Millennials Prefer Backseat Driving
A new report from Key Note ‘Motor Insurance (Consumer) 2015’, suggests that Millennials prefer to be driven as opposed to driving themselves, despite the recent fall in motor insurance premiums.
According to the report net written premiums have fallen by 15.9 per cent between 2011 and 2014.
There are a number of reasons for this considerable drop in the price of premiums, not least significant legislative reforms and the rise of technology embedded in both vehicles (autonomous emergency braking) and in insurance policies themselves (telematics policies install ‘black boxes’ in cars to monitor driving habits, rewarding safer driving with lower premiums).
Another reason for why the price of premiums have fallen is due to the fact the public have embraced price comparison websites (PCWs) wholly. These offer consumers more power when buying insurance (three in five respondents to Key Note’s market said this was true), further cutting prices.
The Key Note report goes on to ask and answer why during a period of cut-price premiums, especially for the riskiest drivers, the young, why has motoring fallen notably among the under-21s.
Between February 2012 and 2014, there was a small decline (0.3 per cent) in the number of full driving licences held by adults in Great Britain aged 17 and over. However, when licence holders are broken down by age, the data revealed that it’s the young who are steering clear of driving. The number of adults aged 17 to 20 with a full licence fell by 4.9 per cent over this period; for those aged 17, it was down by 7 per cent. Meanwhile, for those aged 21 and over there was a 2.3 per cent rise in the number of adults with full licences, which implies the decline in issued licences comes from the reluctance of under-21s to take them up in the first place.
Though the cost of car insurance is down considerably, it does not appear to be tempting younger drivers back onto the roads. Youth unemployment, which has remained higher than pre-crisis levels despite overall improvements in employment, has put pressure on young people’s finances. Furthermore, commuting is a major use for a car: young people without jobs have no reason to commute.
Young adults may also simply be choosing to do something different with their money. The dream of the first rung on the property ladder means a deposit nest egg takes priority over driving for many. Meanwhile, the rise of services such as Uber, which has gained 500,000 London users, allows smartphone owners, typically the young, to summon rides with the tap of a screen.
Historically, city centres tend to be younger than surrounding suburbs as the young congregate in urban centres, which offer good public transport links and discourages driving with congestion charges, traffic or poor parking facilities. Millennials are also perhaps the first generation to grow up with the explicit environmental message that humans must do more to curtail carbon emissions and climate change. Green credentials see them preferring bikes, public transport or good old-fashioned walking.
Not even cheaper premiums seem to be tempting younger drivers onto the roads. With inexperienced younger drivers costing more to insure, the rise of the chauffeured Uber generation may prove the next factor in holding down premiums in coming years.