4th June 2019

Carrot Insurance comments on government IPT consultation

Commenting on the government’s announcement that it has published its consultation into insurance premium tax (IPT), Ed Rochfort, managing director of Carrot, which insures young drivers said:

“We have been expecting this consultation since the Chancellor announced a review in his Spring Statement. While we welcome the review, we were hoping to see the terms of reference expanded to enable the government to explore reforming the tax itself. At the moment the consultation covers the mechanics of IPT, rather than the principles and drivers behind it.

“For some years now, Carrot has argued that IPT hits young drivers harder than other age groups because they usually pay more for their insurance. We believe that, instead, the government should reform IPT and incentivise younger drivers to choose telematics-based insurance, which has been a key factor in reducing the incidence of young driver accidents on UK roads.

“At Carrot, we’ve seen a 42% reduction in accidents among customers using our telematics, compared to young drivers with a traditional insurance policy. We also know that Carrot customers who check their driving score more than four times a week are 39% less likely to have an accident.

“In the market as a whole, telematics has driven down claim-related losses for insurance companies and helped reduced casualties by 35% among 17-19-year-olds since 2011. This compares with 16% of the driving population as a whole.

“If the tax system can play a part in bringing down road accidents, there is surely a case for ministers to act.”