

  Mr Clayden: In terms of the gender issue, it is a statistical fact that young males are 10% more likely to have an accident.

  Q108  Chairman: It is very difficult to sort out what your attitude is to statistics, Mr Clayden, if you will forgive me for saying so. We know from the sophistication of the electoral proceedings and certainly marketing that it is possible to tell almost down to a house what specific incomes and specific areas respond in particular ways to particular challenges. What I am not clear about is why on the one hand you say that we have got to do something tougher than Pass Plus but, on the other hand, you say we could not do that because although you would do it for household insurance you would not do it for driver's insurance. Is that what you are telling us, or are you telling us you do demand higher premia?

  Mr Clayden: For geographical locations?

  Q109  Chairman: Yes, including driving?

  Mr Clayden: Yes. It is a feature, yes.

  Q110  Mr Leech: Can I just ask a very brief question on Pass Plus. It might be slightly unfair but I suspect that the reason why people get discounts who have taken the Pass Plus course is more to do with them being more likely to be responsible drivers in your eyes rather than necessarily better drivers because they have done the additional course, or is that me being unfair on the insurance industry?

  Mr Jacobs: We published research on Pass Plus last autumn. The sample was smaller than we would have liked, it was just 1,000 motorists, but it confirmed that for motorists who do not undertake Pass Plus there is an average of one in five people having a collision in the first year of driving and for those who did take Pass Plus it was marginally lower but not statistically significant given the small sample that we had. That is why we say Pass Plus is a good initiative but it is not in itself going to solve the problem that we face.

  Q111  Mr Leech: It is not because you expect them to be more careful drivers and more responsible drivers?

  Mr Jacobs: I think one of the interesting themes that came out of the research was that, if anything, Pass Plus was a better indicator of safe drivers at the start of the scheme and it is probably the case those who took it took it because they were good drivers, but as awareness has spread more and more people are taking it because they want to learn, which is a good thing. One consequence might be that its impact is less because you have a wider section of the population taking it.

  Q112  Chairman: Do you support psycho symmetric—psychometric testing of candidates? It might be more interesting if it was psycho symmetric!

  Mr Starling: I confess, Chairman, it is not something we had thought about until you asked the question in the previous session. We are very interested in the Government's proposals and we think it is great they are looking at this and they should explore all the aspects and we are happy to talk to them about them.

  Q113  Chairman: No, Mr Starling, I asked you, I know what the Government is proposing. What is the industry's attitude to psychometric testing?

  Mr Starling: As I say, we have not looked at it, so I do not know.

  Q114  Chairman: Mr Clayden, has Norwich Union not considered having people suitably tested?

  Mr Clayden: No.

  Q115  Chairman: Gosh! Mr Jacobs?

  Mr Jacobs: No.

  Chairman: Ah, well. Thank you very much, gentlemen, you have been extremely interesting and helpful. We are very grateful to you. Thank you.