BIBA response to the DFT consultation on amending the Road Traffic Act 1988 to remove the need for motor insurance certificates

17th January 2013

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 membership includes just under 2,000 regulated firms having merged with the Institute of Insurance Brokers (IIB) in November 2011.

General insurance brokers contribute 1% of GDP to the UK economy and BIBA brokers employ more than 100,000 staff.

BIBA helps more than 400,000 people a year to access insurance protection through it’s Find a Broker service, both online and via the telephone.

Brokers provide professional advice to businesses and individuals, playing a key role in the identification, measurement, management, control and transfer of risk. They negotiate appropriate insurance protection tailored to individual needs.

Thank you for inviting BIBA to respond to this consultation, our responses are listed after each question.  

Question 1 Do you agree with the policy objective and that the law should be amended to abolish insurance certificates and instead make the record on the MID evidence of insurance? If not, why not?

Not at the moment, BIBA disagrees with this proposal as it stands. In principle we support the long term policy objectives with the MID being used by Police as the main method of checking and we do not disagree with the rationale, but it is just too early with too many complex issues to resolve first.   

For the MID to be fit for purpose as the ‘proof insurance’, with no ‘back up’ of a certificate, ‘real time’ updates to the MID would be necessary. Whilst this may be achievable for policies covering individual vehicles (MID population currently stands at 98.9% in 7 days) It is likely to prove impractical for MID2 policyholders with only 95.5% of vehicles on MID2 within 21 days.

A move to real time for these large commercial risks (where the client themselves is often responsible for MID2 population) is our main area of concern, as you have already highlighted in paragraph 12. Fleets work in an environment where there is a constant flux of vehicles in their possession and open certificates offer a practical solution for this, allied with the 14/21 day MID2 time to supply window.

An open certificate would typically say: “Any vehicle owned by or in the custody or control of the policyholder” or “Any vehicle the property of the policyholder or hired to him under a hire purchase or leasing agreement”. Any change to the availability of open certificates would be a massive change to the industry and customers. There would need to be a significant educational campaign to advise commercial customers of any changes.

We are also concerned at how the ‘driving other cars’ (DOC) extension could continue without a certificate. A typical DOC wording would say “The Policyholder may also drive any other private motor car not belonging to him or hired to him under a hire purchase or leasing agreement”. Any new system would need to accommodate the DOC provision to preserve customer cover and prevent uninsured driving, otherwise how will the Police clarify cover. We are aware there is a field on the MID for the DOC extension and we would need to ensure this is fully utilised.   

The MID record check “Ask Mid” is ‘real time’ and so it will also be important to mine historical records, e.g evidence past temporary vehicles.

Question 2 If there were no certificate, in what ways do you feel that insurers could best communicate any changes to levels of insurance cover?

If there were no certificate, changes would most likely be communicated in the schedule of insurance issued by the broker/insurer. Levels of insurance cover (e.g. comprehensive cover with a £100 excess) are not listed on this certificate, please see question 4 which lists many of the requirements of the certificate.  

Question 3 Do you feel any change in practice would be needed in respect of commercial policies? If so, what changes would you wish to see? What impact do you feel this would have on commercial policy holders?

As per 1, commercial policyholders are a major concern. We do not see how they can practically ensure real time compliance when their large fleet/stock is in a constant state of flux. The loss of open certificates to commercial customers would most likely mean increased administrative burdens on the business operating the vehicles, a drop off in compliance with RTA insurance laws and the Police would be faced with removing more vehicles from the road as the evidence of insurance previously provided by the Open Certificate is no longer available while the MID is awaiting an update.

Access to the MID and the content of the MID would need to be massively opened up to allow users of vehicles to more easily check their levels of cover, this also means checking other peoples’ policies.   

If a fleet/motor trade risk indicator on the MID confirmed that vehicles are covered on a blanket “open certificate basis” and the police were more relaxed in checking against these policies then a long term solution should be possible.
 
Question 4 What access or information do you think policy holders will want to see? Do you agree that policyholders would want the same information as they currently receive in the insurance certificate? If not, why not?

Yes, policyholders should be able to view the same level of information as on their motors certificate.

