The move comes after the Government ordered a review of the current system in a bid to crack down on uninsured drivers which are thought to cost the industry £500 million a year, pushing premiums for fleets up as a result. It will focus on reducing the number of uninsured drivers and will consider switching to a system of insuring the vehicle, as favoured in Europe.
The Association of British Insurers (ABI) estimates that one in 20 UK drivers currently use the roads without insurance.
Mary Francis, director-general at the ABI, said: 'We need to see a real commitment to improved detection of motorists who drive without insurance, and a wider range of penalties that act as real deterrents.'
Minister for Transport David Jamieson has appointed Professor David Greenaway, an economist from the University of Nottingham, to conduct the review which will assess the relative costs and benefits, the level of premiums and their effect on social and economic groups.
Additional factors to be considered include enforcement of the insurance requirement, the ease with which claims are made, driver behaviour, road safety and vehicle crime. The Government has said that a tax-based insurance system will not be discussed within the review.