MPs on the Transport Select Committee have accused the motor insurance industry of encouraging fraud and exaggeration in accident claims. The criticism was highlighted in a recent report on how the cost of car insurance is inflated by whiplash claims. The report said “Insurers must immediately put their house in order, and put an end to practices which encourage fraud and exaggeration.” The committee believes that the industry was guilty of accepting claims without proper scrutiny.MPs were also concerned about the ‘transparency’ between insurers and other third parties such as claims management companies. The relationship was referred to ‘as opaque as ever’; therefore it was not possible to verify a claim by the Ministry of Justice that the UK was “the whiplash capital of the world”. Figures suggest that there were 477,000 whiplash claims in 2012/13, which is less than 2010/11, when there were 567,000 claims.The fall in claims has helped with the cost of car insurance, which has fallen by 34% in the last year. As of April 2013, the average premium was £746, which is down from April 2012 when it was £1,132. However, the Association of British Insurers (ABI) accepted that more needed to be done to reduce fraudulent claims, and in doing so to reduce premiums. James Dalton of the ABI said “Whiplash now costs UK motorists over £2bn a year, adding £90 to the average premium.”MPs are now asking for insurance companies to provide clearer data on how many whiplash claims are fraudulent, and how many are exaggerated. They have also suggested that all medical practitioners, who file reports on accidents, should be a part of an accredited scheme so that their reports can be subjected to routine audits.The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.Setfords Solicitors are a national full service law firm, with personal injury solicitors in Leeds and across the country.