Jack Straw calls for reform of car insurance industry

The former Justice Secretary Jack Straw is calling for reform of the motor insurance industry.

He says too many insurers refer their clients to personal injury lawyers without permission.

In an article for The Times newspaper, Mr Straw describes the spiralling cost of insurance - caused by referrals to personal injury lawyers - as a racket.

The Labour MP for Blackburn says he is acting on the concerns of constituents who face rising premiums.

Mr Straw is also angry at the high-pressure tactics of legal firms who handle claims for injuries after road accidents.

He is calling for the government to implement recommendations made last year by Lord Justice Jackson, who said such referral fees should be banned.

Whiplash injuries

Earlier this year a report from the Transport Select Committee detailed how firms are paid referral fees for giving lawyers the names of people involved in crashes.

Mr Straw tells The Times that major insurers told him they were selling their own customers' details to solicitors to raise revenue.

He also said whiplash injuries made up 80% of all claims, even though they were usually entirely trivial.

The Times says premiums are going up despite improvements in car safety and security meaning sharp drops in thefts and accidents.

In 2009 the number of road accidents involving personal injury was 31% down on the average for 1994-98.

Thefts of and from a vehicle have slumped - down almost three-quarters (72%) between 1995 and 2010.

But the cost of personal injury claims has doubled in 10 years (from £7bn to £14bn) and motor insurance premiums have shot up, by at least 30% in the last year.

Support from insurers

The Association of British Insurers' Director General Insurance and Health, Nick Starling, said: "We are pleased that Jack Straw has joined our call for referral fees to be banned.

"It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists.

"They must be banned as part of a whole package of civil litigation costs reform which includes looking at solicitors' fixed fees and hourly rates."

He added: "With whiplash now at epidemic levels in the UK, we support Jack Straw's call to look at how whiplash is treated, how people's personal data is used and how claims management companies are regulated."