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Page last updated at 07:49 GMT, Tuesday, 28 June 2011 08:49 UK

'Symptoms of a rotten suing culture'

Former justice secretary Jack Straw warned yesterday that insurance premiums were being pushed up by an opaque trade in the personal data of those who have had accidents.

As reporter Andrew Hosken explained, a road traffic accident has become a commodity, traded between insurers, legal injury specialists and middle men, possibly worth some £3bn per year.

After an accident, he said, insurers pass on clients to accident managers who pipe the claim to an approved body shop and sell on personal injury claims to accident lawyers, often persuading them to take legal action the claimant had not considered.

With profitable referral fees flowing, as little as 24% of a claim could be going on repairs, he reported.

Justice minister Jonathan Djanogly said that "there is a very serious problem" with the current insurance system, which he was seeking to address.

Referral fee profiteering, ambulance chasing and the restrictive fear of legal action are "symptoms of a rotten suing culture", he added, and not the cause of the problems.

"They are funded by an excess of money swilling around the system. Banning anything is not necessarily going to solve the problem."

"The way the system works at the moment gives a perverse incentive for people to ramp up their claims.

"We have to reverse the mechanics of the system."

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