The Motor Insurance Bureau (MIB) and Driver Vehicle Licensing Agency (DVLA) have joined forces to deliver MyLicence, a scheme designed to aid the crackdown on car insurance fraud – a problem that adds an estimated £33 on to the price of every motor policy.
And while this will undoubtedly be music to the ears of honest motorists everywhere, what might make for an even sweeter sound is the plan to do away with the need for motorists to keep and send a hard copy of their proof of no claims discount (NCD).
This part of the scheme isn’t due to go live until next year though, so before we look into that, let’s see how MyLicence is currently working for insurers and honest motorists alike.
Why do we need MyLicence?
Recent DVLA statistics reveal almost a quarter of motorists (23%) fail to accurately disclose their driving record, including declaration of any driving disqualifications.
And while 16% of policyholders under-declare convictions, 7% somehow manage to over-declare, both of which would invalidate their car insurance.
So the MyLicence scheme has been introduced to enable insurers to offer policies based on facts rather than relying solely on driver declaration.
Cross referencing
It does this by using each motorists driver licence number (DLN) to cross-reference the details held by insurers with that held by the DVLA to confirm driving entitlements, endorsements and penalty points.
This means insurers will be better equipped to assess quotes, determine risk levels and provide insurance at an appropriate and accurate price without having to rely so heavily on assumptions and declarations.
The scheme has been a work in progress since 2010 and is just another step in the ongoing process to digitise the data held by the DVLA and other motoring organisations, a process which should benefit motorists and insurers alike.
Honesty the best policy
Huw Evans, Director of Policy and Deputy Director General, Association of British Insurers (ABI), said: “MyLicence is good news for honest motorists. It will speed up the application process, help insurers, brokers and comparison websites to better identify potential frauds, and keep motor insurance premiums as competitively priced as possible.”
And if this can help cut the rising cost of car insurance then it should be welcomed by honest motorists the land over.
As should the plans to do away with having to get a hard copy of proof of NCD – but in reality this could just open up a whole can of worms…
‘Proof of NCD’ strife
It’s well over a year since we published Get proof of your no claims discount and we still get loads of comments from motorists who are struggling to obtain proof of NCD from their previous insurers.
In some instances motorists are even having their current policy cancelled because they can’t provide proof of NCD to their current insurers.
And so the plans to do away with the need for hard copies of proof of NCD will solve this particular headache. But it could also blow the doors wide open on the inconsistent allocation of NCD among insurers.
Entitlement issues
How come? Well, if your new insurer only recognises a maximum of 5 years’ NCD, then you’ll only be able to have 5 years’ NCD on your next policy.
So even if you had say, 9 years’ NCD under the old policy, if your current insurer only recognises 5 years, you’ll instantly lose 4 years’ entitlement.
And it gets worse if you make a claim and, as is usually the case, lose 2 years’ NCD. You’d then see your entitlement fall from 9 years to just 3, which would come as a nasty surprise if you were expecting to go into your next renewal armed with 6 years’ NCD.
Industry standard
We asked the MIB and the ABI whether an industry standard would be introduced for NCD allocation. They said there are no plans to do so as claims history forms an important part of the overall pricing structure, and no claims discounts are regularly used to attract and retain customers for annual policies.
Will MyLicence end ‘proof of no claims discount’ nightmare?
