The cost of motor insurance - Transport Committee Contents

Written evidence from Martin Prosser (CMI 01)

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policy holder fail to maintain monthly instalments the policy holder is then informed that the original certificate in no longer valid.

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 be applicable.

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.

October 2010

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