Sounds to me like what will be considered a "revenue stream" and there will be a funding crisis in the future because too many people have insurance and predicted reciepts from fines are too low (like the council's bleating about not enough people parking illegally to maintain parking ticket returns).
Why not just send them an invoice for insurance under an uncompetitively priced "national (car) insurance" scheme? The letter can state that they have forfeited their right to choose the cheapest insurer on the open market and have been enrolled by default. If you don't pay up, we'll seize your car and sell/scrap it to cover the cost of a years insurance. If it doesn't cover that cost, you are liable for fines for the rest of it.