MPs are calling upon the government to cut car insurance premiums by clamping down on personal injury claims.
The House of Commons Transport Select Committee also called on the government to make it tougher for whiplash victims to claim compensation on Thursday - in an attempt to reduce car insurance premiums.
The Automobile Association (AA) calculated that the average of the lowest three quotes from 90 providers for comprehensive cover increased by just under 40% last year. In addition, the AA reports the number of car insurance claims shot up by 28% during the first five days of this year.
The Commons report claims that around 70% of motor insurance personal injury claims arise from whiplash injuries.
Quoted premiums for younger drivers continued to rise. The Young Marmalade Survey carried out last October found that just over 20% of young drivers aged 18-25 have considered driving without insurance because of the high cost of premiums.
The report said: "We are not convinced that a diagnosis unsupported by any further evidence of injury should be sufficient for a claim to be settled. In our view, the bar to receiving compensation in whiplash cases should be raised".
Nick Starling, Director of General Insurance at the ABI, said: "It is absolutely critical that Britain’s whiplash epidemic is tackled once and for all and the Select Committee’s acknowledgment that the bar to receiving compensation for whiplash is too low is a step in the right direction".
Former Labour cabinet minister Jack Straw, when introducing his Motor Insurance Regulation Bill last September, described whiplash as “not so much an injury, more a profitable invention of the human imagination undiagnosable except by third-rate doctors in the pay of the claims management companies or personal injury lawyers”.
MPs also called on the government to crack down on car-insurance cold-calling. The report said: "We also call on the Government to initiate an investigation of cold calling intended to generate personal injury claims, with a view to examining the legal and regulatory options for curtailing this activity."
The Committee also criticised the industry's "referral fees" practice . Referral fees are incurred when personal injury details are sold on by insurance companies to lawyers. Hundreds of pounds are sometimes paid out as lawyers can claim the cost of referral fees back from the defendant or their insurance company if they are successful.
The Committee said: "We are disappointed that the Government has not given a stronger signal that more transparency is necessary. We recommend that this is done."
Starling said that the government should ban referral fees outright. He said: “We are baffled though that the Transport Select Committee has again called for the transparency of referral fee arrangements of insurers. Referral fees should be banned altogether and not made more transparent - and that ban should apply to all organisations receiving them, not just insurers."
The report said called upon the government "to initiate an investigation of cold calling intended to generate personal injury claims, with a view to examining the legal and regulatory options for curtailing this activity.”