Insurers Are Hitting Back on 'Fronting' ; PERSONAL FINANCE

Insurers are cracking down on parents who insure their child's car in their name to cut costs.

They have tightened up underwriting criteria to clamp down on the practice, known in the industry as "fronting". A spokeswoman for Royal Bank of Scotland insurance brands, which include Churchill, Privilege and Direct Line, said it has recently completed a review aimed at cutting down the incidence of this type of fraud.

Churchill reviewed its "young additional drivers" policy this summer and has amended the questions it asks to identity potential cases of fronting. It now checks who the registered keeper and owner of the vehicle is, and will only quote in the young driver's name if they own it.

Esure has also changed its underwriting criteria to help combat parents attempting to "front" a policy. It now bases its premiums on the highest-risk driver named on the policy, as opposed to the "main" driver.

"The insurance industry has become wise to instances of fronting," said spokeswoman Asia Manzoor. "If Mum or Dad is the main policyholder, and there is, say, a 17-year-old named as an additional driver, we will base our premiums on them."

Even although insuring a car in a name other than the main driver and adding other higher-risk motorists, such as the young and inexperienced, is fraudulent, two-thirds of 1,733 adults questioned by price comparison service Gocompare.com said they would break the law in this way.

Insurers who uncover cases of fronting can repudiate a claim, cancel the policy or charge the correct premium as a lump sum.

Drivers who have had a policy cancelled will have to declare this on any future applications and will find it harder and more costly to buy insurance.

Hayley Parsons, managing director of Gocompare.com, said fronting was a false economy.

"Insurers are wise to the practice and many now set the price according to the age of the youngest driver on the policy," she said. "In the long-run, it is better for young drivers to hold insurance in their own name to build up a valuable no-claims discount."

Although premiums are likely to be high initially, they will drop as years of claim-free driving build up.

Direct Line last year became the first insurer to offer no- claims bonus discounts to drivers named on others' policies, allowing young drivers named on parents' car insurance policies to build up the bonus if they do not make any claim.

If Mum or Dad is the main policyholder we will base our premiums on them as the highest-risk driver Asia Manzoor

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