Fraud, including "staged accidents", is driving up the cost of motor insurance, according to a report by MPs.
The insurance industry should fund a dedicated police unit to stamp out false car insurance claims, says the House of Commons Transport Committee.
The committee also urges the Government to make the driving test more rigorous to help bring down the "appalling" casualty rate among young drivers.
And the MPs also say that the insurance industry should take steps to make more transparent the habit of insurance claim "referral" payments involving such organisations as rescue truck drivers, vehicle repairers, credit hire firms and medical experts.
In evidence to the committee, the AA reported that average premiums quoted to motorists for comprehensive cover increased by 29.9% in the year to October 2010.
Launching the report, the committee's chairman Louise Ellman says: "Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.
"The police made plain to the committee that 'staged accidents' are on the increase and that, so far, we have been lucky there have been no fatalities resulting from such incidents.
"That luck may run out unless the insurance industry acts rapidly to help the police target this kind of insurance fraud."
She adds: "If insurance companies cannot agree a method by which to improve transparency around referral fees, then the Government should step in, with legislation if necessary."
Driving tests to become more rigorous
On young drivers and the driving test, Ellman says: "If we are to curb the casualty rate, especially among young drivers, then it's essential that the driving test properly prepares drivers for motoring."
She welcomes the Government's commitment to making the driving test more rigorous but adds: "Proposals for change have been around for years.
"What matters now is that the Government publishes for consultation the changes it wants to make, with a timetable for implementing them before the next election."
The MPs also call for a clear timetable to be set for new data-sharing arrangements between the Driver and Vehicle Licensing Agency and motor insurers.
Road safety minister Mike Penning says: "We know how important it is that the driving test properly prepares people for life on the roads.
"That is why we have already added a new independent driving element to the test, allowing candidates to demonstrate their ability to drive safely in more realistic situations, and have stopped publishing driving test routes.
"We are also considering how post-test training could help improve the skills and knowledge of young drivers and will publish our plans shortly."
Looking to future change
AA Insurance director Simon Douglas says: "At a time when the cost of motoring is soaring, with the cost of unleaded petrol passing the £6 per gallon mark, drivers are looking to the insurance industry to work with the Government to control spiralling claims costs that ultimately fuel premium inflation.
"For many, especially the young, the cost of insurance is simply becoming unsustainable. If the main recommendations of the committee are implemented I would expect premium increases to come under better control.
"However, there remains an enormous amount of work to do, particularly in helping young people to start driving safely and responsibly."
Nick Starling, director of general insurance and health at the Association of British Insurers, says: "The committee has failed to recognise that the main cause of the recent increases in motor insurance premiums is ever-increasing personal injury claims and spiralling legal costs.
"These are often driven by claims management firms."
Detective Chief Inspector Mark Hooper, head of the Association of Chief Police Officers (Acpo) vehicle crime intelligence service, says: "We've long been aware of the increasing issue of insurance fraud and have been working to combat this since the unit's inception."
Acpo believes that about 30,000 "crash for cash" scams took place in 2009 and the practice of motorists staging collisions to generate a false claim is on the rise.
Hooper adds: "This is a highly lucrative business for organised criminals. We are very keen to speak with the insurance industry to improve the investigation of motor insurance fraud, and to work closely with insurers in the development of the best practices to drive down the number of fraud cases."
Further reading/Key links