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Growing misuse of open certificates of insurance

Published: 01/11/13

Allianz reports on the growing misuse of open certificates of insurance

Having taken more than one million uninsured vehicles off the roads, open motor certificate abuse is coming under the spotlight as part of the police’s clampdown on uninsured drivers.

Although the majority of open motor certificates* are for legitimate use the police have seen an increasing number of these policies being misused.

The most common type of abuse is where an open certificate has been obtained inappropriately or it does not cover the specific use of the vehicle. For example, using the vehicle for a separate business. There is also evidence that these open certificates are being used fraudulently by organised crime groups.

Police challenges
Identifying whether an open certificate is being used by a genuine client or a criminal can be a challenge for the police. When they stop a vehicle that does not appear on the Motor Insurance Database (MID), it can take time to check whether there is valid insurance in place for the driver and the vehicle with further delays following as the police contact third-parties to verify the information provided. Being subject to these checks can have serious ramifications. As well as disrupting business while the police investigate, if details of valid insurance cannot be produced there is a risk that the vehicle will be seized.

Two-pronged attack
Insurers are working with the police to address these issues. Potential actions include improving the wording of open certificates to provide greater clarity to the police and policyholders; publishing a guide to assist the police when dealing with open certificates; and reviewing the data held on the MID.

As insurance brokers we are also involved in the fight against uninsured drivers. We have to make sure that the correct cover is in place and that all vehicles are correctly listed on the MID. Where possible we have to prevent the police from having to check our client’s insurance.

Taking this approach will help to reduce uninsured driving, making the roads safer and helping to control the cost of motor insurance.

  • Uninsured drivers are five times more likely to be involved in road collisions.
  • Uninsured and untraced drivers kill 130 people and injure 26,500 every year.
  • Nearly 2,500 vehicles are seized by the police each week.
  • The annual cost of uninsured driving is estimated at £400m.

*These policies provide insurance which is ‘open’ in relation to the vehicles being covered or ‘open’ due to the number of different drivers allowed to use the vehicle. An open policy of insurance is designed to give people within the motor trade flexibility to deal in multiple numbers of vehicles whether in vehicle sales, repair or any other genuine form of the trade.

 

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