The Missing Price Comparison

17 December 2013

There are plenty of insurance price comparison websites around. I’ve used several of them and I’m sure you have too.

But there’s one option which you never see listed, and I’m curious about it.

The cost of insurance

The BBC today published some news about a Competition Commission investigation into car insurance. Whilst that isn’t directly anything to do with the risks people face on the road, it did make me curious enough to go and dig up a few figures.

Firstly, we can note from the article that the 25 million private insurance policies in the UK are worth roughly £11bn, making the mean policy premium £440.

The cost of no insurance

A fairly obvious thing to look at next is the punishment for driving without insurance, which is £300 plus 6 points for a fixed penalty notice (FPN) or up to £5000 plus a potential disqualification if it goes to court.

So, the fine in some cases (the majority?) is £140 less than the average policy. This is the minimum that the law sees fit to apply; the 6 points have no direct legal consequence themselves (unless you are a new driver, in which case they constitute a ban under the New Drivers Act).

It should be patently clear that a £300 fine for being uninsured is completely and indisputably ineffective as a deterrent.

Who’s applying the punishment?

The curious thing about this punishment is that the law leaves it up to the market to voluntarily apply the lion’s share, by way of raising premiums for the 6 points of the IN10 ticket. Little information is available on this: the sole piece of data I can find is from a widely-reported Confused article from earlier this year, which suggests a 131% increase for a £682 base premium. (That’s based on a sample of one, so it’s perhaps not too trustworthy. However, it’s worth noting that specialist convicted driver insurers are trivial to find on Google, and I doubt they’re on Confused’s books.)

So, for our £440 average policy, we can estimate an increase of a bit under £580.

Now, the offence will still be accounted for beyond the first year, of course. Let’s assume an insurer will apply the same increase over 5 years: it would mean £2900 of additional premium over that time.

So our average driver, if he or she decides not to pay insurance, will incur estimated costs of £3200.

But wait. That’s if they get caught.

The cost of getting caught

Figures from 2009 suggest that 194,000 convictions were made during one year, from a population of 1.5 million uninsured drivers. That’s roughly a 13% conviction rate, meaning you stand to go eight years between getting collars felt.

So, spread the £3200 of the fine plus increased premiums over the eight years it takes to catch you and the average “non-insurance premium” is £400.

That’s rather appealing alongside the average insurance premium of £440.

(What’s more, since 90% of the “non-insurance premium” actually ends up with the insurers, it seems financially only 10% absurd to suggest that insurers should actually be offering Confused or Money Supermarket a commission to list it as an option.)


So, working with averages and the laws of probability, you’re £40 per year better off if you drive without insurance; a 10% saving.

And that assumes that people who drive without insurance will do so once they’ve been rumbled and their premium rises to 2.3 times its original price. They didn’t want to pay before, and the system’s just made it significantly less attractive.


OK, the figures above have some hefty margins of error. I don’t for one minute suggest this is a universally-applicable demonstration that going uninsured is the financially astute move. But it does illustrate the following things, all of which I would argue are deeply problematic:

  1. The minimum (and, I am guessing, the most likely) statutory punishment for driving without insurance is significantly lower than the cost of an insurance policy. This makes it a clearly impotent deterrent in its own right.
  2. The overwhelming majority of punishment for uninsured drivers is not applied by law, but by the market. The market is free to choose to punish offences as strictly or as leniently as it likes, or even not at all if it so wishes – but it can only do so when customers buy products. If the punishment for evading the market cost is delivered by way of increasing the market cost, then not only may offenders still evade it, but they are more greatly incentivised to do so. Further still, offenders are not even legally obliged to accept the market’s punishment: they have the option to stop driving and, perfectly legitimately, incur no further financial impact.
  3. Even if all of the above goes swimmingly well and the offender changes their ways then, taking into account policy premiums and the conviction rate, they are on average £320 up on the deal. Even with the sanctions of both the law and the market combined, it is arguably cheaper to break the law than to abide by it. At the most generous, it seems fair to say that there is no clear evidence to suggest that the punitive measures are in any way compelling. Those who drive without are, financially at least, placing a roughly evens bet.

I should probably cancel my policy.


  1. PedroStephano 17 December 2013 1:47pm #

    It should be both financially punitive and socially unacceptable to drive uninsured. The fact that the number of offenders is so high suggests it is neither.
    Why not separate third party bodily insurance from the comprehensive/fire/theft component and nationalise the former. Everyone pays a flat £200 (ish) for Compulsory Third Party, and driving without it means multi thousand pound fine, jail AND car crush.
    Let the market look after the market bit i.e. the comprehensive, fire and theft.

