Insurance revamp needed, says report

• Costs stop young people taking their test
• Car industry could be hit with falling sales
• Major insurance rethink called for

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A major rethink of the car insurance industry is needed to encourage more young drivers to take their test, according to vehicle telematics company Cobra.

Research by the Department for Transport shows that just 35% of 17-21 year olds hold a full licence, with high insurance costs cited as the main reason why the remainder haven't taken the test.

Cobra believes that the UK motor industry could be hit by falling sales unless insurers move to a model where policies are calculated on how young motorists drive rather than what sort of car they own.

Manufacturers would be able to do their part by fitting safety equipment such as speed limiters, parking sensors and alarms to help drivers bring their premiums down.

'Manufacturers have to sit down with insurance companies to see how they can speed up the process of moving to a driver behaviour-based insurance platform,' said Andrew Smith, managing director of Cobra UK.

Several companies already offer insurance policies that reward young drivers with lower premiums. The Co-operative uses a pay-as-you-drive scheme that assesses the time, distance and location of drivers’ journeys to determine the cost.

Cobra believes such systems would allow responsible young motorists to drive more powerful and expensive cars – while also boosting sales for the UK car industry.

'No manufacturer or insurer would agree to reduce premiums for a 17-year-old driving a Ferrari, but young people should not be discriminated against if they want to drive their parents' Nissan X-Trail or VW Touran,' said Cobra.