Leading insurer Axa has said it will no longer accept referral fees from personal injury lawyers.

The firm, which has 10 million customers in the UK, will no longer take the payments when it puts customers in touch with solicitors at the time of an accident.

The issue has once again featured in the headlines this week, with former justice secretary Jack Straw calling for a ban on referral fees and the government pledging to clamp down on the ‘perverse incentive’ to make unjustified claims.

Axa said it was concerned at what it called the ‘unscrupulous practice’ of motorists being encouraged to make claims several years after an accident.

Group chief executive Paul Evans said: ‘Over the last few years we have seen an exponential rise in personal injury claims - especially soft tissue injuries - whilst evidence suggests road accidents are decreasing.

‘We have also seen a significant rise in claims made some years after the event which are therefore impossible to prove or to defend.

‘It is unfair and unsustainable that drivers are being disadvantaged by exaggerated injury claims which drive up the cost of insurance.

'Referral fees have only served to promote an even greater number of injury claims and Axa will stop this practice whilst government implements the necessary legislation to restore order.’

The company has been a vocal supporter of the Jackson reforms of civil litigation costs, which have largely been adopted by the government.

It has called for the reforms to be implemented as quickly as possible.

The Legal Services Board says there is insufficient evidence to justify a general ban on referral fees, but has vowed to make the system more transparent to guard against abuse.