Motorists that use a ‘black box’ can save up to 13% on their premiums by switching their insurance package to a telematics insurance option
As UK motorists struggle with spiralling insurance costs, research reveals that insurers are not promoting cheaper ‘black box’, or telematics technology to help reduce their insurance premiums. A YouGov survey of 2,000 motorists conducted by Redtail Telematics, the long-established provider of telematics solutions for the automotive, fleet, insurance and stolen vehicle recovery sectors, has revealed that only 8% of respondents had received any communication from insurers about adopting telematics-based insurance to help reduce premiums.
Motorists that use a ‘black box’ can save up to 13% on their premiums by switching their insurance package to a telematics insurance option. Research to find the cheapest car insurance revealed that telematics policies provide the cheapest new driver car insurance, based on quotes for a sample driver*. At a cost of £588 for the sample driver, this is 13% cheaper than the cheapest regular car insurance policy on offer, which cost £678. Overall, four out of five of the cheapest quotes were telematics.
Vehicle insurance premiums are soaring, adding to the financial burdens faced by both individuals and businesses in these recessionary times. For instance, the most recent data for an average vehicle insurance price was a staggering 50% higher than 2023, with a typical driver paying £612 (ABI), more than 40 per cent extra for car cover than they were two years ago - the typical premium was £436 in summer 2022.
In the last year car insurance costs in the UK have risen twelve times as fast as France, and about five times as fast as Spain and Italy. This, according to the Department for Transport, has been driven by damage from pothole-ridden roads, soaring inflation and rising car thefts, amongst other factors.
The Financial Conduct Authority (FCA) said it was launching a competition market study “to see whether people who borrow to pay for motor and home insurance are receiving fair, competitive deals”.
The FCA has estimated that more than 20mn people pay for their insurance in instalments, which can see them charged interest of 20-30 per cent. Almost four in five adults in financial difficulty use these payments rather than a lump sum.
Insurers have said higher prices for car drivers reflect a rise in claims costs. UK motor insurers suffered a second consecutive year of significant underwriting losses in 2023, meaning prices have failed to keep up with payouts that have surged, in part because of rising costs for parts and labour.
The UK Government has also announced a new task force which will identify the factors behind rapidly rising premiums and will agree to solutions to keep costs under control. This task force will include Transport Secretary, Louise Haigh, and Economic Secretary, Tulip Siddiq, and will bring together industry groups and consumer champions such as the Association of British Insurers, Citizens Advice, Which? and Compare the Market, as well as insurance regulators.
Commenting on the Redtail Telematics/YouGov research, Redtail Telematics CEO, Dr Colin Smithers said: “Car insurance is an essential for millions up and down the country. It’s not just a legal requirement, but something that protects all of us on the road. Yet, in recent years, millions of responsible drivers have seen a hike in premiums far outstripping rises seen in other countries. The richness and relevance of telematics data remains invaluable to those insurers committed to fair pricing, improved road safety and responding to environmental concerns. Redtail is passionate about our data informing insurer data to make a discernible impact on all three.”
Sample driver*
Sample driver was 25 years old, has been driving for 6 years and has a clean driving record. He drives a 5-year-old Ford Fiesta ST Line Econoboost 100 valued at £7,000 and he drives 7,000 miles each year.
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