Former UK Justice Secretary, Jack Straw, calls for auto insurance reform

Jack StrawThe call for reform of Britain’s auto insurance industry has gone out once again, this time from former Justice Secretary Jack Straw. The UK, along with several other nations including the U.S. and Germany, has been struggling with soaring auto insurance costs. Consumers have been having a difficult time finding affordable insurance, given the ramping costs.

The nations insurers, on the other hand, have never before had such an influx of new customers thanks to a new law approved earlier this year that requires all citizens to have insurance for their vehicles whether they be in use or not.

At the heart of Straws call for reform is the relationship between insurers and lawyers – specifically personal injury lawyers. When an accident occurs, insurers often refer their clients to personal injury lawyers who, in turn, reward the insurance company with a finder’s fee pending a victory.

“It’s become a huge racket,” says Straw. “The insurance companies should and could have said this is outrageous.”

According to a report from the Transport Select Committee released earlier this year, whiplash is one of the most reported personal injuries related to car accidents in the country. The report also shows that the cost of personal injury claims have more than doubled over the past ten years. Auto insurance rates have risen by 30% in the last year as well.

Straw is calling upon the government to impose a ban on referral fees and payouts that insurance companies enjoy thanks to their close relationship with lawyers. Surprisingly, many of the insurers that comprise the Association of British Insurers have thrown their support behind Straw, saying that these practices are unlawful.

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