Written evidence from Martin Prosser (CMI
Below is my personnel submission of evidence for
your forthcoming enquiry into the Cost of Motor Insurance.
1.1 The terms of reference for this enquiry neglect
the issue of affordability of Motor Insurance and the effects
caused by the current terms of sale, used by the insurance industry.
1.2 Currently the main stream insurance providers
and possibly purchasers are fixated on using policies of twelve
months duration payable as a lump sum or following the addition
of a premium for payments via instalments.
1.3 A certificate of insurance is issued for
an annual policy following completion of the first payment. Should
a policy holder fail to maintain monthly instalments the policy
holder is then informed that the original certificate in no longer
1.4 An alternative would be for persons currently
forced to use monthly payments for reasons of affordability to
purchase four periods of three months or two periods of six months
with a new certificate of insurance issued for each period.
1.5 This reduces the initial outlay to one quarter
or a half of the annual policy providing greater affordability
to purchasers, as no premium for payments via instalments would
1.6 The grater use of upfront payments would
also reduce the cost and risks taken by the insurance industry
currently in providing flexible payment terms.