A new system that will allow insurers to access DVLA data on drivers' convictions and penalty points will be tested from February.
The insurance industry says the move will cut the amount of fraud seen under the current system of driver declaration.
Up to 23% of motorists failed to accurately disclose their record to insurers, it has claimed.
Drivers will want to ensure that the new system will lead to lower premiums.
The scheme is known as MyLicence and has been developed by the Association of British Insurers (ABI), the Motor Insurers' Bureau, the DVLA and the Department for Transport.
Insurers will be able to access information to cross-check any points and convictions at the application stage and price the premium accordingly.
The ABI said that 23% of motorists made incorrect disclosures. This could make insurance invalid, it said.
It argued that the fraud, and complex claims that were subsequently generated, increased premiums for honest drivers, so the new scheme should cut costs.
About 7% of inaccurate declarations came from drivers who declared spent convictions or points, so they could also see premiums fall under the new regime.
The MyLicence project will be tested from February and then begin in full during the second quarter of 2014.
The move comes as various changes are being planned by the government to reduce the number of fraudulent whiplash claims.
Stephen Glaister, director of the RAC Foundation motoring organisation, said: "Given that a significant minority of people appear to mislead insurers about their motoring histories, the majority of honest drivers will probably welcome this change in the hope it cuts their premiums.
"The cost of insurance has gone through the roof over recent years and anything that enables premiums to more realistically reflect a motorist's risk and driving record should help bring down the cost of running a car for those who tell the truth."