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As motorists slid about on the ice during January's cold snap, they were probably counting on an insurance company to cover the cost of any collision they might end up in. But it is an alarming fact that the UK has a steadily growing problem of uninsured motorists on the road--1.25 million at the last count--a phenomenon driven in part by the steadily increasing cost of cover.

The little-known Motor Insurers' Bureau was set up in 1946 by the insurance industry to broker agreements with the government over compensation for victims of uninsured and untraced ("hit-and-run") drivers. Legislation, most recently the Road Traffic Act 1988, requires every insurer underwriting compulsory motor insurance to be a member of the Bureau, and to fund its operations and payouts, now running at [pounds sterling]500m annually. Such is the problem of uninsured drivers that, in Liverpool, the Motor Insurers' Bureau is known as the city's biggest insurer.

Stung by the rising cost of running the Bureau, the Association of British Insurers has just launched tough new proposals to clamp down on the uninsured. The industry has also funded a database of insured drivers (required by EU law) to make it easier for the police to run spot-checks on drivers. And the Labour MP for Leigh, Andy Burnham, recently introduced a bill (unlikely to become law) requiring French-style insurance stickers--vignettes--to be carried on all car windscreens next to the tax disc. He told the Commons that 87 per cent of the public backed the idea. The government has asked the University of Nottingham to conduct a review of the issue.

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One possible solution would be to move away from a system of liability towards one of "eligibility": drivers would be entitled to receive payouts provided that they were themselves insured. This would put an end to the situation of the uninsured, with a bad driving record, being able to coin it in if their vehicle is struck by an insured party. "Many people see this as a just alternative to the present system, which gives a free ride to those who don't bother with insurance at all, but still are able to claim against others who admit liability," says the solicitor and claims expert Tony Summers.

A related idea is a new, non-legal tribunal to settle motoring disputes, with reduced legal costs, and a system of payments based on a tariff scheme, similar to that which exists for criminal injuries compensation.

Legal costs are also a big concern for claims arising under employers' liability insurance, another form of compulsory insurance honoured in the breach. A routine claim for compensation of the order of [pounds sterling]5,000 can imply costs of between [pounds sterling]10,000 and [pounds sterling]15,000. Before his days as a back-bench heavyweight, Nick Brown, while minister for work, published a review of the compulsory scheme of employers' liability insurance. The 2003 report was prompted by significant prices increases in the market for such insurance, which have also caused the Office of Fair Trading to look into the UK liability insurance market as a whole.

The government wants premiums to bear more relation to the actual risk involved at the workplace. It also wants an increased use of alternative dispute resolution, when employees make claims against their employers under such insurance, as legal costs are dwarfing the value of awards or settlements made, making a nonsense of the process.

One option also under consideration is to separate out industrial and occupational disease claims from more routine accident risks. The government also wants rehabilitation to play more of a role in the system of compensation, with a greater emphasis on getting people back to work, and to crack down on rogue businesses who don't bother with cover at all. According to Tony Summers: "Employers' liability insurance is another area where an informal tribunal and a system of compensation payments based on eligibility according to fixed tariffs would save everyone involved a lot of time, money and stress."