A committee of MPs has been told that consumers are set to face higher bills for their car insurance, because the increasing number of no-win-no-fee lawyers has pushed up personal injury claims.

The Transport Select Committee heard from Duncan Anderson of the EMB Consultancy, that premiums have risen by 40% over the last year, with younger drivers being hit even harder.

“If claims continue to rise at the rate that they have been increasing, rates will continue to increase as well,” Duncan Anderson of the EMB Consultancy told MPs.

“Bodily injury claims are increasing at a rate of 30% and other claims types are increasing by five per cent a year. Overall there might be a 15% to 20% natural increase in claims costs if things continue as they are, which will be reflected in ever increasing premiums.”

A number of witnesses, including Ashton West, chief executive of the Motor Insurers Bureau, warned the committee that the level of claims related to motor accidents was far higher in the UK than anywhere else in Europe.

“I think it is because of aggressive marketing on daytime TV. It is creating a view that if you are involved in an accident which is not your fault, you can collect a pot of money,” he said. In the current economic climate, many were tempted to do so.”

“If society wants to be able to claim in every genuine case for ache, pain and sprain, there is a price to be paid for it.”