    • platinum 17 December 2013 2:51pm #

      They have a similar system already in Australia. You buy your compulsory third party insurance when you tax your car, and it’s the car that is insured rather than individual drivers so I imagine it’s easier to enforce. If you want more insurance than the minimum you can always buy more separately.

      • PedroStephano 17 December 2013 5:21pm #

        I was living in Oz when CTP came in. I remember everyone moaning, but it’s normal now. And a very very high percentage of drivers have it I believe.

    • Jitensha Oni 17 December 2013 6:37pm #

      Nationalise car insurance and you’ll just give more ammo to the faction that think they own the road because they are paying out lots of dosh, and cyclists shouldn’t be there.

      • PedroStephano 17 December 2013 6:38pm #

        I did think that

  2. Farnie Roubaix (@farnie) 17 December 2013 3:02pm #

    I also think there is a flaw which the insurance companies are trying to rectify in that many people fail to declare their points and they have no way of checking. I believe they are now asking for the ability to look at the DVLA database

    • PedroStephano 17 December 2013 5:24pm #

      For the first time ever, when I bought a new policy in November, I was asked for photocopies of licenses up front. I predict this will become the new norm.

  3. Matthew 17 December 2013 9:45pm #

    I work in insurance as a software tester so I am well aware of the industries limitations. The industry is more than capable of getting license info including points and license entitlements from the dvla. They can also check on your claims history and even your credit rating, insurers do like being paid! This is all new stuff and it does mean in the future that you will not be able to lie about points claims or your driving history. All at he touch of a button.

  4. Andre Engels 19 December 2013 4:04pm #

    Of course the comparison is not totally fair – there are also the costs that insurance normally covers, which for an uninsured person have to be paid out of their own pocket. It may not be a factor that deters the ‘average driver’, but it should make clear to well-thinking people like yourself that it’s not a good idea to cancel your policy.

    • Bez 20 December 2013 1:53pm #

      The closing remark was rather tongue-in-cheek 🙂

  5. Bob 28 May 2014 7:41am #

    You seem to have completely misunderstood the purpose of insurance and the purpose of fines.

    • Bez 28 May 2014 9:08am #

      Well, no. But it’s hard to respond to that as I’m not sure what point you’re trying to make.

  6. Duncan 4 June 2015 3:53pm #

    Just came across this, but in the spirit of wanting to improve safety on our roads, I think you ought to update it as the data you use is out of date, and the article as it stands risks encouraging people to consider driving uninsured. The risks of being caught are now much higher as are the consequences.

    New laws were introduced in 2011 to tackle driving uninsured, and are proving effective – see:

    You also fail to mention the risks of ending up in court, facing unlimited fines, being disqualified from driving, and having your vehicle impounded or destroyed:

    • livinginabox 9 June 2015 4:41pm #

      If only what you wrote was the reality. Sadly, the evidence reported almost daily is that it is just a dream. It may be the Law, but as Mr Bumble said: “The Law is a ass” [sic].

      If one lives in rented accommodation or moves around frequently, i.e. those ‘of no fixed address’ and drives a car of low value, the financial consequences of being caught uninsured or unlicenced are pretty irrelevant. An unlimited fine is only a deterrent to those who might be forced to pay it and no deterrent to those who have no fixed or tangible assets and therefore cannot be forced to pay.

      Being disqualified from driving only works against those who belong to the mainstream of society, out on the edges, it is of little consequence and no deterrent to driving.

      As already pointed-out, the chances of getting caught are small and if one drives-off after a collision the risks of detection are likely also small, just dispose of the vehicle (I do not wish to discuss further how to do this).

      The existing Law is crafted to catch the majority in society, those who generally play by the rules, when they occasionally do something bad.

      The Law is particularly bad at catching those who do not play by the rules. The existence of a persistent hard-core of nearly three percent of all drivers being uninsured and or
      disqualified/unlicenced is proof-positive that the detection and legal sanctions are not working.
      What we need are more Police, to make the criminals genuinely fear being caught and a legal system better able to deal with those who live at the periphery of society.

  7. Fred 8 June 2015 9:12pm #

    If motor insurance were made illegal and motorists were instead forced by the law to pay the *full costs* of a crash, people would drive a lot more carefully.

    • James Metcalfe 16 January 2016 9:52pm #

      if steering wheel air bags were replaced by big spikes maybe, but costs? No, as people think they will not have an accident. The same applies to the spike as well I guess, but it is a much more constant visual reminder.

      • LIVINGINABOX 19 January 2016 10:57am #

        I believe you’re being far too simplistic and unrealistic. If the consequences of bad and dangerous driving were serious and almost inevitably visited upon the perpetrator, the message would soon get through. Currently, with cash-strapped Police forces, there is far too little enforcement effort and the rules are treated as advisory only.

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