Drivers could see their insurance premiums drop £15 from March as driving licences go online.
Insurers will be able to check a digital database for drivers' licence details, including endorsements for speeding offences.
Firms are at present unable to check these details when they sell policies so end up factoring in the risk that applicants may have lied to them. The online register could also see a reduction in the price of car hire.
The system, which will be launched by the DVLA, is part of the Government's push to move services on to the internet.
The Association of British Insurers estimates it will save motorists up to £15 each year in their car insurance payments.
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 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."
Motoring organisation AA said that an overwhelming number of drivers backed the move saying it would also help to tackle fraud.
In a poll of its 17,883 members, 92% supported the online database and most of those who responded said they had no problem giving their driving licence to insurers to check their motoring records.
AA president Edmund King said: "We welcome any efforts to bring down the cost of car insurance and being able to accurately check driving licence records will help insurance companies to overcome fraud and hence offer lower premiums."
Last month the Competition Commission announced that motorists were paying too much for their insurance and that car repairs after an accident were not carried out to sufficiently high standards.
Source Sky New
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