The average young driver is spending more than 10% of their annual salary on motor insurance, according to the ABI.
Analysis by the Association of British Insurers (ABI) shows that motor insurance accounts for 10.1% of the average salary of drivers aged between 18-21 years – five times more than the 2% average for all other drivers.
At 1.3%, drivers aged between 50-59 years pay the lowest proportion of their average salary.
The ABI says the figures provide further evidence of the need for reforms to help stem rising motor insurance premiums, especially for young drivers. It suggests rising premiums are caused by factors such as the way compensation payouts are calculated and a resurgence in whiplash-style claims.
Among a raft of measures to address the issue – including creating a fairer system for awarding compensation – the ABI is calling on the Government to implement graduated driver licensing (GDL) to ‘protect both young drivers and those already on the road’.
Research published last month by academics from the University of West England and the University of Oxford showed a decline in driving among the younger generation.
The study showed that 29% of 17-20 year olds and 63% of 21-29 year olds held a driving licence in 2014 – compared to 48% of 17-20 year olds and 75% of 21-29 year olds in 1992/94.
The researchers identified sweeping changes to social-economic conditions and living circumstances as the main factors behind a marked drop in car ownership among young people over the past 25 years.
James Dalton, director of general insurance policy at the ABI, said: “More than any other drivers, young motorists need relief from rising motor insurance premiums.
“While telematics technology is helping many young drivers manage their insurance bills, cost pressures keep mounting.
“The Government has a key role in helping keep motor insurance costs under control, and this latest analysis highlights why they need to implement their proposals to reform personal injury compensation and lower value whiplash-style claims as soon as possible.”
The RAC is attributing rising premiums for young drivers to the Government’s decision to increase insurance premium tax to 12%.
Mark Godfrey, RAC Insurance managing director, said: “The cost of insuring a car was by far the biggest worry for young drivers aged 17-24 surveyed for the RAC Report on Motoring, with 15% listing it as their number-one issue out of 23 common motoring concerns – in contrast to just 8% of drivers of all ages.
“The Government’s decision to increase insurance premium tax to 12% has disproportionately affected young drivers as they are already paying the highest premiums due to the fact their greater likelihood of being involved in an accident, therefore the impact of the tax rise comes on top of their premium making it even more expensive.”