Direct Line welcomes Government Review into UK Motor Insurance and Warns of Spiralling Problem of Uninsured Driving

Date: 21 August 2003.

Direct Line welcomes today’s announcement of a Government review into UK motor insurance. The independent committee will carry out a full review of the current UK system of motor insurance to attempt to tackle the growing levels of uninsured driving.

Claims arising from uninsured driving top 50,000 per year and cost the industry £400 million. Uninsured motorists cost honest drivers around £30 a year on their premium.

Emma Holyer, Motor Spokesperson at Direct Line said:

‘‘The cost of uninsured driving is spiralling up and up, and it’s honest motorists who end up footing the bill through higher premiums. Uninsured driving is not a victimless crime and it is essential that a range of effective measures are put in place to stem this growing problem. The time has come to start driving insurance cheats off our roads. We look forward to working with the Government to develop sensible and practical solutions to the problems facing UK motorists.”

Britain has one of the highest uninsured driving populations in Western Europe. It is estimated that one-in-twenty vehicles on UK roads are uninsured, equivalent to 1.25 million vehicles, compared to less than one in every two hundred in Finland, and one in every five hundred in Germany. Greece is the only other European country with more uninsured vehicles than Britain.

Uninsured driving is particularly prevalent amongst younger drivers; 16% of 17 – 24 year olds say they know someone who drives without insurance, compared to 6% of over 55’s.

MORI research conducted on behalf of Direct Line has revealed widespread support for tougher measures to tackle the problem. 44 per cent of drivers want more spot checks conducted by the police, 30 per cent feel that fines are currently too low and should be increased, while 28 per cent are in favour of imprisonment for persistent offenders.

In September 2001 a new motor insurance database was launched. It gives the police direct access to insurance details at the side of the road making it easier to spot vehicles that potentially are uninsured. Direct Line believes this is beginning to deter insurance cheats. Emma Holyer added:

“The current range of penalties imposed by the courts on drivers who are caught out are frankly ineffective. We belive the minimum penalty should at least reflect the cost of an insurance policy. As it stands, a convicted uninsured driver gets away with a fine far less than this. We must start dealing with this problem far more seriously, so that repeat offenders are taken off our roads. Only then will insurers be able to reduce the financial burden currently imposed on law-abiding drivers.”

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Notes to editors:

* In 2000, the Motor Insurers’ Bureau (MIB) estimated that the true cost of uninsured drivers was in excess of £400m i.e. twice the amount of the annual levy paid by insurers. The insurance industry is hit twice because, not only does it fund the MIB, it also loses out on premium income which it would otherwise have received had all motorists taken out insurance. In 2001 the estimated number of uninsured drivers was 1.5m, this means each uninsured driver cost the industry £176.66 in levies to the MIB. If the current trend continues Direct Line estimates that the cost per uninsured driver could reach £313.33 by 2005. This means the total cost to the industry of uninsured drivers would be nearly £1billion (£313.33 x 1.5m x 2 = £940m).

The average car insurance premium is £325 per annum.

A maximum financial penalty of £5,000 together with an automatic licence endorsement of 6-8 penalty points (option to disqualify if deliberate) can be imposed on an uninsured driver however, first offenders generally receive a fine of £200.

Further research conducted by MORI Financial Services on behalf of Direct Line in November 2001 of 2,003 interviews among adults aged 17 and over, who are Driving Licence Holders and who have driven at least once in the last month. Further regional data available on request.

For further information please contact:

Emma Holyer, Direct Line Press Office

Tel: 0845 878 2182 / 07734 433569