Motor insurance "extortion" says Lancs MP Jack Straw

Jack Straw

The cost of car car insurance premiums is reaching "extortionate" proportions, and drivers in Northwest England are among the hardest hit, the House of Commons has heard.

Former Home Secretary and Blackburn MP Jack Straw told a select committee hearing that "perfectly law-abiding people" in region are being penalised through excessive premiums.

Labour MP mr Straw told the House of Commons Transport Committee that some involved in the pro-active claims businesses were "parasites" who were engaged in "bribery".

He recounted the canvassing calls that householders receive and told MPs that only hours earlier he had been contacted by phone and asked if he had had recently been involved in a road accident.

Committee chairman, Louise Ellman said that she too had been contacted by telephone that very monring and also asked about road accidents.

Labour MP for Liverpool Riverside, Mrs Elman said:"I don't know how they got hold of my ex-directory phone number."

Mr Straw added: "Claims management companies are parasitic.

"In any other walk of life, we would describe this racket by referral companies as bribery. These practices are leading to very substantial cost increases for law-abiding motorists."

Mrs Ellman said premiums, had risen sharply for a number of years but now appeared to be levelling out.

Paul Evans, Chief Executive of insurance company AXA UK, said it was more the case that the growth increase had slowed to about a 1-2% rise a month.

He said the costs could be directly associated with the increased level of claims made from certain areas of the county, including the North West.

Mr Evans said:"We shall continue to see continuing increases in the months to come.

Justice Minister Jonathan Djanogly told the committee the Government had decided to have referral fees banned as this was "an appropriate" thing to do and had been "generally welcomed".

Endorsing a remark by Mrs Ellman, Mr Djanogly said "a merry-go-round" was an apt description of the motor claims system.

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