Parents warned on car insurance lies
Six in ten parents admit they would consider insuring their child's car in their own name, adding the child as a secondary driver, to bring car insurance costs down.
But the practice, known as 'fronting', is against the law and parents who do it risk fines, invalidating their cover and jeopardising future insurance for their children. Parents should not be tempted to hide a young motorist as a named driver on a policy. Where fronting is exposed, insurers will cancel the policy or charge the correct premium as a lump sum.
Drivers who have had a policy cancelled will have to declare this on any future insurance applications and will find it harder to buy. Insurers can also refuse to pay for any claims or can settle a third-party claim and recover the cost from the parent as the policyholder.
If the insurer declines a claim, the young driver could be treated as uninsured and could be fined hundreds of pounds and receive six penalty points, which means an automatic ban for new drivers. They will also face higher insurance costs in future.ENDS
Aggregators failing to disclose insurer ties
Many aggregator sites fail to disclose commercial ties to insurance companies, which can mislead customers into thinking promotional features are actually the best value products in the market, according to new research.
The Resolution Foundation, which commissioned the study, has called for a voluntary code of practice for price comparison web sites. The ABI is also conducting its own investigation into a code of conduct for aggregators, and is in the process of consulting all insurance aggregators.
According to Resolution, the study by YouGov, 45% of people have used a price comparison site to help make a financial decision in the past year. However, the research also showed that many sites fail to explain their commercial relationship with product providers.
Clive Cowdery, chairman of the Resolution Foundation, said: “Comparison sites are valuable in making informed financial decisions, but many sites are undermined by a lack of transparency about their commercial relationships. A voluntary code of practice would address this and encourage a growing market, without the need for further regulation.”
Biba chief executive Eric Galbraith said: “This research clearly shows that aggre-gator sites are a dangerous tool, providing consumers with little more information than a comparison of price when they are choosing an insurance policy.”
Chris Hannant, head of market regulation at the ABI, said it would take the Resolution Foundation’s research into consideration and release its own report in about six months. He said the ABI would not take on a regulatory role, that would be the FSA’s responsibility.ENDS
Consultation on novice drivers
The government will launch a consultation on whether to overhaul the rules for novice drivers next month (November 2007), the Department for Transport (DfT) said this week. It follows a report from the Commons Transport Select Committee on young drivers.
Recommendations put to government included calls for zero alcohol levels for the first two years,and a minimum 12 month learning period. The focus would be on driving in different weather and lighting conditions, on motorways and with a specified number of hours of professional tuition.
The DfT said the government was open to recommendations made by the committee, but was awaiting the outcome of the public consultation, which it hoped would generate additional evidence.
The government expressed extreme caution in response to the report, but welcomed “constructive discussions” with the ABI over data sharing, in an attempt to inform national road safety policies.
The response added: “The department is very willing to work with the industry on evaluation of packages which might improve road safety, and has discussed this with the ABI and some individual companies.”ENDS