Insurance premiums have gone up sharply over the past year Insurers must do more to tackle fraudulent injury claims, which are driving up the cost of motor insurance, a report by MPs has said.
The Transport Select Committee wants a dedicated police unit, paid for by insurers, to tackle the issue.
The committee also wants more transparency on “referral” fees – involving organisations like vehicle repairers and medical experts.
But the insurers’ association called the report a “missed opportunity”.
“The committee has failed to recognise that the main cause of the recent increases in motor insurance premiums is ever-increasing personal claims and spiralling legal costs,” said Nick Starling from the Association of British Insurers (ABI).
It said more should be done to tackle the “compensation culture” which it said was behind the rise in legal costs, adding an extra £40 a year to average motor premiums.
AA Insurance said it supported the report’s findings.
Simon Douglas, director of AA Insurance, welcomed the idea of a special police unit.
“With insurer control, such a unit could very quickly pay for itself. Fraud, particularly false personal injury claims, is in my view the biggest driver of premium increases,” he said.
The committee received evidence from the police and the AA for its report The Cost of Motor Insurance.
“The police made plain to the committee that ‘staged accidents’ are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents,” committee chairman Louise Ellman said.
It is also calling for more transparency on “the merry-go-round” of referral payments.
“Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going,” Ms Ellman said.
The ABI said these fees were a symptom of a “dysfunctional compensation system, not the cause of it” and should be banned altogether.
The committee also looked at the AA’s British Insurance Premium Index, which showed that the average Shoparound premium – an average of the lowest three quotes for each risk – increased by 33% over 2010.
Young drivers saw the biggest increases. Those aged between 17 and 22 saw their premiums rise by more than 58%, the AA said.
The committee also wants the government to make the driving test more rigorous to help bring down the “appalling” casualty rate among young drivers.
However, Mr Douglas from the AA, which also operates a driving school, cautioned that making the driving test too difficult could lead some young drivers not to bother and try to drive without a licence.
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