Greenaway puts pressure on insurers to collect data

The GreenawaY REPORT into uninsured driving was greeted with a resounding cheer from all involved. The government, insurers and motorists' groups welcomed all 20 recommendations, and breathed a sigh of relief at what wasn't in the document.But as the fanfare dies down it is being replaced by a note of caution.While the recommendations are entirely sensible and in line with what the industry was asking for, they will require a huge amount of work from all parties involved. The government has been asked to introduce legislation that will allow police to confiscate and potentially destroy offenders' cars as well as gain greater access to the motor insurers' database (MID). Courts will be required to pass stiffer sentences on uninsured driving, including the imprisonment of offenders. And the police will need to play their part in improving detection.But it is what has been asked of insurers that should be creating concern at board level. Underwriters will be required to dramatically improve their data management, or face closure.

Data collectionOne of the major pillars of Professor Greenaway's report is that the MID be used as one of the main tools to improve detections. To this end he has set out an extremely challenging timetable for insurers to improve their data collection.Recommendation 13 states: "The permitted interval between an insurance policy being issued and details uploaded on the MID should be reduced from 14 days to seven days by the end of 2006 with a target of 100% compliance. Moreover, a target date by which real time data entry will be implemented should be set, at no later than the end of 2008."The timetable is punishing enough as it stands, but put it against potential sanctions for the insurers who don't make the grade and the outcome could be terminal.Motor Insurance Bureau (MIB) chief executive Ashton West says: "The challenge is for insurers to hit the targets. "MIIC (Motor Insurers' Information Centre) is the regulator. It is our role to ensure that those challenges are met. If they are not met we have the ultimate sanction of withdrawing membership, which means that an insurer who failed to comply would not be able to write motor insurance."

Industry targetsWest qualifies his statement with reassurances that the MIB is not about to throw the rule book at insurers who fail to meet the industry's own deadline of 1 January 2005.But he is none too optimistic about the industry's ability to hit 95% compliance within 14 days. He says: "I am not confident that we will be there on 1 January. As an industry we are trying to improve but I think it will prove challenging to get to that level on 1 January. We are getting there with a number of insurers but we need a plan in place for all of them."To this end, in partnership with the ABI, he is initiating a consultation exercise to find the pitfalls to hitting the targets. Though individual insurers are making the right noises about their own preparations for the January deadline, most privately concede they are concerned about the industry a whole.And it is not just insurers who will have to get involved in the drive to speed up data transmission. Brokers, motor dealerships and most of all the software houses will all have a part to play.Fortis chief executive Barry Smith, who also chaired the ABI review group on uninsured driving, said: "From a Fortis point of view we are very comfortable that we will be providing the required information by January. But as an industry it will need a lot of hard thinking. We will need to think through processes as to how we provide data."Recommendation six is the other area that will provide both a challenge and an opportunity for the market.It states: "The industry should continue to develop products which price young drivers into the market earlier, provide incentives to them to gain driving experience and see the benefits of that experience in terms of the premiums they pay."

More inclusiveWhat Greenaway is not saying, and he makes this very clear, is that insurers should move away from pricing on risk. But the implication of some of his findings is that as an industry, not enough thought has gone into how the market could be more inclusive towards young drivers.He says: "There may be some mechanisms that the industry could use to bring into the market more quickly at least some proportion of those younger drivers who do choose to take a chance and drive uninsured."There are no sanctions and no deadlines in this recommendation. But what there is, for any motor insurer willing to spend the time and energy to find out which younger drivers represent the greater risk, is the opportunity to gain a massive competitive advantage from better pricing.