A scheme to use recycled parts to repair vehicles is back on the agenda despite the collapse of a similar project last year, Insurance Times has learned.

The venture, which is being overseen by the British Vehicle Salvage Federation (BVSF), could be running from the autumn and save more than £200m in repair costs for insurers who take part.

Policyholders whose vehicles are over five years old, or so badly damaged that it will not be economically viable to repair them using new parts, will be given the option of having used parts fitted. BVSF members will supply the parts.

It is understood that the seven insurers who supported the original scheme - Admiral, CIS, Fortis, Highway, MMA Allianz Cornhill and Provident - along with Norwich Union and Royal & SunAlliance have shown an interest in the scheme.

Norwich Union snubbed the original scheme.

A spokesman for CIS said: "It is an attractive scheme, with huge environmental savings."

Alan Greenouff, chairman and secretary general at BVSF, said:

"We want to prove it can be done and I'm hopeful that we can offer a service that will actually work.

We were aware of the demand from the insurance world and of course there's a great deal of pressure to re-use and recycle.

"We know there are several insurers that are interested in this type of service. They will have to play their part to persuade their repairers to use recycled parts."

The original pilot project, which at the time was touted as revolutionary, was put on hold indefinitely after MMA's chief engineer Gary Brench, who was supervising the project, left the company.

Brench, who is now business development director at Claimwatch, said: "Quite a lot of cars are written off because of cosmetic damage and it cost MMA five times more to handle the total loss claim than a repair claim."