The Association of British Insurers (ABI) reckons the new database will shave up to £15 off the cost of car insurance by letting firms tackle fraud by looking at endorsements drivers may have for speeding and other traffic offences.
The trade body for car insurance firms also expects the cost of car hire to fall as a result of the My Licence digital project as disqualified drivers or those with penalty points on their licences will have to tell the truth when trying to hire a car.
The ABI explained insurers and car hire firms cannot check driver convictions when issuing a policy or offering vehicles for hire, so have to include a cost for the risk of dishonest motorists either forgetting or failing to tell firms about their driving history so they can pick up cheaper quotes.
The new online database will let firms quickly confirm application details by searching driving licence numbers, postcodes or national insurance numbers to price policies accordingly.
The secure online portal will also allow drivers to check their licence details.
The DVLA system is going online as paper driving licences are due for scrapping by the end of 2015 to save money.
Cabinet Office minister Francis Maude estimates the government will save more than £1.2 billion by shifting services like DVLA driving records online by the end of 2014.
“Our digital agenda is part of our long-term plan to tackle the deficit we inherited,” he 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 is why it is 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.”