Young drivers insurance hike following Quinn Insurance going into administration

Young drivers could suffer a 20 per cent insurance hike as a result of Quinn Insurance going into administration, according to specialist insurance providers Adrian Flux.

Gerry Bucke, operations director at Adrian Flux, said the news of Quinn's forced closure had worrying implications for all drivers under the age of 25, or those with a low no claim bonus, because the insurer's low prices had led to cut-throat competition in the market.

UK motor insurer Quinn Direct was closed to new business yesterday (March 31) after its Irish parent Quinn Insurance was placed into 'provisional' administration. Quinn Direct specialised in low-cost policies for younger drivers, who often signed up through price comparison sites.

"Because Quinn Direct offered such cheap insurance for young drivers it meant other insurers had to lower their prices to compete," said Gerry. "Without this downward pressure on prices there is a real danger of the cost of insurance premiums for young drivers soaring even higher. There has been speculation that the net effect could be an extra 20 per cent on young driver prices."

However, in the same week that the insurance market for young drivers in the UK has become precarious, a survey by AXA has revealed that British motorists, aged under 25, are actually 30 per cent less likely to make a claim than young drivers in Spain or France.

Mr Bucke said the rise in the UK's 'compensation culture' was also to blame in young British drivers facing rising premiums, despite making less claims than their European counterparts.

"The sad fact is that even with the prices as high as they are, most insurers are not seeing any profit on their young driver book," said Gerry. "Even minor bumps can result in huge claims for whiplash. Young and inexperienced drivers are more likely to encounter such a claim and the value of these claims against youngsters also tends to be much higher."

Increased training and education for young drivers is one of the key solutions being championed by Adrian Flux to help cut accidents and insurance prices.

"We are passionate about making sure young drivers can continue to insure a car at a reasonable rate," said Gerry. "Increased training makes a real difference, which is why we offer massive discounts for young motorists who have passed a Pass Plus course or one of the other industry recognised schemes. We also help sponsor the driver education schemes run by a number of county councils. An hour on a skid pan can really help you keep a clear head and react appropriately in an unexpected situation."

He added: "All of this goes some way, but the most difficult thing to determine is always going to be the mentality of the driver. This is where a broker like Flux can have the edge over faceless comparison sites. We can look at factors outside the standard computer rating factors and try to gain an impression of the person behind the risk."

Article posted on 01 Apr 2010