Car cover costs must be cut, MPs demand

Transport Committee blamed referral fees for spiralling insurance.

Hard-pressed motorists forced to cope with ever-increasing insurance premiums may soon get some good news. A cross-party MPs' committee this week challenged the insurance industry to reduce charges.

The committee said car cover prices have spun out of control because of increasing claims for whiplash injuries. And it accused insurers and lawyers of cashing in on crash victims by taking fat fees for passing their names on to claims companies.

"Insurers, solicitors and claims management companies have themselves driven up the cost," said Louise Ellman MP, chairwoman of the Transport Committee.

She demanded more transparency about the charges and that consumers be given clear information on referral fees and who earns money from them.

That prompted finger-pointing between the insurance and legal industries, with both trying to blame the other for rising charges.

Desmond Hudson, chief executive of the Law Society, said: "The insurance industry itself is fuelling the costs of accidents and passing them back to motorists. The fact that it sellsaccident details to third parties inevitably fuels the number of claims. Some firms have a record of seeking to pay off the victim of an accident whether or not that victim has been injured."

John Spencer, director of Spencers Solicitors, said: "Insurers often make offers without requiring any medical evidence. Their hope is that they can 'buy off' a claim before the injured person seeks independent legal advice and is properly represented."

Insurers were swift to hit back. Nick Starling, director of general insurance at the Association of British Insurers, said: "Referral fees should be banned altogether and not made more transparent – and that ban should apply to all organisations receiving them, not just insurers."

Andy Goldby of Direct Line agreed. He said: "The committee is correct to point out that referral fees need to be banned across the board. However lawyers' fixed costs also need to be reduced."

So how is this squabbling good for drivers? With all sides recognising that there's a major problem, the Government is heading down a road which will end in serious embarrassment if it doesn't do something to curb car insurance premiums.

The Transport Committee said the Government should establish a cross-departmental ministerial committee to look at reducing the cost of motor insurance. Meanwhile, questions about the high cost of insurance for young drivers will be followed up in a forthcoming inquiry on road safety.

Progress by these committees and inquiries will be slow. But a crackdown on outrageous premium hikes looks more likely to follow than ever.

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Have you tried new the Independent Digital Edition apps?
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Customer Service Advisor

    £15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

    Recruitment Genius: Compliance Manager

    £40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

    SThree: Talent Acquisition Consultant

    £22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

    Day In a Page

    Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

    Making of a killer

    What motivated a shy student to kill 38 holidaymakers in Tunisia?
    UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

    Just when you thought your commute couldn't get any worse...

    Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
    Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

    The Real Stories of Migrant Britain

    Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
    Cheaper energy on the way, but it's not all sunshine and rainbows

    Cheaper energy on the way, but it's not all sunshine and rainbows

    Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
    Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

    No grace of God for Katy Perry as sisters act to stop her buying convent

    Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
    Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

    Residents just want water and power in a city chosen to be a ‘smart’ metropolis

    The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
    Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

    Something wicked?

    Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
    10 best sun creams for body

    10 best sun creams for body

    Make sure you’re protected from head to toe in the heatwave
    Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

    Nick Bollettieri's Wimbledon files

    Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
    Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

    There is more than a shiny trophy to be won by England’s World Cup women

    The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map