A new online database for driving records set to be launched by the DVLA this year will help drive a reduction in insurance premiums for "honest" motorists.
According to an announcement made by the Cabinet Office today, DVLA's new digital system will be prepared for public testing online in the next few weeks and fully launch in June.
Cabinet Office Minister Francis Maude said: "To win the global race and save hard-working taxpayers more money, we need world-class public services available online 24/7 from anywhere.
"That's why it's great news that DVLA is about to launch online driving records which can be used by anyone with a driving licence as well as by the insurance industry."
The government and the Association of British Insurers (ABI) said that the system will help insurers check the data of the UK's 40 million drivers and provide accurate quotes - reducing premiums for those that provide honest details.
Currently insurers have to build in a number of risks into their premium pricing because they have no way of ensuring that drivers are telling the truth about their driving history when applying for insurance. A new industry 'hub' will allow insurers to cross check this data and eliminate these risk factors - reducing the cost for drivers.
The ABI said there would be "significant cost savings" for insurers through better identifying fraudulent non-disclosure and reducing the need to obtain paper copies of licences from policyholders.
"My Licence offers clear benefits to the industry and honest customers alike. Insurers will be better equipped to identify fraud, accurately price risk, speed up applications and improve administrative efficiency," said John O'Roarke, Managing Director, General Insurance at LV.
"Using My Licence will enable insurers, brokers and comparison websites to achieve real savings that can be passed on to customers and to improve customer service."
In other news, the government announced today that it is set to save £500 million this year thanks to the digital by default agenda and it has committed to making the UK the most digital government in the G8 by 2015.
The government launched its Digital Strategy in 2012, tasking departments with a digital by default policy and promised to digitise some of the public sector's largest transactional services in a bid to save £1.7 billion a year after 2015.
Of the 25 'high volume and high profile' services across government that the Government Digital Service selected last year to transform into new digital products, one is live (student loans), 15 are in beta, six are in alpha, and three are in discovery.
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