Young driver insurer Carrot Insurance (part of UK-based global telematics leader Trak Global Group) has urged the powerful House of Commons Transport Committee to champion technology as a proven means of reducing the risk of young drivers being involved in a road traffic accident (RTA).
Carrot Insurance has submitted evidence to the Committee, which is holding an inquiry into young drivers and how to reduce accident frequency in this age group.
Carrot insures tens of thousands of novice drivers with its black box technology, and the company also uses smartphone apps to help more experienced young drivers save money on their car insurance premiums.
Carrot Insurance managing director Norrie Erwin said: “Telematics insurance is proven to reduce accidents and improve driver behaviour. In our evidence to MPs we showed that Carrot has overseen a 42% reduction in the number of accidents among our customer base compared to customers of the same age group on conventional policies.”
Norrie said that Carrot’s unique ‘carrot, not stick’ philosophy rewards young drivers when they drive well, to encourage even better driving behaviour. He told the Committee: “Customers who regularly check their driving behaviour on their Carrot app are 39% less likely to have an accident, so the rewards programme incentivises customers to check their status, and by doing so frequently, they drive better.”
He said the Carrot proposition also had wider benefits, because better driving scores mean that insurers pay out less in claims. “For every two-point uptick in driver scoring across the Carrot portfolio, loss ratios improve by 14%. The improvement in loss ratios has made this segment of the insurance market profitable for insurers again, creating more insurance choice and lower premiums for young drivers.”
Norrie said it was important that the government does more to encourage novice drivers to use a telematics product for their first year, by reducing or removing Insurance Premium Tax (IPT). “In 2016, Carrot Insurance customers paid well over £2.0m in IPT, but on average the company saves £5m each year in lower claims costs because they have fewer accidents.”
Norrie also said that Carrot’s app technology enabled his business to provide customers add-on benefits such as accident management technology, and PaceNotes, a virtual education programme for learner drivers. “The fact is that drivers who learn to drive safely on the roads with our help go on to be better drivers in later life. So the benefits of telematics insurance reach well beyond the young and novice driver category.”
Click this link for Carrot Insurance’s submission to the Transport Committee;