Written evidence
from Motor Insurers' Bureau (CMI 16)
1. BACKGROUND
The obligation to have valid liability insurance
covering the use of motor vehicles is one of the core principles
of the European Community motor insurance legislation. It has
been clearly stated by the European Insurance & Occupational
Pensions Committee (EIOPC) that Member States should do everything
in their power to combat uninsured driving.
Unfortunately, historically the UK has had a very
poor record of addressing this problem with levels of uninsured
driving exceeding 5% of the vehicles on UK roads or 1 in 20 cars.
This compares poorly with the best in Europe such as, for example,
Germany, Sweden, Denmark and Austria where levels are less than
1%.
2. THE
COST OF
UNINSURED DRIVING
The Motor Insurers' Bureau (MIB) is a company limited
by guarantee and was established to ensure that the victims of
uninsured driving and "hit and run" drivers do not go
uncompensated following an accident. It operates under two agreements
with the Department for Transport and currently deals with over
30,000 claims from innocent victims each year at a cost of some
£400 million. This is a cost which is ultimately borne by
the honest and responsible consumer. In view of the obligations
arising under the Road Traffic Act insurers currently also have
to deal with a significant number of claims which would otherwise
be classed as uninsured. Therefore, the true financial cost of
uninsured motoring in the UK almost certainly exceeds £500
million.
This financial burden has, until very recently been
increasing relentlessly. The MIB levy on insurers has increased
from £39 million in 1991 to £417 million in 2008.
The Motor Insurance Database (MID) is the central
insurance database for UK vehicles established by the insurance
industry and operated by the MIB. Since its introduction together
with the police facility to interrogate the MID and the police
power to seize uninsured vehicles, there has been a welcome reversal
of the rising trend in the costs of uninsured driving.
On average, one person is injured every 20 minutes
and three people are killed each week by uninsured or untraced
drivers and whilst this remains unacceptably high there are encouraging
signs that matters are improving. With the introduction of the
MID, coupled with the concerted effort and collaboration with
all UK Police forces, the level of this socially unacceptable
crime has fallen by something in the order of 20% since 2006.
This positive enforcement approach has removed over
600,000 uninsured vehicles from our roads since the introduction
of the necessary power to seize an uninsured vehicle in August
2005. This has certainly helped drive the improvements to date.
However, as pointed out by Professor Greenaway in his report entitled
Uninsured Driving in the United Kingdom published in July 2004,
on the road enforcement activities alone cannot deliver the further
significant reduction in the level non-compliance that is required.
The vast majority of drivers in the UK comply with
the law but recent surveys indicate that despite the reducing
levels of uninsured driving not everyone accepts the responsibility
that owning a vehicle carries. A surprisingly large number, particularly
of young drivers indicate that they are not aware of their legal
obligations with some 10% of 18-34 year olds not knowing it is
a legal requirement to insure a car.
The MIB commissioned research last year to help understand
people's attitudes to motor insurance and how these might be impacted
by the harsh realities of the economic recession. Following on
from the research the MIB launched the Stay Insured campaign underlying
why, when it comes to driving and motor insurance, staying insured
is not only legally but socially and economically the right decision
for everyone in the UK. A full copy of the Stay Insured Report
is attached to this submission.[31]
3. THE
NEXT STEP
- CONTINUOUS INSURANCE
ENFORCEMENT
In 2004, as a direct response to the increasing problem
of uninsured driving, the Government commissioned a review of
all areas relating to motor insurance. To address one of the key
recommendations of the resulting "Greenaway Report into Uninsured
Driving", the Government commissioned DVLA to introduce a
record-based compliance and enforcement regime. The powers to
do this were inserted at Section 22 of the Road Safety Act 2006.
The legislation makes it an offence to be the registered keeper
of a vehicle on the road without a valid policy of insurance being
in force.
The Department for Transport, DVLA, MIB, ABI and
BIBA are currently working on the programme to introduce Continuous
Insurance Enforcement (CIE) from March 2011 which is a preventative
approach and will focus not on identifying individuals using an
uninsured vehicle on the road but uses technology to effectively
and efficiently supervise directly from the record a supplementary
offence; that of being the registered keeper of a vehicle which
is not insured. Effectively, this will involve comparing the DVLA
database and the MID to check whether insurance is in place for
each vehicle. This approach, being record based, as opposed to
actual on road capture means the ability to significantly scale
up the requirements to enforce Insurance obligations will reach
unprecedented levels, and is expected to significantly reduce
the levels of evasion when considered in conjunction with existing
police on-road activities. Education and encouragement are watch
words of the intended scheme but will require all stakeholders
to play their full role.
This is a major combined public and private sector
initiative that will not involve large sums of public funding.
In fact the insurance industry has already invested in excess
of £50 million in developing the MID to enable its use for
this purpose. All motor insurers in the UK and BIBA are supporting
the introduction of CIE. There are significant benefits to consumers,
including a reduction in the subsidy required to fund the consequences
of uninsured driving, improved road safety and the consequent
impact on public and private funds, more effective use of limited
police resources and improved public perception of the government's
role in dealing with this problem.
This is an initiative that will deliver real benefits
to consumers, lessen the feeling of insurance being a "grudge
purchase" for many and ameliorate the impact of other continuing
upward pressures on the cost of motor insurance.
November 2010
31 Not printed. Back
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