How 'ambulance chasing' lawyers push up your car insurance bills

The rises are blamed on bigger medical bills, the impact of young and uninsured drivers - and a big increase in the legal costs paid to accident lawyers, nicknamed ambulance chasers.

Young male drivers aged 17 to 21 are ten times more likely to be involved in a crash than a motorist over the age of 30 and are now struggling to get insured at all.

Because safer cars mean more drivers and passengers survive crashes - though often with horrific injuries - medical costs have risen.

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The combination has helped drive up the premium of an average policyholder from £594 to £629 over the 12 months to January, according to research by the AA's British Insurance Premium Index.

That is a rise of 5.9 per cent - far in excess of the inflation rate of 2.1 per cent, according to the Government's chosen

measure, the Consumer Prices Index. It amounts to £70 in 12 months.

However, even modestly higher-risk drivers paying anything from £1,000 to £2,200 a year in premiums will see their bills rise by hundreds of pounds.

The insurance industry predicts worse to come with annual rises of up to 15 per cent a year. Many firms blame much of

this on the compensation culture.

The industry says the cost of injury claims is increasing at 10 per cent a year, fuelled largely by lawyers from accident claim companies and wrangles which can take up to two years to sort out.

Association of British Insurers spokesman Malcolm Tarling said: 'The average personal injury claim takes far too long to settle. We want to speed up payment of these claims to under six months.

'Too often lawyers are involved when there is no need. We are pushing the Government to introduce a more streamlined procedure for dealing with the smaller, simpler personal injury claims of under £25,000. We want a radical shake up.' A further

pressure on premiums is the rising cost of repairs, running at 5 per cent a year because of the increasingly sophisticated nature of car parts.

Though premiums are predicted to soar by 15 per cent, the insurance companies claim the figure would be nearer 50 per cent were it not for intense competition for customers. They say that not all the rising costs are passed on the motorist.

The ABI says that for every £1 insurers pay to compensate claims an additional 43p is paid in legal costs. It says this is 'excessive' and means that 10 per cent of every motor premium is swallowed up in legal costs.

The total gross premium income for the motor insurance market is around £8.4billion - so a whopping £840million is finding its way into lawyers' pockets.

John Close, insurance director at the AA British Insurance Premium Index said premiums had doubled since 1994.

'The main factor is personal injury claims,' he said, adding that greater safety features, such as bigger crumple zones and more air bags meant cars cost more to fix.

'The irony of this is that you are much less likely to be killed in an accident - and therefore more likely to make a personal injury claim.'

•A 17-year-old female driver could have to pay as much as £2,359 to drive a Ford Fiesta - if she can find a firm to insure her.

A Daily Mail investigation found that the cheapest quote was still £1,000-plus.

The AA estimates that about half of insurers have stopped quoting for drivers under 21 while less than a quarter will quote for 17-year-olds.

Some firms, however, target young drivers and their parents.

Being older is no guarantee of a cheap price. A 32-yearold office manager driving a Land Rover Discovery could pay more than £1,100, despite having a three-year noclaims bonus.

Taking into account risk factors, such as location, car, driving record and lifestyle factors such as occupation, the cheapest quote was £632.

Rising premiums will wipe out of the gains achieved by drivers who have a no-claims discount. Those with a full bonus could typically expect a 64 per cent discount on the full cost of cover.