Jack Straw criticises personal injury claim "racket"
Former Cabinet Minister, Jack Straw, has called for reforms to the car insurance industry, describing the increased cost of car insurance premiums as “a huge racket.”
Referring to the process of insurers being paid for referring clients’ details to personal injury lawyers without permission, Mr Straw told the Today programme on Radio 4 that: "The insurance companies are complicit in this. They should and could have said this is outrageous."
Mr Straw has put his support behind a report published last year by Lord Justice Jackson in which he recommended that referral fees should be banned.
Mr Straw went on to say that top executives from two of the UK’s largest insurers had admitted that the situation with referral fees was the industry’s “dirty secret.” The source is reported to have told Mr Straw that garages, recovery firms and even the police were involved in selling on this information.
A report from the Transport Select Committee earlier this year showed how companies receive referral fees for selling the names of people involved in car crashes to legal firms who deal in personal injury claims.
Mr Straw expressed surprise that with road accidents actually falling since the mid 1990’s, safer roads, less thefts from vehicles and improvements in car safety and security, the number of personal injury claims has risen and the cost of them has doubled from £7 billion to £14 billion in the last ten years.
The Association of British Insurers' Director General Insurance and Health, Nick Starling, said: "We are pleased that Jack Straw has joined our call for referral fees to be banned.
"It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists.”
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