Insurance cheats cost drivers £1bn

DRIVERS face rocketing insurance premiums to pay for a £1bn annual accident bill caused by uninsured motorists, it has been revealed. Honest drivers pay an extra £30 a year because more than a million others do not insure their cars, an influential industry study shows. By 2005, however, they will be forced to pay an extra £60 each.

The findings, by insurer Direct Line, come ahead of a separate Government study showing that a growing number of motorists are also driving without licences.

Direct Line's study reveals that last year insurers had to pay £265m to compensate victims of uninsured accidents through the Motor Insurers ' Bureau. This year the figure will rise to £300m but experts say the 'true' cost to the industry is closer to £600m, taking into account the premiums insurers do not receive.

In 2001, the estimated number of uninsured drivers was 1.5m, with each one costing the industry £176 in levies to the MIB. By 2005, the cost per uninsured driver will be £313, making the total cost to the industry nearly £1bn.

The study shows that Britain has the worst uninsured driving record in Western Europe, with one in 20 vehicles not covered compared with one in 500 in Germany. In London, the numbers driving without licences or insurance may be closer to one in 10, rising to 13% among drivers aged 17-24.

MORI research for Direct Line shows that 44% of drivers want more roadside checks to trap insurance cheats, 30% say the fines they face are too low, and 28% favour imprisonment for persistent offenders. Insurers are pinning their hopes on a motor insurance database launched in September, which gives police direct access to insurance details during spot checks. Early results are said to be encouraging.

The Government study, due in summer, will reveal that the added difficulty of passing the two-part driving test and the high cost of lessons are fueling growth in unlicensed motorists. The report is expected to show that one in 40 drivers - usually young males - have no licence. It will call for stiff new community service orders to punish offenders and may recommend the compulsory carrying of driving licences.