Surprising that this hasn't been picked up by their current insurance company - I'm assuming they've insured it in the 10 years

Me too..!
I think one of your first ports of call should be to the current insurers, Ian. They accepted the risk on the basis of honesty, and if there is a large marker against the registration/VIN then they should not only be aware but asking questions of the proposer.
It's really unusual, I must say. But given the huge numbers of the database, perhaps not unusual. Either way, it's rotten luck and your mum & dad must be so upset by it all.