ROCKETING car insurance premiums in East Lancashire are caused by the amount of personal injury firms in the area, an investigation by Jack Straw has found.

According to the Blackburn MP, the area’s roads and cars are safer than ever and there is less vehicle crime.

He said crash for cash scams – previously blamed for a steep rise in premiums in East Lancashire of around 30 per cent this year – were only ‘part of the problem’.

Mr Straw has been investigating the situation since the Lancashire Telegraph revealed the rising costs for residents across the area.

At the time experts blamed it on gangs staging crashes to make insurance claims, with roundabouts off the M65 at junctions 5, Haslingden, 10, Gannow Top, Burnley, and 13, Nelson, being among the country’s hotspots.

But Mr Straw said his research had revealed the motor insurance industry’s ‘dirty secret’ — that insurance companies themselves sell on clients’ details to personal injury firms for between £200 and £1,000 a time.

The North West has a ‘particularly high concentration of claims companies’ who ring and text people saying they could earn thousands of pounds by claiming whiplash and other injuries suffered in a crash.

This practice has driven up premiums for East Lancashire motorists to an average of £1,700 for a 25-year-old and £800 for a 50-year-old, Mr Straw said.

He added: “Motor insurers themselves are among the major traders in personal information about those involved in accidents, in return for which they receive referral fees.

"This information is then used as a platform for claims against the self-same insurance companies.”

The MP has branded the impact on people of a BB1 postcode covering East Lancashire as ‘unfair and discriminatory’ and has called for an overhaul of the system.

He is proposing outlawing referral fees and an overhaul of the no-win-no-fee system, as well as changing the law on whiplash damages to require a stricter burden of proof.

Mr Straw also wants a clampdown on the trade in personal data and tighter regulations of claims companies.

Mr Straw added: “This is not a system. It’s a racket.

"The quicker it’s ended, the better it will be for the law abiding motorist.”

Nick Starling, a director general for insurance at the Association of British Insurers, welcomed Mr Straw’s call for referall fees to be banned.

He said: “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.”

Click on the link below to read Jack Straw's column on car insurance.