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The Actuary The magazine of the Institute & Faculty of Actuaries

Defaqto white paper suggests young driver risk control

Defaqto said that although younger drivers represent the greatest risk to the motor insurance industry, providers can introduce and encourage a number of measures to bring premiums down and maintain a space in this market.

The paper examines what providers can do to lower premiums for young drivers while at the same time managing the risks they pose to insurers.

Mike Powell, Defaqto’s insight analyst for general Insurance, said: “If premiums continue to increase within the young driver segment of the motor insurance market, we could see regulatory intervention to control price. However, removing age as an underwriting factor would have a major impact on the pricing and underwriting capability of all motor insurers.

“To take advantage of the opportunities offered by the already challenging young driver market, insurers need to find a solution to the affordability issue while ensuring they do not take excessive risk on to their books.”