Former Justice Secretary Jack Straw clashed with former Labour MP Andrew Dismore, during a committee hearing on the cost of motor insurance on 11 October 2011.
The Transport Committee's inquiry comes following a government proposal to ban the use of referral fees.
Mr Straw said that insurers were getting paid for referring clients' details to personal injury lawyers without permission, leading to higher premiums despite increased safety levels on the roads.
He described the so-called Claims Management Companies and personal injury lawyers as "parasites" that were leading to higher costs for car owners.
The hearing comes following an announcement by the Office of Fair Trading (OFT) that it will look into reports of rising insurance premiums.
In April, the AA said that the cost of car insurance was rising at the fastest rate on record, and had gone up by 40% in 12 months.
The government has said it will target what it sees as a "compensation culture".
However Mr Dismore, who represents the Access to Justice Action Group, which campaigns for improved access to the legal system for people on low incomes, denied that such a thing existed.
He said the government should be targeting practices such as cold calling by insurance companies, rather than referral fees themselves.
The committee also heard from Transport Minister Mike Penning, and Justice Minister Jonathan Djanogly.
Mr Djanogly, who is spearheading the reform proposals, said that referral fees were a "symptom of a sick suing culture".
He confirmed that a ban on referral fees could be included in a proposed Legal Aid Bill.