Uninsured drivers: clamping down

Last July, it was announced the UK’s 1.5 millionth uninsured vehicle had been seized. But how effective is this as a deterrent? And what is the real story about car confiscations?

The car in question was a Vauxhall Corsa and it was taken by police in Haringey, north London. The driver was a 23-year-old man.

A youngish male and a cheapish car might appear to be par for the course, but insurer Churchill scored a bumper amount of publicity last autumn when it revealed  luxury cars such as BMWs, Porsches and Bentleys were also being seized for having no cover. Churchill said in September 2016 that police in England and Wales had seized almost 22,600 vehicles since the beginning of the year from drivers who were not insured or didn’t have a licence. About 2900 seized cars were sold in auctions, raising over £1.4m, while around 6600 others were crushed, with their scrap value generating revenues of £280,000.

However, Telegraph columnist ‘Honest John’ suggests some drivers are losing their cars unfairly. “The old legal right of a policyholder to drive other insured cars on a third-party basis has been withdrawn by most UK insurers. Many drivers don’t realise this and are being fined and having the cars they were driving confiscated as a result,” he writes on his website. “The police should not be employed to enforce bad law for the benefit of a bunch of money-grabbing insurers.”

“Almost everywhere else in the world a car is automatically insured for any qualified driver,” he points out, calling for UK law to be changed so that cars are “automatically insured for any qualified driver when they are taxed, as in Germany”.

This view does not wash with UK insurers. It is commonly felt that, bar a few errors, most who have their car seized are likely to be in the wrong.

Police check vehicles using automatic number plate recognition and the Motor Insurers’ Bureau also runs a helpline for officers who have queries about status.

“Police are doing their job and this is an effective deterrent,” says Graeme Trudgill, executive director of the British Insurance Brokers’ Association. “We rarely hear of any concerns in this area and the call centre at the MIB does a great job in assisting police with roadside checks. I have been there and listened in to calls from the roadside. They call and check with the insurer and broker, so they take sensible precautions.”

Indeed, while costs will probably need to be paid if a car is impounded, this can be reclaimed if there is an error.

Driving without insurance
Uninsured drivers are often younger males, although not always, as shown by Scotland's Transport Minister Humza Yousaf, who said he was “mortified” and “embarrassed” after being caught driving without insurance. The SNP politician, who was insured to drive only his own car, was at the wheel of a friend’s car when he was stopped by police in the Highlands.

Yousaf did not contest the charge but explained it was an “honest mistake”: he’d been insured to drive other vehicles but, after splitting up from his wife and transferring the ownership of the couple’s car, he did not complete the process of taking over as the main policyholder.

More than 500,000 uninsured cars have been seized in the last four years but an estimated one million drivers continue to drive without insurance in the UK.

This is despite Continuous Insurance Enforcement, which was introduced in June 2011, in a bid to crack down on uninsured driving. It requires every vehicle to either be insured or registered with the Driver and Vehicle Licensing Agency as off the road.

Neil Drane, head of enforcement services at the MIB, says the emphasis in recent years has been on building closer relationships with police forces.

The MIB holds and manages the records of approximately 37 million vehicles on the Motor Insurance Database on behalf of insurers.

Last April, the MIB recruited Paul Bennett, who had been  in the force for 25 years, as its national police liaison officer. Drane comments: “Having a dedicated ex-police officer to engage with forces makes a great difference. We also know that there are pressures on police numbers and resources, but acting on uninsured drivers also tackles crime-related issues.”

Different deterrents
According to Trudgill, “different deterrents influence different people at different  times. If warning letters and fines don’t influence the hard-core evader, then seizure has to be one of the more serious weapons in the armoury”.

Nigel Teasdale, partner at DWF, notes the fine of £300 for uninsured driving may not be a huge deterrent for young drivers, whose motor premiums are higher. “They might choose to pay this off at £5 a week and as this is going to be a lot cheaper than insurance, see uninsured driving as a risk worth taking.”

Mike Brown, head of counter fraud intelligence at Direct Line, says: “When you take a fixed penalty notice of £300 and compare it to the average cost of a motor insurance at £429, it may seem to some like a financial risk worth taking. It’s disproportionate too, when you consider that you can pay up to £1000 for not paying for your TV licence. We would like to see a review of these fines to better reflect the impact of the crime.”

More broadly, Teasdale says there are a number of initiatives that could have an impact, including government work on ways to reduce young driver accidents. “A more intensive driving test and possible graduated driving licences are under consideration.

"Things like curfews may be unwanted, but telematics policies can still be expensive. The high cost of insurance also fuels fraud such as ghost broking and fronting. Seizures may be attracting publicity, which is positive, but being able to provide young drivers with affordable insurance is going to need some new thinking, although it’s still welcome to see the MIB and its work with the police bring results.”

He adds that it could also be useful to keep an eye on how Ireland is trying to cut road deaths after they grew from 162 in 2015 to 187 last year. Reforms are targeting drug driving, written-off vehicles and uninsured driving. Besides having their vehicle seized on the spot, uninsured drivers could get five penalty points, a significant fine and an automatic court appearance. Also, for accidents involving uninsured drivers, the Irish MIB may pursue the individuals involved for costs under its rights of recovery.

More to do?
While punishments are important, should insurers be doing more? “Potentially, a hard-hitting advertising campaign along the lines of the drink driving/using a mobile phone while driving campaigns may help,” comments Gareth Howell, managing director, Axa Personal Direct and Retail Partners, adding that insurers are also trying to make cover more affordable for young drivers.

"There is more choice in respect of tailor-made policies for young drivers than there has ever been before,” Howell says. “The industry has and continues to try and make products available to younger drivers at a sustainable price. Telematics policies are the obvious example of these initiatives.

"The imposition of tax on top of insurance premiums is not helping in this situation. The insurance premium tax will have increased by 100% in the last three years when it increases in June 2017, which is far above the average wage increase.”

Some uninsured drivers who have their car seized may choose to buy another car, perhaps a banger at an auction, and get back behind the wheel. As Brown says: “Our research suggests that at least 6500 drivers were caught driving while banned in 2015 alone. It’s certainly a tough nut to crack, especially when heavy-handed sentencing will not be appropriate for all offenders, particularly those who are unintentionally uninsured.”

Howell notes: “Uninsured driving levels may reduce with the introduction of new technology including autonomous vehicles and other initiatives such as car pooling.”

Along with drink or drug driving, lack of insurance seems to be perceived increasingly as a taboo. Seizures will not eradicate the problem, but they’ll certainly help clamp it down.