Ireland's largest motor insurer is to start offering cheaper deals to young male drivers, in an experiment to see if they are as high-risk as the industry has traditionally claimed. From tomorrow Guardian PMPA is to give a 6 per cent discount to new first-time drivers aged between 17 and 24. But the discount, amounting to around £90 on a £1,500 policy, will still leave policy-holders facing significant costs.
Young drivers find it extremely difficult to get insurance and are often quoted exorbitant rates.
Industry sources estimate that yearly premiums range from £1,200 to £2,500 or more, depending on the driver and the vehicle being insured.
Young drivers are considered to be extremely high-risk, and many companies will not quote for them. The issue has been of major concern for some time.
Guardian PMPA is introducing the discount for one year.
The company's operations director, Mr Aidan Cassells, said last night that it would be reviewed after 12 months, when the claims record of young drivers would be taken into account. Depending on the company's findings, the scheme will either continue or be shelved.
Mr Cassells said the company had been examining how it could improve the plight of young drivers and had decided that this would be a positive move towards reducing costs.
Some reductions have also been introduced for young female drivers, although young men are considered a far higher risk than young women.
The Minister of State for Science, Technology and Commerce, Mr Noel Treacy, welcomed the reductions last night.
He said the disproportionately high costs of claims associated with young drivers was a cause of grave concern, not only from an insurance perspective, "but also in terms of the common good".
Figures released by Mr Treacy's Department last night showed a huge increase in motor insurance underwriting losses.
The figures showed that losses from this sector of the insurance business rose from £41 million in 1995 to £90 million last year.