Jack Straw, the former Justice Secretary, recently called for a reform of the motor car insurance industry.
Stating that too many car insurance companies refer their claims to personal injury legal experts without seeking permission, Mr Straw recently told The Times that spiralling insurance costs were caused by the so-called ‘racket’ of referrals made to accident lawyers.
Mr Straw also expressed anger at those legal firms which employ high-pressure tactics in order to handle injury claims related to road traffic accidents. As a result, he has called upon the government to adopt the recommendations suggested by Lord Justice Jackson last year, who said that there should be a general ban upon referral fees.
A Transport Select Committee report published earlier this year described how some law firms pay referral fees to insurers for passing on the details of those customers who find themselves involved in car crashes. Mr Straw reported that major car insurance companies claim they were peddling their customer information to lawyers in a bid to raise revenue.
Mr Straw also remarked that 80 per cent of all claims actually originate from whiplash injuries, despite the trivial nature of the vast majority of injuries. Meanwhile premiums are creeping upwards despite car security and safety improvements which have led to a sharp drop in both accidents and thefts.
2009 UK road accident figures were down 31 per cent on the average number of accidents that occurred from 1994 through 1998. Likewise thefts from and of a vehicle have declined between 1995 and last year by nearly three quarters, or 72 per cent.
However, the cost of injury claims has increased by 100 per cent in a decade to £14 billion, up from £7 billion.