insurance cover for speeding drivers

[Herbie von Smalls]

leader article from saturday's Financial Times:

 

..TX.-

An insurer is offering peace of mind to British drivers who fear

losing their licence for speeding offences: for a modest yearly

premium, LicenceGuard will reimburse some or all travel costs for the

year following the loss. Cue: stampede to the moral high ground.

..TX.-

LicenceGuard's spokesmen have obviously grown used to defending

themselves against the charge that they are encouraging motoring

offences. They argue that insured drivers do not take more risks,

because the insurance doesn't compensate them for all of the

inconvenience they will suffer if they lose their licences. They

argue that speeding is quite different from other offences such as

drunk driving, which they do not cover. They argue that a speeding

conviction is simply a matter of luck, an occupational hazard.

LicenceGuard, on this view, is a kind of professional indemnity

insurance against the costs of an honest mistake.

..TX.-

All these arguments are pernicious and wrong. Faster driving is

potentially deadly. It is not an occupational hazard: simply drive

within the speed limit and your licence, as well as bystanders, will

be safe. And it is clear that even partial insurance will encourage a

driver to take more risks than no insurance. Nevertheless there is

nothing wrong with an insurance product such as LicenceGuard. It

should be defended, not on the grounds that speeding is acceptable,

but because insurance that provides compensation in the event of a

criminal conviction might, paradoxically, make criminal justice

systems more effective.

..TX.-

Anyone buying insurance that would pay out if they were convicted of

a crime is almost certainly expecting to commit one. Nobody else

would find it worth paying the premiums. Therefore, the premiums will

reflect the insurance company's best estimate of how likely criminals

are to be caught. If the insurer plans on staying in business, there

will be a substantial margin on top to allow for profit.

..TX.-

Conviction insurance is not a free lunch. It allows criminals to swap

a small chance of a heavy penalty for a guaranteed small penalty: the

premium. Doesn't smaller but more certain punishment seem reasonable

for many crimes? It is true that some potential offenders will be

goaded on by their insurance policies, but punishments could be

toughened up to compensate. Premiums would rise and crime would fall.

..TX.-

The real message of LicenceGuard's low premiums, if they have done

their sums right, is that the chance of losing your licence, even for

a boy racer, is tiny. Applaud the insurers and install more speed

cameras at once.