New policy for drink drivers

DRINK drivers, those with speeding convictions and owners of high-performance cars are the new target market for the latest insurance venture from Peter Wood.

The entrepreneur who transformed the market by setting up Direct Line in the 1980s is the man behind First Alternative, launching this week.

First Alternative is his second joint venture with banking giant HBOS and follows the success of Esure which they jointly formed in 2001.

Anyone with a single drink-drive conviction or 'one or two' speeding convictions will be able to obtain cover from First Alternative.

The business has already secured 6,000 customers, all higher-risk motorists who have been channelled through from Esure, which won‘t cover anyone with less than four years‘ no-claims discount or whose circumstances don‘t fit within a narrow range of criteria.

Wood claims that First Alternative could save non-standard drivers as much as £140 on an annual premium. He added:

'The number of non-standard private motorists is growing rapidly. With the proliferation of speed cameras more and more of us are getting points on our licence. First Alternative is there to take up where other insurers leave off.'

Road safety campaigners, however, attacked the idea of giving drink drivers and speeding motorists access to cheaper insurance.

Peter Sparrow, administrator for the Campaign Against Drink Drivers, said the move sent out the 'wrong message'.

Prison sentences for causing deaths on the road are already too short, he argued, adding that many bereaved relatives felt those convicted of motoring offences should be treated more sternly.

Sparrow added: 'We think this is a very bad idea. The price of conviction should be part of the punishment. As things stand, endorsements have to stay on your license for years which is a good thing. Convicted motorists should be charged more by insurers otherwise we‘re practically going to be patting them on the back for doing it.'

Wood defended First Alternative‘s strategy, insisting that drink-drivers are still a legitimate market. He said:

'We‘re not going for repeat drink-driving but just those with one conviction. We would say that people can slip up once. Two drink-drive convictions would not get cover from us because we‘d say that you had obviously not learned from your previous mistake.

'We‘re also not going to cover A-list celebrities or youngsters in very powerful cars. But people with speeding convictions are in our sights. I feel it is very easy to rack up points. There were 1.4m people caught by speed cameras in 2001 and this is forecast to grow to 4.5m by 2006. That‘s a lot of people who will otherwise find insurance more expensive elsewhere.'

Specialising in different types of driver is a solution for insurers who have found motor insurance a tough market in which to survive. General motor insurance is barely profitable and, according to Wood, any insurer who has to pay 20% commission to a broker can find the business makes no money at all.

'We‘re going to be selling direct because the margins on motor insurance are so small that you have to do it this way.'