Road Safety: An Insurer Perspective Briony Krikorian Association of British Insurers

Natural allies Safety benefits of risk pricing: reducing risk levels leads to lower premiums, and therefore insurance creates automatic incentive for customers to reduce risk Prevention is better than cure: insurers seek to reduce frequency and size of claims ABI works with the Government to address problem areas

The safety benefits of risk pricing Insurers can be most competitive if premium charged is adequate to cover the risk posed Insurers work with claims data and customers to identify risk Insurers develop more sophisticated methods of risk pricing and encourage risk reduction Prospect of lower premiums encourages consumers to reduce their risks where they can Safer behaviour of insureds means average premiums are often lower

The safety benefits of risk pricing Canada: 3 provinces where risk pricing allowed, the chance of being involved in a fatal road crash is almost 20% lower than in the more heavily- regulated provinces

Reducing quantity of collisions Commercial: insurer-provided driver training courses for professional drivers that can lead to lower premiums Personal: - no claims discounts reward safe driving - discounts for completing Pass Plus scheme - telematics-based insurance

Reducing quantity of collisions One in 20 vehicles on UK roads are thought to be driven uninsured ABI research revealed uninsured drivers more likely to be unsafe drivers ABI and Motor Insurers’ Bureau working closely with the Government to bring down the level of uninsured driving

Reducing severity of collisions Industry seeks to minimise the severity of accidents through two main routes: –creating pressure to improve vehicle design so that fewer people get injured in road traffic accidents – Thatcham research centre –promoting best practice in treatment and rehabilitation for people injured in road traffic accidents

Example: Young drivers Insurers identified growing risk of young drivers 2005 ABI collected claims data on young and newly qualified drivers 2006 ABI policy paper identified specific risks young and newly qualified drivers pose

Young drivers Car drivers killed or seriously injured per 1,000 licence holders Source: ABI estimate derived from Department for Transport accident statistics

Risk factor - inexperience Percentage of accidents where inexperience was a contributory factor Source: Proportion of accidents between that had a contributing factor. Department for Transport, STATS19.

Risk factor - speed Percentage of accidents with excessive speed a contributing factor Source: Department for Transport, STATS19

Risk factor – young passengers Driver fatalities per 10 million trips for young drivers Source: Chen, L.H., Baker, S.P., et al. arrying passengers as a risk factor for accidents fatal to 16- and 17-year-old drivers. Jama 283(12): Cited in BBC “Teenage drivers ‘die showing off’ (March 2000). Based on 16 year-old drivers in the US.

Risk factor – driving at night Casualties per hour (serious and fatal) per year by age (2003)

Insurer incentives to reduce risk Discounts for advanced training e.g. Pass Plus scheme Accelerated no-claims discounts Telematics products – Pay-As-You-Drive and deterrent fee A2OM academy Young Marmalade initiative

ABI proposals to Government 12-month minimum learning period Structured learning program e.g. in rain, on different roads Passenger restrictions Discourage night-time journeys

Government response July: Transport Select Committee report on novice drivers endorsed ABI proposals October: Govt response promised to consider proposals

Other road safety areas Older drivers – Govt medical licensing consultation Motorcyclists – ‘Enhanced rider’ scheme Cross-border drivers – policy paper in November