Loading the risk? Insuring young drivers

Are young drivers really more expensive to insure than older ones? The answer, it seems, depends on how big your fleet is.

Enquiries by CM reveal that while some firms do pay about three times the premium that applies to older drivers to take on the youngest ones, others pay no more at all – unless those young drivers subsequently have an at-fault incident.

Quotes obtained from truck insurance broker Towergate Insurance (see box) demonstrate that the cost of insuring young drivers can be far greater than for older ones. Based on our criteria, we were quoted £4,293 to insure a single 4x2 tractive unit at 40-tonne GVW with a 35-year-old driver, but £12,164 to insure the same vehicle for an 18-year-old.

A quote for a fleet of five vehicles with five older drivers came to just over £25,300, while the cost of insuring the same fleet with one 18-year-old driver on board came to more than £32,000.

These quotes apply to small fleets, where a no-claims-discount (NCD) type approach based on individual drivers and vehicles is taken. Larger fleets, where the insurance emphasis is on claims history, might face nothing more than an increase in the excesses applicable to any young drivers, confirmed Towergate – although this depends on the insurer.

Extra, extra?

Excesses on such drivers would probably rise to two or three times the normal sum, said Ian Pitt, business manager in the commercial motor division at the broker, which might result in paying out between £2,000 and £3,000 in the event of an at-fault incident instead of just £1,000. But if no such incident occurs, such fleets will pay no more for using young drivers, he said.

Does that seem unfair on the smaller companies paying higher premiums up front? "Yes and no," says Pitt. "Fleet and NCD policies have a totally different make-up in terms od how the premiums are calculated, NCD rating being much more scientific and based on actuarial reviews and historical data on masses of similar classes of business, whereas fleets are ever so much on their own merits."

But are the extra costs (whether premium or excess) prohibitive enough to be choking the supply of new young drivers for the industry?

Road Haulage Association national chairman Peter Barber believes it is. “Nobody wants to risk their costs being higher if there are any problems,” he said.

Freight Transport Association (FTA) chief executive Theo de Pencier agreed. “I think fleet managers are reluctant to recruit drivers in the first year or two after their test,” he said. “You’ve got to be tough, well organised and have a good plan to be able to overcome [insurers’] objections and convince them not to load against younger drivers.”

Data from Skills for Logistics underline the point in showing that just 1% of employed LGV drivers in the UK are aged under 25.

There is some hope things may eventually change, however. Pitt of Towergate suggests the use of new technology to monitor drivers could, as it becomes more widespread in the truck sector, lead to more emphasis on how people actually drive, rather than how old they are, as it has with general motorists.

And de Pencier of FTA suggests that increasing use of psychometric testing among employers could also play a part in time, by helping to demonstrate that new recruits are risk-averse.

For the time being, however, the simple truth is that young drivers do cost more to insure – and disproportionately so for those who are least able to afford them.

That seems in large part to be down to the lower overall premiums small fleets pay compared to larger counterparts.

“It’s just a question of numbers,” confirms Barber of the RHA. “Insurers aren’t going to insure someone for just a £5,000 premium when the first bump they could have could wipe out a whole year’s profit for them.”

Operator experiences

Peter Eason, MD of ELB Partners, said that employing a 24-year-old driver recently did not affect his firm’s insurance premium, but it did lead to about twice the normal excess for the driver. Eason, whose firm employs about 60 drivers, said he is not put off by this because young drivers are often more cautious than older ones.
“I don’t have an issue with them,” he said. “More firms should give it a try.”

Caledonian Logistics MD Derek Mitchell, who has six drivers under 25 out of a team of about 70, agreed. Although his excess tripled for those drivers, he thinks young drivers in CVs are much less of a risk than young drivers in cars.

Graham Stubbs, MD of own-account operator Bliss Bedding, said he used to pay £5,324 insurance premiums for a three-vehicle fleet, despite employing daughters Lucy (24) and Jessica (18) as drivers. But after moving the smallest of these vehicles, a 12-tonner, to a separate O-licence to make room for a new vehicle on the original one, he was quoted more than £3,000 for that vehicle alone, because of Jessica’s age. “It’s no wonder people aren’t taking on young drivers,” he said. "If you were going to save £1,500 you'd go that way straight away."

Quotes in

CM asked Towergate to provide quotes for comprehensive vehicle insurance on a two-year-old Daf 85CF.360 4x2 with 290,000km on the clock and a secondhand value of £37,500, based at a depot in Lichfield and hauling third-party semi-trailers within a 250-mile radius. We asked for three quotes – one for an 18-year-old, a 35-year-old and 55-year-old – and were quoted £12,164, £4,293 and £4,611 respectively, making the cost of insuring the 18-year-old almost three times that of the 35-year-old.

We then established an imaginary fleet of five vehicles, all Daf 85CFs of the same spec and year, operating from the same site, to get two further quotes: for a group of five drivers comprising two 55-year-olds and three 35-year-olds; and the other for one 18-year-old, two 35-year-olds and two 55-year-olds. The quotes were £25,344 and £32,042 respectively – a hike of more than 26% for the luxury of employing the younger driver.

Unfairly penalised?

Should young drivers cost any more at all to insure than older ones? New drivers are, it could be argued, naturally cautious about driving, trained to a higher standard than drivers of yesteryear, trained more recently than older drivers, and quicker in their reaction times, too.

So is there any evidence that young commercial vehicle drivers truly pose an elevated risk to insurers? FTA chief executive Theo de Pencier doesn’t believe so. “I’ve never seen any statistics that show me that younger HGV drivers are more likely to have accidents than older ones,” he says. “I think it’s one of these myths that grow out of the car industry.” 

CM asked the Association of British Insurers what statistics it had about accidents involving young commercial truck drivers. A spokesman there admitted they had “nothing specifically” on young drivers in the truck sector but did send us a document highlighting that the biggest single cause of accidental death among 15-24 year olds was “dying in a car”.