The new Continuous Insurance Enforcement regulations create a new offence for keeping a vehicle without insurance.
From Spring 2011, an additional enforcement scheme is being introduced to make sure that all vehicles are insured or a Statutory Off Road Notification (SORN) is made.
All registered vehicle keepers must ensure that their vehicle has the statutory minimum third party motor insurance – failure to comply could result in a series of escalating penalties. Furthermore, if their insurance record does not show on the Motor Insurance Database (MID), keepers of legitimately insured vehicles are at risk of receiving notification that they appear to be uninsured.
This is a fundamental improvement to current practice (previously an uninsured driver needed to be ‘caught’ on the road to face enforcement measures) therefore BIBA is keen to raise awareness of how this will affect insurance intermediaries and what they should do to help existing and potential customers stay compliant.
It is estimated that around 1.4 million of all UK motorists drive uninsured. These drivers cost the UK about £500 million annually, which adds up to an average cost of an extra £30 per car insurance policy.
The police currently seize around 500 uninsured vehicles every day, but much more needs to be done to help identify and combat uninsured driving even further.
CIE differs from existing police on-road enforcement of uninsured driving in that, unless a SORN declaration has been made by the vehicle keeper, the keeper is required to insure the vehicle at all times.
How does CIE work?
CIE systematically compares records between two databases, the Motor Insurance Database (MID) managed by the Motor Insurers’ Bureau (MIB) with those held on the DVLA Registered Vehicle Database to indentify keepers of potentially uninsured vehicles.
This will clearly identify any vehicle keepers who do not have a valid insurance policy on the MID.
If it appears that a vehicle has no insurance or no SORN, than an Insurance Advisory Letter (IAL) will be sent to the registered keeper.
If the registered keeper takes no action, the keeper faces:
– a fixed penalty fine of £100
– having the vehicle clamped, seized and destroyed
– court prosecution and be fined up to £1,000
Starting in spring 2011, the MIB will issue and cover the cost of the new IAL’s to registered keepers informing them that their vehicle appears to be uninsured. The letter will advise the keeper what they need to do to comply with the law and will result in hundreds of thousands of letters being sent to vehicle keepers, some of whom may be insured but have not had correct details loaded onto the MID. These could result in calls to broker’s offices.
DVLA will be responsible for the cost of enforcement, which will take the form of Fixed Penalty Notices (FPN) followed by the possibility of prosecution and/or wheel clamping should the vehicle’s keeper fail to heed the warnings. The cost of enforcement will be more than covered by fine income and is due to commence a short while after the first IAL’s are distributed by MIB.
What is the insurance industry telling customers?
If you are not insured and use your vehicle on the road you are already committing an offence – get insured immediately.
If you are insured and your record does not appear on the MID , then you should contact your insurance provider to get the MID updated immediately. This will avoid the inconvenience of you being unnecessarily contacted by MIB and DVLA, or being stopped by the police.
Check the Motor Insurance Database for FREE to see if you have a valid insurance record – www.askmid.com
If you are keeping your vehicle off the road, make sure that you have submitted a SORN declaration to DVLA. If the vehicle is taxed you need to return the disc (including nil value discs) to DVLA using a V14 form.
When you insure your vehicle, make a point of checking the MID to see if your vehicle is recorded correctly. Although most insurers process the information promptly its best to allow say a week for this to update.
Preventing customers from receiving an IAL in error
It is essential that insurance brokers are aware of their responsibilities. The most important thing that can support customer is to update the MID in a timely and accurate manner. This will mean they should not receive an IAL in error in the first place.
Within the motor trade and motor fleet sector there is a potential issue as certificates of insurance are often issued on a blanket basis, rather than to a specific Vehicle Registration Mark. (VRM) There is a risk of reputational damage if an IAL letter is received by one of your customers in error because their details have not been updated or have been registered incorrectly on the MID.
CIE will have huge benefits to the insurance industry as long as it is carried out effectively, so it is vital that commercial insurance brokers play a role in advising their customers ahead of the change and work closely with insurers to ensure MID compliance.
BIBA, the MIB and DVLA have produced FAQ’s for brokers (these can be viewed on the BIBA Website)
Advice in renewal letters
Insurance are communicating the CIE messages to customers wherever possible. An important place is the broker’s renewal letter. BIBA and the MIB have prepared this draft wording which many will use in their renewal letter.
“From spring 2011 a new scheme is being introduced to make sure that all vehicles are insured or a Statutory Off Road Notification (SORN) is made.
“All registered vehicle keepers must ensure that their vehicle has the statutory minimum third party motor insurance – failure to comply could result in a fine (fixed penalty notice), wheel clamping or court prosecution. You can check if you are on MID at www.askmid.com”
CIE is an important change to the motor insurance landscape. This change must be communicated to customers. Brokers, must maintain the correct MID record on behalf of their customers as MIB will be sending tens of thousands of IAL’s a month. CIE benefits will include safer roads, greater premium income for the insurance industry, a reduction in the number of claims made to the MIB, a reduced levy to insurers and an increased IPT income to government.
If you have any queries please contact Graeme Trudgill, BIBA’s Head of Corporate Affairs at firstname.lastname@example.org or 0207 397 0218 or check the BIBA website.
By Graeme Trudgill, Head of Corporate Affairs, BIBA