Exempting telematics from IPT could make driving safer


Vodafone has launched a new campaign, supported by Brake, which aims to make driving safer, cleaner and cheaper. New analysis has found that exempting vehicles that are fitted with telematics products from Insurance Premium Tax (IPT) could save drivers hundreds of pounds by incentivising them to drive slower and safer. Existing research already shows that there is a reduction of up to 76% in ‘safety-relevant events’ for younger drivers with telematics in their cars, demonstrating that this policy could have a real effect on improving road safety.

Telematics boxes (or ‘black boxes’) are about the size of a smartphone and are fitted discreetly into vehicles to get a more accurate picture of an individual’s driving style. For example, the technology can monitor the time of day or night when the vehicle is driven, total mileage, number of journeys and severity of braking. Insurance companies can then use this data to offer more accurate premiums based on an individual’s own driving behaviour and safety, rather than simply relying on assumptions about the typical risks associated with drivers of their age.

Those with telematics in their cars are already incentivised to drive more safely through savings on their insurance premiums but we could go further still. Our research shows that the public is warming to having more technology in their cars with a recent poll finding that 63% would be open to the idea if it led to a financial saving. By tweaking the tax system to exempt IPT from telematics-bases insurance policies, drivers would be further incentivised to drive safer with the opportunity to save even more of their own money. Such a move could see the average driver save as much as £180 a year and younger drivers £470 a year through reduced premiums with the insurer passing the saving down to their customers. Given the average insurance premium for a young driver is £1,141 this means that the proposal could lead to a massive 40% saving.

Research from the British Insurance Brokers’ Association (BIBA) suggests that there are now close to one million live telematics policies in the UK but, as an overall proportion of motor insurance policies, telematics still represent a very low number. Exempting IPT could change this as it would create an extra incentive to drive safer.

IPT exemption for telematics vehicles could lead to other societal benefits. Research suggests that there could be up to £200 million in savings to the NHS from reduced costs due to fewer accidents. Telematics technology could pave the way for smarter, more efficient cities by using the data to help facilitate traffic monitoring and routing opportunities. Driving more efficiently also means less fuel being used which could improve air quality and help our environment.

Exempting IPT from telematics vehicles could make a huge difference in making our roads safer.

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Wednesday, 13 November 2019

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