A committee of MPs has expressed alarm that 800,000 people are driving on Britain's roads without insurance while 750,000 do not have a valid driving licence.
Members of the Transport Select Sub-Committee said the Government should take action to address the problem by introducing much tougher fines.
According to the ABI the courts impose fines averaging £250 for a first offence. The association would like to see tougher sanctions for offenders.
The ABI also said it was curious to see the effectiveness of initiatives such as curfew trials where uninsured drivers had to report to police stations.
MPs also said they did not see how the existing driving licence system could be enforced unless drivers were required to carry licences while driving.
A sub-committee report on young drivers revealed that those in the 17-24 age group are involved in 25% of all road accidents resulting in death or serious injury, yet this age group holds only 11% of all driving licences.
Members said it took new drivers up to two years to master sufficient driving skills to allow them to anticipate adverse driving conditions.