Figures released by The Actuarial Profession have shown that despite an 11% fall in road traffic accidents between 2010 and 2011, personal injury claims have risen by 18%. Personal injury claims from traffic accidents alone are costing the insurance sector approximately £400 million per year.

David Brown, chairman of the Institute and Faculty of Actuaries UK third party motor and PPO claims working parties, which produced the report, said: ‘The increase in costs to insurers because of the rise in bodily injury claims is likely to result in a rise in motor insurance premiums.

‘The clear correlation between claims management companies’ office locations and the ‘hotspots’ for bodily injury claims suggests that the two are interlinked. We expect to see legislation coming soon which will affect the way in which claims management companies do business, which may account for the significant increase seen in 2011 – it is possible this is a last hurrah.

‘In 2010 the worst areas of the UK overtook the worst areas of the US in terms of the proportion of accidents involving bodily injury. It is disappointing to see this trend not only continue, but worsen in all regions with the exception of Scotland.’

The Government has committed to take action over the rocketing cost of vehicle insurance, banning referral fees (money paid by claims management companies to insurance firms for details of crash drivers) and capping legal success fees at 25% of damages awarded in personal injury cases as part of the Jackson reforms which are expected to go through Parliament as part of the Legal Aid, Sentencing and Punishment of Offenders Bill in April next year.

In a separate move, the Office of Fair Trading has decided to refer the motor insurance market to the Competition Commission after it found evidence that insurers compete in a ‘dysfunctional way’ that may push up premiums for drivers by £225m a year.

Much of the concern comes at the way inflated charges are made for third party repairs and credit hire vehicle provision.