A report by the Treasury Select Committee has accused insurers of "encouraging" drivers to make injury claims.
The report says insurers receive referral fees from lawyers if they pass on the names of people involved in crashes and these people can be persuaded to make a claim. The report was commissioned in an attempt to look into the rising cost of car insurance.
The Treasury Select Committee has also called for a specialist police department to be established – funded by insurers – to tackle fraudulent claims after lambasting the industry for not doing enough to prevent fake and staged accident claims.
But the Association of British Insurers, which represents motor insurers, has dismissed the accusations. It claims it wants commission fees banned and says they are a "symptom of a dysfunctional compensation system, not the cause of it." It cited claims management firms as the main cause.
"This report is a missed opportunity. The Committee took a great deal of evidence, and has chosen to ignore much of it," says Nick Starling, director of general insurance and health at the ABI. "The Committee has failed to recognise that the main cause of the recent increases in motor insurance premiums is ever-increasing personal injury claims and spiralling legal costs. These are often driven by claims management firms."
The ABI also claims it is working to combat insurance fraud and already funds the Insurance Fraud Bureau.