Fraud busting car insurance

Measures to be in place by summer 2014

Fraud busting insurance

From summer 2014 AA Insurance, along with most car insurers, will ask insurance customers for their Driving Licence Number (DLN) in a move to cut application fraud.

This is part of a national initiative being developed by the Driver and Vehicle Licensing Agency (DVLA), the Department for Transport, and the insurance industry represented by the Association of British Insurers (ABI).1

Customers will be asked for driving licence number

The DLN, a unique 16-character sequence displayed on a driving licence, will be used to get information from the DVLA on the type of licence a customer holds, how long they have held it, and whether they have any driving convictions.

Simon Douglas, director of AA Insurance, points out that the data will remove the opportunity for customers to declare wrong information about their driving history.

Drivers are fed up with a fraudulent minority trying to get cheaper insurance by telling lies at their expense

Simon Douglas, director of AA Insurance

Drivers support move 'if it cuts down fraud'

According to the ABI, a startling one-in-five policyholders under-declares the number of motoring convictions they have – some in error, others deliberately in order to pay a lower premium.2

"Insurance fraud, including fraud by being economical with the truth, is a serious issue for the insurance industry and is stealing from honest policyholders. Mis-declaring information adds around £15 to the cost of every car insurance policy," says Mr Douglas.

"If this initiative streamlines the car insurance application process and improves policy accuracy, then it could reduce insurance industry costs as well as help keep premiums in check."

According to an AA/Populus survey, an overwhelming 92% of respondents supported the move 'if it cuts down fraud', with 72% strongly agreeing.3

Similarly, most respondents (89% supporting; 69% strongly agreeing) said they have 'no problem with providing my driving licence number' to enable their insurer to obtain such information.

"This shows that drivers are fed up with a fraudulent minority trying to get cheaper insurance by telling lies at their expense," says Mr Douglas.

"As well as saving honest customers an average of £15 on the cost of their car insurance, this initiative will also mean that insurers will need to ask customers fewer questions when they apply for cover. This will speed up the purchasing process so customers will also be able to access motor insurance much more quickly."

The new system will apply to the whole motor insurance industry including insurers, brokers and price comparison sites.

1 Known as Insurance Industry Access to Driver Data (IIADD), it is expected to launch in the summer of 2014.

2 ABI research 2009; in all, 23% of motorists wrongly declare elements of their driving history to insurers.

3 AA/Populus survey of 17,883 AA members, 14–20 December 2012. Populus is a founder member of the British Polling Council and abides by its rules.

10 October 2013