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All young drivers 'should have tracking devices installed to reduce car insurance costs'

Junior Minister Michael D’Arcy said young people are choosing to pay higher premiums rather than have the devices installed in their cars.

Image: Shutterstock/tommaso79

ALL YOUNG DRIVERS should have speedometer tracking devices fitted to their cars in order to reduce the cost of their car insurance, according to one junior minister.

Minister of State at the Department of Finance Michael D’Arcy said insurance companies offer young drivers the option to have such telematic devices installed in their vehicles in order to avail of cheaper motor insurance.

The machines track the speed of the car and reward drivers which stick to the speed limit with lower car insurance rates.

However, D’Arcy said young people are choosing to pay the higher premiums rather than have the devices installed in their cars.

Tracking devices 

“There is an opportunity for young drivers to use a telematics device which can record the movement of their vehicles. To my disappointment a huge number of young drivers prefer to pay the extra amount rather than be on the system where their every movement is recorded in an appropriate way.

“I believe that in the future all young drivers should use these devices so we can ensure they start with good driving practices rather than bad ones,” he said.

In January, the Data Protection Commissioner warned insurance companies they could face an audit for offering discounts to young drivers who install special tracking devices in their cars to monitor their driving behaviour.

The commissioner said the devices collect a lot of information about the driver such as their location, and her office will ensure insurance companies are not breaking the law in how they use and store the information.

Fianna Fáil’s Bobby Alyward said that he had not heard from any of his constituents that their premiums were going down, giving one example of a young driver.

“A young fellow who did the theory test, passed it, had 12 driving lessons and passed his second driving test after failing the first. When he looked for insurance quotations they were for thousands of euro. The insurance actually cost more than a car. When his father and mother tried to put him on their insurance as a named driver they were quoted €2,000 and €3,000.

“I even tried to put him on my insurance for my commercial farming vehicle at home with my insurance company. It quoted €900 for eight months. That is extravagant. No young person will ever get on the insurance ladder unless we do something, and this is the place to do something to try to reduce the cost of insurance,” he said.

Not being taken up by young drivers

“The cost of insurance will be halved for a young driver if he or she uses this device. However, very few people are taking it up,” said the minister.

Concerns have also been raised about excessive loading of insurance costs on those in retirement.

Finance Minister Paschal Donohoe said he has received representations to that effect that some policyholders, both younger or older drivers, are continuing to experience an increase in their insurance premiums in spite of the fact that prices are generally in decline.

He said Minister D’Arcy has written to Insurance Ireland in relation to the matter, but no formal response has been received to date.

However, Donohoe said during discussions between department officials and Insurance Ireland, they indicated that they had not discerned a particular trend from the enquiries received through its helpline.

Insurance Ireland also pointed out that in making their individual decisions on whether to offer cover and what terms to apply, insurers will, aside from the driver’s age, use a combination of other rating factors. These include the age and type of the vehicle, the relevant claims record and driving experience, the number of drivers, and how the car is used, he said.

The minister said Insurance Ireland also advised that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market.

Cost of car insurance report 

D’Arcy, who is tasked with implementing the government’s working group report on the cost of motor insurance, said to date, a considerable amount of work has been undertaken to address the issue of the cost of motor insurance.

He outlined that a number of the report’s recommendations had been delivered or were being progressed.

“It should be noted that the average cost of motor insurance has been consistently falling since the middle of 2016. The ongoing implementation of the motor report recommendations is contributing to this trend. The most recent CSO data show that the reduction is 18.1% since July 2016,” he added.

Three recommendations yet to be implemented relate to legislation, while another outstanding action is contingent on the establishment of the new office of the legal costs adjudicators, which currently is expected to occur by July 2018.

The minister said another two actions yet to be rolled out relate to the establishment of a fully-functioning integrated insurance fraud database for the industry to detect patterns of fraud.

This requires the approval of both the Minister for Justice and Equality and the Garda Commissioner. D’Arcy said this measure has “potentially far-reaching co-operative mechanisms between Insurance Ireland and An Garda Síochána” and is still under consideration.

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