Select Committee on Transport Written Evidence

Memorandum by Direct Line (TLE 23)



  1.1  This review is the submission of Direct Line in response to The House of Commons Transport Committee Inquiry on Traffic Law and its enforcement. Direct Line started in April 1985 and today is the UK's largest private motor insurer with over 5.5 million active policies in the UK. The company has pioneered selling insurance products direct to the consumer by phone and internet. Our business interests include motor, home, travel and pet insurance, vehicle breakdown cover and life insurance. The response from Direct Line is concerned with how appropriate current enforcement priorities impact on uninsured driving, and some proposals for alternative remedies.

  1.2  Motor insurance was made compulsory under the "Road Traffic Act 1930". It was introduced following increasing number of road accidents where victims were left uncompensated for injuries to their person or damage to their property. Compensation was often unavailable, as drivers often did not have the resources necessary to cover the significant one-off costs associated with motor accidents.

  1.3  UK statistics on incidents of uninsured driving suggest that 5% of drivers on UK roads are uninsured. The costs imposed on industry by incidents involving uninsured drivers are shared between costs covered by insurers through the Motor Insurance Bureau and costs covered directly by insurers where there's evidence of an earlier insurer or policy. This overall financial burden on the industry is estimated at £400-£500 million per annum or on the honest motorist of £30 per year on their premium.

  1.4  Direct Line believes that it is essential a range of effective deterrents are in place to tackle the problem of uninsured driving and that the profile of enforcement is made a more significant priority with other driving offences. The incidents of police action on licence and insurance offences has fallen over the last 10 years with the average penalty fine for driving without insurance cover has fallen in real terms over the same period.

  1.5  It is important that the perception is challenged that uninsured driving is a "victimless" crime. This evidence of a falling level of detections, a level of fines not proportionate to the seriousness of the crime and an increasing financial burden on the honest motorist, clearly suggests a rising level of uninsured driving and that a review into effective deterrents is needed.

  1.6  The ultimate goal for an effective penalty and enforcement policy must be for motorists to take responsibility, change behaviour and abide by the requirements to drive with motor insurance. It is crucial that a policy is adopted that incentives the uninsured driver to recognise their responsibility towards the "honest" motoring public and where that is heeded, sufficient deterrent is applied through enforcement that encourages good driver practice.

  1.7  Direct line favours a number of proposals that could help to bring about a more effective system of changing behaviour.

  1.7.1  Appropriate fiscal remedies: courts to have a flexible approach to fines that incentivise against persistent offenders and introduce equality between fines and motor insurance cost.

  1.7.2  New approaches: a parallel approach to fiscal enforcement measures that draws across other procedures to ensure motorists understand the severity of uninsured driving.


  2.1  Direct Line supports measures that have the objective of improving driving behaviour, which here is to ensure the requirement of mandatory insurance whilst driving. The role of penalties and other incentives is to encourage and reinforce compliance and to dissuade those from driving if insurance is unaffordable or not considered necessary. Aims are different according to whether you are an "offender"—where penalties are to encourage greater compliance, or to deter re-offending—or the "honest motorist"—where penalties act to provide reassurance and protection. Behavioural, social and economic factors will contribute to the decision not to purchase insurance provision, evidenced on the one hand by individuals unable or unwilling to afford the cost of insurance, to those who may simply have forgotten to renew their policy. The more serious and frequent category of uninsured drivers are those who have a persistent record and attitude to committing driving offences and break other road traffic laws such as driving a stolen vehicle or driving whilst disqualified at the same time. The view of Direct Line is to progressively encourage driver behaviour to the purchase of insurance and a penalty system that can assist in a change of behaviour.

  2.2  Most individuals are risk averse and even a small threat of detection with an accompanying stigma of breaking the law will have the effect of deterring such activity.

  The effectiveness of introducing a new regime of enforcement measures against uninsured driving will be blunted by a lack of commitment to driver education and re-education in the same way that policies in other areas of road policy and safety have been endorsed by media messages to deliver changes in driver attitude and behaviour.

  2.3  Motor insurance is one of the few classes of insurance, which is compulsory in the UK. The Road Traffic Act requires all motorists to be insured against their liability for injuries to others (including passengers) and for damage to other people's property (third party liability cover) resulting from use of a vehicle on the road. Most motorists go beyond this minimum requirement and opt for the additional security afforded by more comprehensive cover. Other compulsory requirements for driving in the UK including holding a current driving licence, vehicle excise duty and a MOT certificate. Penalties for illegal driving include penalty fines and points.

