Insurance industry bosses have warned that motor insurance premiums are set to rise steeply to cover the costs of more than one million uninsured drivers.
Police estimates suggest that at least one million, and as many as five million, drivers do not have insurance and industry experts suggest that insurance costs could go up by as much as ten per cent - more than six times the rate of inflation.
The cost of accidents caused by uninsured drivers often has to met by motorists who do pay their premiums.
Insurance bosses also say the number of claims is rapidly increasing, with the cost of claims also rising, The Daily Mail reports.
A spokesman for the Association of British Insurers said: "Competition between insurers can keep prices down but at the end of the day insurers have to make a profit. The cost of uninsured drivers is going to have to be met somehow."
Police are now planning to clamp down on uninsured drivers, through measures such as linking insurance firms' computer records with those at the Driver & Vehicle Licensing Association (DVLA).
Uninsured drivers are the most likely to fail to stop after an accident and are also ten times more likely to have been convicted of drink-driving.
Malcolm Tarling, of the Association of British Insurers, commented: "We are looking at rising premiums thanks to the cost of uninsured driving and the continuing growth in compensation payments."
He pointed out that the cost of paying fines for driving uninsured is far less than the cost of insurance, adding: "We are also worried that drivers who until now have been honest and paid for insurance will be increasingly tempted to go without when they see so many others effectively unpunished for driving without insurance."DeHavilland Information Services plc