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Motor insurance certificates to be retained summary of Government consultation

The Government has reversed its proposal to remove motor insurance certificates following intense lobbying by the ABI.

The Department for Transport (DfT) announced the decision today, publishing a summary of responsesimpact assessment and proposed next steps on its consultation to remove the requirement to have a motor insurance certificate, which began earlier this year.

The Government’s position has been heavily influenced by the ABI and the consultation response represents a good outcome for the industry as motor certificates will be retained and the Government will now legislate to use the MID as evidence of cancellation.

The Government decided not to move ahead with the proposal to remove motor insurance certificates for the following reasons:  

  • The certificate has important uses in certain situations such as for fleet/trade policies
  • Policy-holders are familiar with (and prefer) the standard format used in motor insurance certificates
  • The cost of upgrading the MID would be substantial
  • There would be a need to issue certificates for some people such as those travelling abroad or without access to the internet

Next steps

The Government said it will legislate to allow the industry’s preferred model of removing the present requirement for a policy-holder to return their certificate if they cancel their policy in mid-term and to use the Motor Insurance Database (MID) as evidence of the cancellation. Based on figures that we have developed with the industry and supplied to Ministers, the Government estimated that cost savings to insurers range between £27m - £46m per annum, with a best estimate of £36m (constant 2013 prices).

The Government also said it will alter the existing legislation regarding the provision of insurance certificates: retaining the requirement for insurers to issue an insurance certificate, but removing the current position that the insurance policy will have no effect until an insurance certificate is delivered to the policyholder.

To convince Government not to go ahead with their original proposal and support the industry’s preferred model of using the MID as evidence of cancellation, the ABI has held lengthy discussions with officials and Ministers.

Members of the Motor Certificates Working Group were also asked to provide detailed figures and the data provided by members proved to be extremely useful in supporting our proposal.

In order for the industry to work with the Government to deliver this new model, the Motor Certificates Working Group will now reconvene to become the ‘MID as evidence of cancellation Working Group’ and the next meeting is scheduled to take place in November.

Last updated 01/07/2016