  2.4  It is our experience that the current level of fines levied by the courts for uninsured-driving offences is around £150. The options available to the courts in cases of uninsured driving should be as broad as possible in order to tailor the penalty to the specific circumstances of the offence and the individual concerned. Since the level of fines which may be imposed by the courts need to take into account the ability of the offender to repay the fine, in many cases the fines imposed are less than the insurance premium would have been—hence for some individuals there is a financial incentive not to pay for insurance.


  3.1  Direct Line identifies two broad themes in "remedy solution" that could introduce further enhancements in the detection and enforcement of uninsured driving. This involves increasing the resources at the detection, enforcement and recording phases of uninsured driving incidents and the introduction of tailored remedies for the punishment of first, and the on-going deterrent of repeat offences, of driving without insurance.

  3.2  With continued investment in databases and police resources, the opportunities of detecting uninsured drivers should increase. Second; a range of other measures including a review of the level of fines that reflect the seriousness of the offence, the purchase cost of a suitable motor insurance policy and the costs that insured drivers impose on all law-abiding drivers.


  3.1.1  Direct Line believes that the Motor Insurance Database (MID) has a continuing role in assisting law enforcement agencies identify uninsured drivers. The database is operated by the Motor Insurer's Information Centre (MIIC) and allows enquiry's to be made of a vehicle registration mark (VRM) to confirm the existence of an insurance record.

  3.1.2  The information on the database is accessible to the police and motor insurance companies and is relevant to validate cover. It includes:

    —  Policyholder name and address.

    —  Vehicle make and model.

    —  Dates of cover.

    —  List of named drivers.

  3.1.3  The database allows police at the roadside to determine the insurance record on the database for that vehicle. If the police check reveals a vehicle's details are on the system then it is likely that the driver is insured. Likewise, if the vehicle's details are not on the system then there is likelihood that the driver is uninsured. In these circumstances the driver will be required to present their insurance documents within seven days.

  3.1.4  Direct Line identifies that a key benefit with the database is that because it acts as a filter of insured and uninsured drivers, law enforcement agencies around the country are only likely to be dealing with the paperwork and administration relating to uninsured driving. This makes effective use of police time and resources in catching uninsured driving and reduces the inconvenience and "stigma" to the honest motorist.

  3.1.5  Direct Line believes that moving to a purely electronic system in which the Driver and Vehicle Licensing Agency (DVLA) would have full access to registered keepers of vehicles—linking this information to details of those with insurance and an MOT certification (where appropriate) would use this information pro-actively to identify and pursue "offenders". In Germany, the licensing, tax and insurance arrangements of vehicles are input into a central database allowing the visible identification of "unlicensed vehicles" and the appropriate actions by authorities. Direct Line believes that a "joined-up" system between the leading agencies would eliminate the requirement for an insurance certificate to be produced at the time of vehicle licensing as the DVLA and Post Office would have access to insurance status information via the motor insurance database. In the detection of "uninsured driving", proactive enforcement—through roadside checks by police and use of "intelligent" cameras linked to the central network—would be targeted at vehicles not identified on the database with the likelihood that the driver is uninsured. This would also arrest the decline in enforcement proceedings of uninsured and unlicensed driving compared to the increase in cost to the industry and consumer from claims arising from such driving behaviour.


  Direct Line believes that it is important for a range of options to be available to the Police and the courts in order to tailor the penalty to the specific circumstances of the offence and the individual concerned.

Penalties and sentences

  3.2.1  Research undertaken in 2001 by Direct Line/Mori concluded that public opinion supports tougher measures to tackle the problem of uninsured driving: 44% of drivers want more police spot checks, 30% feel fines should be increased, while 28% favour imprisonment for persistent offenders.

  3.2.2  With courts benefiting from a range of fine scales reflecting a flexible approach to the ability of the offender to repay the fine, continued evidence suggests that the level fines imposed remain at a level considerably less than the insurance premium would have cost the offender to purchase. In 2001 the average fine for uninsured driving was £150, a third of the average cost of a year's premium for non-comprehensive insurance. Though the current level of the fixed penalty notice available to the Police to set at the roadside higher than the average court fine, this also remains low compared to the cost of non-comprehensive insurance. The ability to successfully challenge a fixed penalty notice in favour of a court fine on the "ability to pay" principle, further enhances the message to those "more risk averse" and complacent to the threat of detection, that the offence of uninsured driving is not considered important hence for some individuals it is not rational to pay for insurance.

  3.2.3  Direct Line favours a range of fines available to the courts that in determining an appropriate level for an offence of uninsured driving should reflect the seriousness of the offence and the costs that this offence imposes on insured drivers.