Certificates confirm various key facts including

– Registration of vehicle
– Name of Policyholder
– Policy number (certificate number)
– Commencement date
– Expiry date
– Persons or clauses of persons entitled to drive
– Limitations as to use
– Driving other cars extension

If they are unable to view this full list of data, then it is highly possible they could fall foul of the law.

The Police would need to be in a position to check this full list of data otherwise they may be unwittingly allowing people to drive who are not entitled to or for purposes outside those allowed by and stated in the certificate.   

Question 5 Do you have any data protection concerns? If so, what are they and what measures do you think should be introduced to resolve them?

Some policies are “any drivers over 25” open driving and so theoretically it should be possible for any potential driver to have sight of the MID record at any time to ensure they will be driving legally (as if looking at a certificate). Therefore access would need to be quite open/wide to allow for this, but this could lead to data protection concerns. 

Question 6 Do you agree that there should be an option to issue a hard copy of the record of insurance e.g. those travelling to other Member States in the EU?

There must be an option to issue a hard copy of the insurance record for use overseas. The current certificate performs this important role and that is another reason we believe it should be retained.

Question 7 Are there any other circumstances where you think a hard copy document should still be issued?

When selling a car, the purchaser can currently show his certificate with the DOC extension to the seller to ensure compliance with the law in order to take a test drive.

Employers using their vehicles for work are often asked to produce their certificate to evidence employers are sufficiently insured for using their vehicle for work purposes.

Volunteer groups and charities confirming insurance cover for volunteer drivers.

Vehicle hire companies generally require sight of a certificate to verify proof of insurance for commercial operations.

Question 8 Is there further information that the Police should have?
No Comment

Question 9 What other parties do you think would need access?
Insurance brokers would need access to ensure the correct cover is in place for their customer.

Question 10 What measures do you think would give motorists confidence in the accuracy of the MID to ensure it is effective as an alternative to the certificate of insurance as evidence of insurance?

There are significant concerns reported by insurance brokers where Police often seize a vehicle that is yet to be updated on the MID. The Police sometimes ignore advice from the MID helpline or the holding broker/insurer and still seize the vehicle. Without the certificate or cover note this could potentially get a lot worse.

Summary

To consider the proposal of removing the need for insurers to issue a certificate and use the record held on the MID as evidence of insurance, we would need practical solutions in place to cover these key issues. We are also satisfied that following the introduction of electronic motor insurance certificate, the main cost has already been taken away from the industry so there are fewer benefits for the removal of certificates. The key concerns that need attending to are:

 

  • Insurance brokers would need access to the enhanced MID.
  • MID timelines and accuracy is currently insufficient and there would be increased occurrences of Police seizing insured vehicles.
  • Evidence of insurance in hard format for foreign use
  • The end of MID2 commercial vehicles using open certificates (with a constant flux of vehicles) would be completely impractical.
  • The future of the driving other car extension for motorists would be in danger.  
  • Evidence of insurance for employers/charities could be an issue.
  • Vehicle users not having easy access to information about cover for a specific vehicle to ensure cover.
  • The MID must allow for checks of past records e.g. temporary vehicles, not just real time access.  
  • There is no requirement to record temporary vehicles (in possession for less than 14 days) on the MID record. With no MID record and no insurance certificate what proof of motor insurance would apply.
  • Many consumers are not internet literate and do not have access to the internet. This was a consideration for the introduction of electronic certificates. The DFT would need to consider how they could access and verify their insurance records.
  • In addition section 148 of the RTA part VI is triggered by the delivery of a certificate of motor insurance, this could mean more claims. We are concerned that there is no explanation of how this section of the RTA would operate. This part of the Act exists to ensure minimum cover exists for a TP claim if one of the minor breaches specified is breached by the person insured for the vehicle.   

Conclusion

We are not yet ready for the removal of insurance certificates. The 11 points we have raised in our summary must be dealt with first.  We would welcome further discussions with DFT officials round this point.

Yours sincerely   

 

Graeme Trudgill FCII

Head of Corporate Affairs

0207 397 0218

trudgillg@biba.org.uk