Insurers should pay for a specialist police unit dedicated to fighting fraudulent car claims, an influential group of MPs will argue today.
In a report into the surging cost of motor insurance, the Transport Select Committee will say that an industry-funded police team would help to combat the rise in so-called “crash for cash” and whiplash scams.
The committee, which has been investigating the car market since October, will also call for greater clarity regarding “referral” payments. These charges, increasingly common in the motor market, include fees charged by “accident management” companies to pass on potential personal injury claims to lawyers.
Law firms can also levy a fee if they are referred to a customer by rescue drivers, vehicle repairers, credit hire companies or medical experts.
This opaque “merry-go-round” of levies is ultimately met by insurers and has been instrumental in fuelling a dramatic rise in premiums over the past 12 months, the MPs argue.
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Louise Ellman, the Labour chairwoman of the committee, told The Times: “Transparency is a first step. If that doesn’t work, then the Government should step in with legislation.”
Ms Ellman said that the committee was not opposed to outlawing referral fees, as had been recommended by the Association of British Insurers.
She said that the idea of the police unit had been suggested by the Association of Chief Police Officers. Police chiefs said that there were fewer than 6,000 specialist road police in charge of dealing with problems across the transport sector. “Our proposal is that the insurance companies would pay,” Ms Ellman said.
According to the AA, premiums for car cover last year rose at the fastest rate since it began compiling records 16 years ago. The average cost of comprehensive cover rose by 39.3 per cent to £791.82, it said.
Fraudulent claims are also rising sharply. About 122,000 fake insurance claims worth £840 million were uncovered in 2009, according to the ABI. Of those, false motor claims represented £410 million.
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The ABI was sharply critical of the report, arguing it was “a missed opportunity” to ban referral fees altogether. It also criticised the idea of a police unit, arguing that insurers funded the Insurance Fraud Bureau, a group that worked with the police to investigate organised car insurance crime.