The cost of motor insurance - Transport Committee Contents

3  Uninsured drivers

32. The Government has estimated that some 4% of motorists drive, illegally, without insurance.[84] The Motor Insurers Bureau (MIB), which administers the scheme whereby motorists involved in accidents with uninsured drivers can pursue claims for damages, told us that this figure compared badly with other European countries.[85] The MIB is funded by a levy on insurers, which increased from £39 million in 1991 to £417 million in 2008.[86] As a result, uninsured driving adds around £30 to the average premium.

33. Although uninsured driving adds to the cost of motor insurance it has not contributed to the recent steep increase in premiums.[87] The MIB told us that driving without insurance has decreased by 20% since 2006 due to the introduction of a motor insurance database and better collaboration with police forces.[88] As a consequence, the MIB levy on insurers has reduced: MASS said it was "surprising why insurers are not releasing money back to their policy holders through reduced motor insurance premiums".[89] We welcome the action which has been taken in recent years to reduce uninsured driving.

34. The Road Traffic Act 2006 made it an offence to be a registered keeper of a vehicle on the road without insurance.[90] In order to enforce this offence, the Government has developed a scheme (known as Continuous Insurance Enforcement (CIE)) to enable the DVLA's list of registered keepers of vehicles to be compared with insurers' records of which vehicles are insured. The relevant regulations[91] were long in the gestation[92] but were finally published on 11 January, the day of our oral evidence session with the Minister. He described the introduction of CIE as "one of the most dramatic changes in motor insurance ... since insurance was brought in".[93]

35. Under CIE:

  • The DVLA will work in partnership with the MIB to identify uninsured vehicles
  • Registered keepers will receive a letter warning them that they appear to own an uninsured vehicle and that they risk being fined if it is not insured[94]
  • Keepers will be fined £100 if they fail to insure their vehicle
  • If the vehicle remains uninsured it could then be seized and destroyed.

We have not received any detailed comments on the regulations but in evidence submitted before they were published witnesses were supportive of the Government's aims.[95]

36. We welcome the introduction of Continuous Insurance Enforcement: it is a sensible measure which should help reduce the prevalence of uninsured driving. During our inquiry, however, we were told that 10% of drivers under the age of 34 are unaware of the legal obligation to have motor insurance.[96] We recommend that the introduction of CIE should be accompanied by a promotional campaign, aimed at young drivers, to alert them to the requirement to have valid motor insurance. We also recommend that the first letter sent to registered keepers who appear not to have motor insurance should focus on reminding drivers of the legal requirement to insure their vehicles and should not be based on the assumption that all recipients have deliberately flouted the law. Once vehicle owners have been reminded of the requirement to take out insurance pursuit of those who fail to do so should be vigorous.

37. MASS suggested that the £100 penalty for keeping a car without insurance is too low.[97] In addition, several witnesses argued that the penalty for driving without insurance is also too low, particularly when compared to the cost of insurance.[98] The current penalty is a fine of up to £5,000, 6 to 8 penalty points and a period of disqualification but said the average penalty imposed by the courts for the offence is less than £200.[99] Current sentencing guidelines state that for a first-time offender pleading not guilty, an appropriate penalty would be a band C fine (equivalent to 150% of weekly disposable income), 6 penalty points and a 12 month disqualification. As an alternative, the police can issue a £200 fixed penalty as well as 6 penalty points on a driving licence. Ashton West of the MIB pointed out that, in addition to these penalties, the police may seize an uninsured vehicle and return it only once a fee of £150 has been paid and proof of valid insurance provided.[100] Around 180,000 cars were seized in 2009 because they were not insured.[101] Although we can see the argument to increase the minimum penalties for driving, and for keeping a car, without insurance, the Government's focus should at this stage be on better enforcement of the existing law. We recommend that the penalties for these offences should be reviewed one year after CIE has been implemented.

84   CIE Evidence Base, DfT, paragraph 8: the AA's estimate is 5%, Ev 64 paragraph 4.5.1. Also see Ev 84-85 and Ev w31 section 8. Back

85   Ev 59-60 section 1, Q131 and CIE Evidence Base, DfT, paragraph 1. Back

86   without adjustment for inflation; Ev 59, section 2. Back

87   Ev 64 paragraph 4.5.1. Back

88   Ev 59-60 section 2. Back

89   Ev 68 paragraph 5.2. Back

90   Section 22; see Ev 59-60 section 3, Ev 73 and Q130. Back

91   Motor Vehicles (Insurance Requirements) Regulations 2011. Back

92   See, for example, Transport Committee, Eleventh Report, 2007-08, Ending the Scandal of Complacency: Road Safety beyond 2010, HC 460, Q95. Back

93   Q263. Back

94   vehicles with a valid Statutory Off Road Notification will be exempt. Back

95   For example, Ev 46 paragraph 1.7, Ev 71 paragraph3 and Ev w10 section 3. Back

96   Ev 59-60section 2. Back

97   Ev 68 paragraph 3.3.2. Back

98   Ev 68 paragraph 3.3.1, Qq 23, 132, Ev w6 paragraph 2.6 and Ev w 31-32 section 10. Back

99   Ev 58 paragraph 7.3.1. Back

100   Qq132 and 296 (Minister). Back

101   CIE Evidence Base, DfT, paragraph 8. Back

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