The Telegraph reports that an online licence-checking service will allow insurers to check motoring convictions and penalty points of drivers, which the insurance industry claims will reduce premiums.
However, the new database has left many sceptical about the possible savings for motorists and concerned about data security.
Insurers currently check individual driving records through the DVLA, a government body, but this is seen as expensive and time-consuming.
The Association of British Insurers (ABI) has said that 23 per cent of data provided to motor insurers was incorrect.
Around 16 per cent of policyholders ‘under-declare’ convictions, while around seven per cent over-declare and mistakenly tell their insurers about expired motoring convictions so they pay too much for their policies.
“It should also speed up and simplify the application process for customers who will not have to guess what motoring offences may or may not need to be disclosed,” said the ABI spokesman Malcolm Tarling.
The project, initially known as Insurance Industry Access to Driver Data, was rebranded as MyLicence at the end of last year.
All insurers, brokers and price comparison websites have been encouraged to sign up, which allows them access to the necessary information using an individual’s licence number.
The ABI said seven of the top 10 motor insurers had registered for the service so far, before an expected launch on 14th July.
However, Julie Daniels of the comparison site comparethemarket.com said the £15 saving was unlikely until the insurance industry fully embraced the service.
“I believe that there will be little material change in premiums until the initiative is taken up across the industry,” she said.
The migration of driving licence data online is part of the Government’s digital agenda, which has been gradually moving services on to the internet.
The paper counterpart of a driving licence is due to be phased out by 2015 in favour of a photo-card licence.
Paper car tax discs will also be scrapped from October this year.