Uninsured Drivers Costing £500m

Posted 2008-05-6

It is estimated that uninsured drivers are costing over £500m a year, according to the Motor Insurers’Bureau, which pays compensation to the victims of uninsured drivers involved in accidents.

And the cost of the compensation, the bureau claims, is adding in the region of £30 extra onto the insurance premium of every legally insured motorist.

Recent figures now reveal that the UK has one of the highest levels of uninsured drivers in western Europe, with a staggering one in 20 cars and vans on British roads now being used illegally, without motor insurance.

The growing problem has recently been highlighted by the British Brokers’ Association (BIBA), who have approached the government requesting that more awareness is brought to the obvious dangers of driving whilst uninsured, and requesting the government bring greater enforcement to tackling the unacceptable situation.

Commenting that the government had been dragging its feet in dealing with the current blight of uninsured motorists, BIBA Chief Executive Eric Galbraith said that new regulations are urgently needed in order to resolve the problem.

Towards this end, BIBA will be calling on Transport Minister, Ruth Kelly, to urge the transport department to push forward regulations to address the unsatisfactory trend at the earliest opportunity.
Only recently the government had already introduced laws giving the police access to the national motor insurance database, and the right to seize any uninsured vehicles and even crush them.

It’s estimated that since the introduction of the new powers in 2006, uninsured driving has been reduced by around 10%. But BIBA would like to see the figures reduced even more substantially.

Increased risk taking may also be one more effect of the recent credit crunch, which has seen ever greater numbers of consumers struggling with the repayments on secured loans and homeowner loans, as a combination of increased interest rates, more restrictive lending criteria and the withdrawal of many former financial products, which until very recently were readily and abundantly available.

Apart from increased mortgage payments and higher interest charges on secured and homeowner loans, consumers have also been hit with a raft of price rises in other sectors, with overall living costs being further stretched by rising prices in fuel, utility bills and even food.

As a result there has been a massive increase in the numbers of consumers and business organisations seeking debt relief solutions, including bankruptcy, Debt Management Plans (DMPs) and Individual Voluntary Agreements (IVAs).

Recent reports from the UK Insolvency Helpline, which gives free financial advice to consumers and businesses concerned about debt levels, confirm that the number of applications for IVAs increased at a rate of 118% in 2006, and that the insolvencies in 2007 rose to 150,000, with the prediction that, for the first time ever, more of these insolvencies will be serviced by IVAs than bankruptcies.

The IVA is a formulated repayment plan, typically over a period of five years, which allows a debtor to negotiate an agreement with creditors to reduce some of the outstanding money owed by pledging to pay regular monthly payments. The increasing popularity of the IVA to consumers is largely based on the fact that they avoid the stigma associated with bankruptcy and often allow the debtor to retain assets, including a business or a home.

The alternative DMP is similarly constructed, but it is a programme by which affordable payments are negotiated with creditors by an independent company. Once an agreed monthly figure has been reached, this amount is then sent by the debtor to the debt management company, who pass it on directly to the creditor.

The UK Insolvency Helpline was set up in 1997, following recommendations from a national group of Insolvency lawyers and accountants, with a remit to supply an urgent need for debt and credit advice to consumers generally.

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