My contact (an agency) said that the insurance company now sees both parent and child as being at fault in BAD cases. The child will be denied insurance both as an individual and also as a named driver. The denial period will likely be longer than the ban and listed for the obligatory five years.
Don't forget it is the parent that has the contract and so responsible for the position in their opinion. The parent may be at risk of having their cover cancelled with that provider as you outline. It means on the parents renewal the least you can expect is a significant increase in premium and scrutiny. If you look around competitors will often not quote without considerable discussion.
It's a difficult issue for both sides. Insurance companies remain under pressure to keep the prices controlled and so are becoming more difficult around risk. They no longer worry about saying no which is how we were conditioned to deal with them.
The best method of handling this is to get off the Internet and use a well respected broker and document it very carefully. Sorry to say but the child's penalty will basically mean they take a time out, blackbox enabled, restricted car choice and a strong recommendation to drive like a princess for a bit to get them out of the sin bin. The parents will need to shop around and show they are no longer carry additional drivers.
I am just repeating what i was told by a friend who works in insurance.
