The cost of motor insurance - Transport Committee Contents

Written evidence from Nick Ross (CMI 24)

I have recently been made aware of your inquiry into the cost of motor insurance and I gather the committee has extended its deadline for submitting written evidence to Wednesday 15 December.

Accordingly I offer the following observations:

  1. ¾  Crime is an important driver of motor insurance costs.
  2. ¾  Most crime is driven by lax design of policy, products or services.
  3. ¾  The three-quarters drop in vehicle theft since its peak in the mid 1990s has been driven overwhelmingly by design improvements (as indeed has the cut in road fatalities from over 6,000 to rather more than 2,000 - a trend kick-started by a campaign in which I was involved in the 1980s).
  4. ¾  The criminal justice system has little measurable effect on crime rates and should not be regarded as an important lever for driving down crime*.
  5. ¾  Most politicians, police and members of the public have not grasped this and continue to believe that crime is driven by bad people rather than bad regulatory or corporate decisions.
  6. ¾  While in general private enterprise is often culpable in promoting criminal behaviour, in this case bad public policy is the key.
  7. ¾  In 2001, together with two energetic civil servants from the DTLR and DVLA, I presented HMG with a comprehensive proposal to ensure compliance with vehicle identification requirements. Ministers accepted the "easy" options and balked at those requiring political courage.
  8. ¾  The impact of the new measures secured an immediate improvement in motor insurance penetration.
  9. ¾  Adoption of the more comprehensive package, one that defaults to motorist-compliance rather than voluntary obedience, could ensure much higher penetration of vehicle insurance and thus drive down premiums.
  10. ¾  By cutting the number of "ghost" vehicles which are untraceable and often without MoT, better regulatory policy is also likely to reduce accidents, vehicle crime and crimes commissioned with the assistance of vehicles.
  11. ¾  However, better enforcement is unlikely to make a major difference in premiums to young drivers where the actuarial risk is principally from accidents. Since UK motor policies generally insure the driver not the vehicle, improved regulation is unlikely to reduce the problem of young people driving without insurance cover. Indeed it might reveal a larger problem.
  12. ¾  Given (a) that driving on public highways is a complex skill that improves with maturity and practice, (b) the competitive nature of the UK insurance industry, (c) the mounting costs of vehicle repairs and injury claims and (d) the relative impotence of courts to affect behaviour, improving insurance access to young drivers can only be tackled by subsidising them, such as through State subventions or fiscal dispensations (which would drive up taxes) or by sharing the risk with others such as older motorists (which will drive up their premiums).

I do not say this lightly. I presented the BBC's Crimewatch for two decades. It was the revelation that crime rates rise and fall independently of court disposals, and the discovery that much thinking about crime owes more to voodoo than science, that led me to found the Jill Dando Institute of Crime Science at UCL and to seek firm evidence about cause and effect (I am an honorary fellow of the Academy of Experimental Scientists and a trustee of Sense About Science).

December 2010

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