The Motor Insurance Database, unveiled today, will allow police to carry out instant roadside checks of drivers' insurance details through a link to the Police National Computer (PNC).
The database, which will initially hold details of 22 million policies, could significantly reduce the £400m spent by insurers each year processing claims involving uninsured drivers.
Insurers believe that just a small fall in the number of uninsured drivers on the road could more than cover the cost of the new database.
"If we can achieve a 2% improvement, the system will pay for itself," said Donald Martin of the Motor Insurers' Information Centre. "I would expect to cover our costs within a couple of years."
The insurance industry funded Motor Insurance Information Centre hired Experian to develop the database after putting the project out to open tender three years ago. Fifty insurance companies and 10 insurance brokers will feed details of motor policies into the database.
Experian plans to add details of five million fleet and company car policies to the system over the next few months. Eventually the database will hold 60 million records, allowing insurers to check insurance details dating back up to three years.
The system, which is connected to the PNC through a dedicated secure link, will replace the current manual inspection process, which relies on drivers producing their documentation at a police station.