Parents and learner drivers face a reckoning on car insurance

New Road Traffic Bill is expected to lead to a clampdown on the ‘massive issue’ of fronting

Have you heard the one about the middle-aged, male barrister insured as the main driver of a bright pink Fiat 500 cabriolet with dark tinted windows and garish stripes down the sides?

Except he’s not really the main driver at all.

He'd not be seen dead in a gaudy Fiat runabout, knowing that he'd be the laughing stock of the Law Library if he rocked up to the Four Courts driving something designed for a would-be Paris Hilton.

The barrister actually drives a sensible, status-enhancing Jag. The pink job is his daughter’s car, but its insurance is in his name, with her as a named other driver, thus saving him a packet on the premium.

Or there's the one about the young man whose parents took out a car insurance policy and had their son down as a named driver, even though, in truth, he was the main driver.

The money they saved, on what he would have had to pay on a policy in his own name, allowed him to buy a second-hand high-performance car – a bit old but still with a lot more street cred than the Nissan Micra he'd have been better off starting out with.

He’ll have a long time to think about that now, after driving the high-performance car, unaccompanied and inexperienced, resulted in a very serious crash that has left him with severe life-changing, and life-limiting, injuries.

"He lost control of the car," said an insurance industry source.

“If they had put the car insurance in the son’s name, the cost of insurance for that [high-performance] car would have been prohibitive but it might have prompted them to get something more appropriate, a Micra say. Had they done that, the young man would still be ok.”

Next week, during the Dáil committee stage hearing of the Road Traffic (Amendment) Bill, which is designed primarily to disqualify automatically first-time drink-driving offenders, the Government will seek to tag on a clause that would make owners liable in law if they allow their vehicle to be driven by an unaccompanied learner-permit driver.

Gardaí would also have the power to seize on the spot a vehicle being driven in this way.

Main effects

If passed and, crucially, if enforced by An Garda Síochána, the measure is likely to have two main effects.

The first is the intended one: car owners (parents in the main) will be less likely to turn a blind eye to their learner-permit children driving a car without a fully qualified person in the vehicle.

This is the legal requirement as it stands. However, the proposed change would create a legal sanction against the vehicle owner, as well as the law-breaking unaccompanied driver.

It is proposed that an owner who allows their vehicle to be driven by an unaccompanied learner driver would face a €2,000 fine and up to six months’ imprisonment.

The second likely effect relates to what the insurance industry calls “fronting” – that is, parents buying an insurance policy for a vehicle for which they declare themselves to be the main driver and another person, usually their child, to be an additional driver, when in truth the child is the main driver.

The practice is widespread because of the amount of money parents can save.

Fronting is attractive because car insurance premiums are based on the risk attached to the main driver and not, primarily, to the risk attached to a named other driver.

If premiums were based on the level of driving experience, and hence risk, of the young adult, the cost of the policy would be very much greater.

Insurance industry sources believe that parents who front insurance policies for their children are also likely to ignore them driving unaccompanied.

One leading insurance company operating in Ireland reckons that the number of fronted insurance policies continues to rise annually.

“Based on our own share of the market, I’d say there are about 60,000 such policies nationally,” said the source.

“It is a massive, massive problem . . . It’s a form of insurance fraud. It means that insurers may not pay out for accidental damage to the vehicle and we can theoretically look to recover any damages paid to the other party.”

Between 2014 and 2016, learner-permit drivers were involved in 35 fatal crashes. Of those, 25 – or 71 per cent – involved unaccompanied learner-permit drivers.

The number of unaccompanied learner-permit drivers breaking the law grew very sharply between 2016 and 2017, as evidenced by penalty point statistics provided by the Road Safety Authority (RSA).

In 2016, 6,767 penalty point notices were served on such drivers. However, that number jumped to 10,608 the following year, and there is no reason to date to believe the trend has not continued.

At the end of this January, the number of learner permits stood at 244,627.

Learn the implications

Michael Bannon, the motor manager for Aviva, says vehicle owners need to come up to speed on the implications of the proposed changes.

“People really don’t understand quite how significant an issue it is,” he said. “From our perspective, we’ve seen a significant rise in the number of drivers who have accidents and are driving unaccompanied.”

In such circumstances, companies have the right to reject a claim “if a driver was driving outside the terms of their licence”.

What this means in effect is that if an unaccompanied learner-permit driver is involved in a crash in which the vehicle is damaged or even destroyed, an insurance company can refuse to pay out.

“I know of a driver whose €25,000 car was written off and the insurer refused to meet the cost of replacement because the driver was on a learner permit and was unaccompanied,” said Mr Bannon. “The owner now has a €25,000 bank loan and nothing to show for it.”

The RSA says it supports any measure that cracks down on unaccompanied learner-permit drivers.

"The only European country that could possibly be having this conversation is Ireland," said Brian Farrell of the RSA. "Frankly, all other countries would be aghast that we allow learner drivers go out unaccompanied."