Biba is drafting guidelines for brokers and insurers on updating the Motor Insurance Database (MID).

It has drafted a proposed clause to the terms of business agreement (Toba) between brokers and insurers clarifying their respective obligations in hitting MID targets.

Biba said the clause was designed to ensure brokers are not unfairly penalised by insurers should they be prevented from forwarding MID information for reasons "outside of their control".

The move is in response to criticisms of brokers over the updating of the MID.

Some insurers have threatened to remove agency agreements from brokers whom they claim are holding up the process.

The Motor Insurers' Bureau (MIB) will start to impose fines of up to £250,000 on insurers who are missing the targets in October.

Graeme Trudgill, Biba manager of technical services, said: "Brokers have a part to play in making the MID work and these guidelines will help insurers and brokers know exactly what their responsibilities are.

"However, it is not fair for insurers to punish brokers where there are, for example, problems with their software house, or in cases where fleet operators have failed to notify brokers of policy changes straight away."

The first part of the clause states: "The broker will use all reasonable effort to ensure that any information received from the client which is notifiable to the Motor Insurers' Information Centre (MIIC) will be transmitted to the company or the MIIC within the timescales agreed."

Trudgill said: "We are aware that insurers want to see the MID included in their Tobas and we want to be proactive about it and lead the way, rather than have overly-harsh requirements imposed on us at a later date."

The clause will now be put before the ABI, the MIB and Biba partners including Norwich Union, AXA, Royal & SunAlliance and Fortis.

An ABI spokesman said: "We welcome any efforts by Biba to ensure MID targets are met.

"But Tobas will be decided between individual firms."