MPs blame injury claims for high insurance premiums

The Transport Select Committee has issued another report into the reasons why our motor insurance premiums keep going up.

The Government's Transport Select Committee has called for an end to “sharp practices” in the motor insurance industry and a higher threshold for paying out for whiplash claims.

In a follow-up report to its initial investigation into the rising cost of motor insurance, the committee blames the rise in personal injury claims for the increase in insurance premiums.

And it argues that if raising the threshold for paying out compensation doesn’t reduce the number of claims, the Government should introduce legislation. It proposes that this legislation would require evidence of both the whiplash injury itself and the negative effect it is having on the claimant’s life before compensation is paid out.

It’s asked the Government to ban referral fees, where people or companies sell on insurance claimants’ details, “across the board”, rather than just in personal injury cases. The ban for personal injury claims is part of proposed legislation currently being reviewed by the House of Lords.

It also wants the Government to begin an investigation into cold calling to generate personal injury claims. The Office of Fair Trading (OFT) says that the average referral fee is £800.

Government figures show that the number of personal injury claims resulting from motor accidents has risen by a staggering 70% since 2005-06. And 70% of those claims are for whiplash.

The committee also highlighted fraud and uninsured driving as two areas that need to be tackled in future.

In December, the OFT announced that it would be investigating the motor insurance industry. It’s due to report back in the spring.

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