They have been given a final ultimatum to sign up or face a fine of thousands of pounds.
Collectively, the industry is facing fines amounting to £50 million if action is not taken now. The Motor Insurers Information Centre (MIIC) says the first fines will start to be issued within the next three months.
Neil Drane, head of the MIIC, which monitors the MID, said: 'Fleet operators and motor traders who have failed to provide insurers with the information required are being looked at and will be taken down the legal proceedings route.
'Fleets have had ample opportunity to provide the information and have undermined the value of the database.
'The process has been initiated this week and within three months we could see fleets being prosecuted. It depends how the Crown Prosecution Service wants to proceed but it will pursue policyholders and ultimately the maximum sentence under current legislation is a £5,000 fine.'
The MIIC has provided insurers with information on those policyholders which have yet to supply the information. The insurers have begun writing to fleets this week, giving them a month to reply.
If fleets fail to respond, a letter will be issued from the MID and they will be given another month to respond. If the second attempt fails, legal proceedings will start.
Companies had to ensure that details of every vehicle on their fleet were on the database as part of the Fourth EU Motor Insurance Directive by January 20 last year.
The database was created as part of a major anti-crime initiative aimed reducing the problem of uninsured driving, which the MIIC estimates costs UK motorists about £600 million a year.
The MID database encountered problems when it was first introduced.
The final legislation appeared a few days before the January 20 registration deadline, giving fleets little time to react, and there were problems registering vehicles on the database.
Prior to its publication, it was thought that fleet operators would have 14 days to notify the MID of changes of details of fleet vehicles, but when the Government finally published its interpretation, this had been changed to 'immediately'.