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
  • Get to the point
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

    Ashdown Group: Marketing Manager - B2B, Corporate - City, London

    £45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Neil Pavier: Commercial Analyst

    £50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

    Loren Hughes: Financial Accountant

    £45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

    Sheridan Maine: Finance Analyst

    Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

    Day In a Page

    General Election 2015: The masterminds behind the scenes

    The masterminds behind the election

    How do you get your party leader to embrace a message and then stick to it? By employing these people
    Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

    Machine Gun America

    The amusement park where teenagers go to shoot a huge range of automatic weapons
    The ethics of pet food: Why are we are so selective in how we show animals our love?

    The ethics of pet food

    Why are we are so selective in how we show animals our love?
    11 best bedside tables

    11 best bedside tables

    It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
    No postcode? No vote

    Floating voters

    How living on a houseboat meant I didn't officially 'exist'
    Louis Theroux's affable Englishman routine begins to wear thin

    By Reason of Insanity

    Louis Theroux's affable Englishman routine begins to wear thin
    Power dressing is back – but no shoulderpads!

    Power dressing is back

    But banish all thoughts of Eighties shoulderpads
    Spanish stone-age cave paintings 'under threat' after being re-opened to the public

    Spanish stone-age cave paintings in Altamira 'under threat'

    Caves were re-opened to the public
    'I was the bookies’ favourite to be first to leave the Cabinet'

    Vince Cable interview

    'I was the bookies’ favourite to be first to leave the Cabinet'
    Election 2015: How many of the Government's coalition agreement promises have been kept?

    Promises, promises

    But how many coalition agreement pledges have been kept?
    The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

    The death of a Gaza fisherman

    He built his own reef, and was fatally shot there by an Israeli gunboat
    Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

    Saudi airstrikes are fuelling the Gulf's fire

    Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
    Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

    The only direction Zayn could go

    We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
    Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

    Spells like teen spirit

    A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
    Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

    If fashion is a cycle, this young man knows just how to ride it

    British designer Jonathan Anderson is putting his stamp on venerable house Loewe