Cheap motoring news
06/07/2011
Car insurance companies are fuelling fraud
Cheap car insurance companies are selling information about their customers to personal injury lawyers for anywhere between £200 and £1,000, according to ex-justice secretary Jack Straw.
The MP claimed that staged accident scams, previously cited as the main cause of car insurance price hikes, are only part of the problem.
He stated, "Motor insurers themselves are amongst the major traders in personal information about those involved in accidents, in return for which they receive referral fees.
"This information is then used as a platform for claims against the self-same insurance firms."
Mr Straw has suggested banning referral fees, as well as major regulation of the no win, no fee system. He is also keen to see the alteration of legislation on whiplash damages, so that a greater burden of proof is needed before cases are successful.
A lead member of the Association of British Insurers (ABI) has said that he shares Jack Straw's opinion that referral fees should be outlawed.
However, the Legal Services Board, which conducted a lengthy review of referral fees, claimed that the ideal solution would be to increase "transparency obligations, rather than seeking a simple ban on the arrangements".
In related news, accountancy firm Mazaars recently said that novice motorists might experience difficulty finding cheap car insurance, as price rises of over 50% are expected in the years ahead.