BIBA’s response to the consultation on a scheme of Continuous Enforcement of Motor Insurance

BIBA’s response to the consultation on a scheme of Continuous Enforcement of Motor Insurance

The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.

BIBA represents 2,400 insurance brokers and intermediaries, including 1,700 FSA authorised firms. Insurance brokers and intermediaries distribute nearly two-thirds of all UK general insurance. In 2007, insurance brokers and intermediaries generated £1.5 billion of invisible earnings and they introduce £22 billion of premium income into London’s insurance market each year.

BIBA is the voice of the industry, advising members, the regulators, the Government, consumer bodies and other stakeholders on key insurance issues. BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards. BIBA works closely with the Chartered Insurance Institute to provide training to those working in the industry and actively participates in helping the industry and its customers deal with some of the major issues of the day.

BIBA members provide professional advice to businesses and consumers, playing a key role in identification, measurement, management, control and transfer of risk. They negotiate appropriate insurance protection tailored to individual needs and operate to a very high standard of customer service with the aim of ensuring peace of mind, security, financial protection and the professional advice required.

BIBA believe CIE is vital to reduce the level of uninsured driving in the UK and confirm our support for option 3, the “Full Approach”. We do not believe option 1 or 2 would be effective.

BIBA want to congratulate the Department for Transport for this consultation paper. An escalating system of warnings/fines/immobilization and destruction should prove effective. It should have a significant impact on soft evaders as well as catering for the “persistent evaders” with the cycle of continuous comparisons between the two databases.

We are also pleased that even if the fixed penalty is paid, if the vehicle remains uninsured, the keeper is still liable for enforcement actions.

We are also pleased that the UK Government is committing to an education and awareness publicity campaign and would like to be included in the development and action of this campaign. We believe it is important that the government focus on the socially responsible aspect of motor insurance and how those that buy insurance contribute premium towards the £500 million cost to support incidents involving those that don’t obey the law.

The Benefits of the initiative to reduce uninsured driving extend beyond the immediate campaign. We understand from many Police forces that the MID is an excellent tool that benefits the resolution of other crimes. So the importance of the publicity campaign is paramount.

Our responses to the 5 questions set out are as follows:

1. Do you have any views on the process for warning those who appear from the record to be uninsured?

We agree with the suggested process. This process should have an important long term preventative effect on uninsured driving.

As this is a system of “continuous” enforcement we would prefer the database comparisons to take place on a more regular basis than monthly, we would hope that in time these comparisons could occur more frequently so as to have a more accurate “suspect pool” at any period in time.

We would add that a similar system should be introduced in Northern Ireland.

Motorcycles are often kept off road during the winter and a SORN notification submitted. We expect the SORN notifications to increase due to CIE but would also urge the government to strongly enforce the SORN regulations and any fraudulent breaches of these requirements that occur in order to evade CIE should be strongly punished.

2. Are the exceptions we have proposed appropriate?

The motor trade is a particular concern as our members often experience difficulties with obtaining vehicle information from motor traders. Many traders pass on vehicles before 7 days anyway and we understand the rule for MID2 has a deadline for 14 days for first intent to use, subsequently many trade vehicles are never registered on the MID. Careful consideration needs to be made for the motor trade although we do not believe in a total exemption.

In regard to lease vehicles we believe the owners of the vehicles should directly protect their own assets and take responsibility for insuring these vehicles for at least the basic TP requirements. This cost will surely be met by their customers anyway as it is already when they are required to obtain their own insurance.

3. Our proposal is that if an individual fails to respond and to take action, in spite of a warning letter, a £100 penalty is payable, which will be reduced to £50 if paid within 21 days. Do you think this is appropriate?

No we don’t think this is appropriate. The £100 fixed penalty is too low, especially the ½ price reduction to £50 if paid within 21 days.

The fixed penalty notice from the Police for uninsured driving is £200 and we believe this should be a minimum consistent benchmark for vehicles that are uninsured as per CIE. We believe a small discount for paying early for example, 20% to be appropriate – but ONLY provided the vehicle is then insured.

Comparing the charge to other motoring sectors and offences. The congestion charge penalty is £185 as illustrated below and yet uninsured vehicles are a far more serious offence.

The break down of the congestion charge process:

If you pay the charge on the day of travel you pay £8.
If you pay the charge on the first charging day after travel you pay £10.
If you have not paid the congestion charge by midnight on the following charging day a Penalty charge notice (PCN) is issued for £120 to the registered keeper of the vehicle.
28 days is given from the date of service for the PCN to be paid or challenged.
If the PCN is paid within 14 days of the date of service you will receive a 50% discount.
If the PCN is not paid within the 28 days originally given it increases to £180 and a charge certificate is sent to the registered keeper.
14 days is then given for the £180 to be paid.
If payment of £180 is not paid within 14 days. An order of recovery is sent to the keeper. The charge then rises to £185.
21 days is given to pay £185.
The next step is: a warrant of execution is asked for and passed to Bailiff’s to recover the monies owed.
This results in immobilization and removal of the Vehicle which incur further fees.

4. Do you have any comments on the proposed regulations for immobilization, removal and disposal of vehicles?

We strongly agree with point 27 that the person proposing to drive the vehicle away must be insured to do so. However we are concerned that “Continuous Insurance Enforcement“ cannot be properly enforced if vehicles cannot be removed from driveways/private land. If Bailiffs and Police have the powers under certain circumstances to enter private property then surely it is extremely relevant that those permissions apply to the system for continuous insurance enforcement – if not then there is a loophole through which evaders can escape with no insurance.

We would also like to point out that the fine is nowhere near as effective a deterrent as the potential for losing your vehicle. So we strongly urge the government to allow seizure of these vehicles under these circumstances.

5. Do you have any views on what would be reasonable in dealing with persistent offenders in such circumstances?

We strongly agree with this cycle of continuous comparison and rapid escalation to immobilisation and removal.

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