Average price gap of £2,172 turns 83% of young drivers to telematics policies

Drivers aged between 17 and 19-years-old who do not take out telematics-based motor insurance policies face paying up to £2,172 – or 83% – more per year for traditional cover.

This is according to new data from market research firm Consumer Intelligence, which said this extra cost represented a “penalty” for young policyholders and created a lack of trust that risked disenfranchising them with the technology.

The data, created from an analysis of 6,868 motor risks across both telematics and non-telematics groups, found that telematics adoption rates fell to 51% for drivers aged 25 to 29, 25% for drivers aged 25 to 39 and to just 15% for drivers aged 50 and above.

Ian Hughes, chief executive at Consumer Intelligence, said the aggressive implementation of telematics policies on the captive audience of young drivers amounted to the “weaponisation of pricing”.

This, he said, led to low adoption rates among older cohorts – over 50s, for example, could save £160 to £230 on appropriate policies, yet had a very low uptake rate.

Threat to adoption

Hughes added: “The industry is training an entire generation to hate the technology it needs them to embrace for usage-based and connected insurance products in the future.

“Insurers think they’re selling clever technology. Customers hear ’we don’t trust you’. That fundamental miscommunication is costing young drivers thousands and threatening innovation adoption for decades to come.

“Insurers need to stop selling surveillance and start selling recognition. Our research shows customers who feel recognised and in control have three times higher voluntary adoption rates. The industry is literally explaining its way out of billions in future premiums.”