  3.2.4  The average fine level for a first offender should mirror the cost of non-comprehensive motor insurance where an offender provides limited scope or inclination towards the retrospective purchase of insurance.

  In cases where an offender provides commitment to the purchase of insurance, the flexibility in the fine system would provide for a level of fine and its proportionality to be directed towards the purchase of appropriate cover.

  3.2.5  In the case of second or continued repeat offenders with public opinion suggesting a strong approach to enforcement for repeat offenders, Direct Line believes that it is important that a custodial sentence should be available for the most serious of offences.


  3.3.1  Direct Line supports an option available to the Courts to empower them to use community sentences in cases where imprisonment is not available, or appropriate. Direct Line believes that it is possible to link a suitable fiscal penalty with a community penalty service order requiring the offender to participate in local road safety initiatives, such as around schools and with peer groups. We accept, however, that in some cases the offender may not be physically fit to carry out a community penalty.

  3.3.2  Direct Line appreciates that a move towards introducing a community penalty scheme is most appropriate where the court determines that a defendant is unlikely to be able to pay a fine at least equivalent to the annual third party insurance premium payable. The move to a community penalty scheme would act as a punishment and deterrent in such circumstances and would go some way to compensate "society" for the costs of the crime.


  3.4.1 Direct Line recognises that permanent forfeiture of the offenders owned vehicle is normally only used for the most serious of offences. We suggest that this option should therefore only be used when a driver is involved in an accident causing damages to another party or is a significant repeat offender. In such cases the proceeds of the sale of the vehicle could be used to defray the costs of the claim made to the MIB for damages. The proceeds could be paid to the MIB and would help to minimise the extent to which the cost of uninsured driving is subsidised by the average motorist.

  3.4.2 Direct Line would welcome the introduction of a new penalty of temporary forfeiture of the offenders owned vehicle. We believe that such a proposal would be a useful stand-alone penalty for drivers caught without insurance who are unlikely to be able to pay a "suitable fine". We believe that the proposed immobilisation at the defendant's home or another suitable location would be helpful and that the defendant would be responsible for any administrative or storage charges. We suggest that before the vehicle is returned, the defendant should be required to provide evidence that insurance cover has been arranged.

  3.4.3 Direct Line believes that the forfeiture of the offenders owned vehicle immediately removes the "means" for an offender to commitment the same offence and is a clear demonstration to the general public of action being taken against the offence and for their continued protection.   


  3.5.1  Improving the detection rate of insured drivers coupled with a suite of effective and robust penalty measures will demonstrate an effective system of enforcement and instil behavioural changes towards the significance of the offence. In this response, mention has already been made on the carrying by drivers of insurance documentation at all times.

  3.5.2  Direct Line also identifies that a legal requirement for individuals to carry insurance documentation when driving, would further identify uninsured drivers at a roadside check. This would increase the opportunities of detection, thereby making more effective police time from "unnecessary" administration and encourage their willingness to be directed at uninsured driving in the same way as for other motoring offences such as speeding and tax disc evasion.

  3.5.3  Direct Line would also seek changes to the regulations regarding motor insurance certificates which would allow them to be printed in ways other than simple black on white (as the current regulations prescribe). A change here would allow Direct Line and other insurers to produce certificates which would be less easy to forge and also addresses anomalies in current rules which require insurance companies to provide third party cover for consumers who are in possession of a motor insurance certificate from that insurer despite the contract having been terminated by either party.

  3.5.4 Direct Line believes that to carry insurance documentation could appear to be initially "unpopular", it would seem unfair and provoke a feeling of "a social stigma" for a driver with insurance to proceed through the police administrative process in confirming information already identified on the MID.

  Government would need to undertake consideration of how all drivers should carry insurance documentation when driving could be administered in the UK.


  4.1  A successful policy of penalty and enforcement in reducing incidents of uninsured driving must be based on adequate resorting in the detection of this motoring offence and a suite of effective remedies and penalties to act as a deterrent.

  4.2  Direct Line calls for;

    —  Improved co-ordination between the databanks and information held by government agencies and the MID to improve the detection of uninsured driving at roadside checks.

    —  A range of options to be available to the Police and the courts in order to tailor the penalty for uninsured driving to the specific circumstances of the offence and the individual concerned. This would include reviewing the value of fines to reflect the cost of insurance, the forfeiture of vehicles, community service projects and measures to de-incentives the crime and encourage behavioural change.

    —  Consideration to be made on the benefits of requiring drivers to carry insurance documentation with them when driving.

October 2003

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