Motor insurers should publish on their websites the names of law firms with which they have referral fee arrangements, and indicate the level of fees paid, a House of Commons inquiry recommended last week.

Policyholders should be sent this information with their insurance documents, and when claims are made, insurers should make it clear to claimants that they can choose their own solicitor, the transport committee concluded in its inquiry into the rising costs of motor insurance.

The committee has asked the insurance industry to implement a more transparent regime on referral fees by the end of 2012, and called on the government to step in with legislation if it fails to do so.

The committee recommended that the Department for Transport should sponsor a research project on reducing the number of personal injury claims relating to motor insurance, drawing on experiences in other jurisdictions, with the aim of publishing a discussion paper in 2012.

Transport committee chair Louise Ellman said: ‘Consumers are largely unaware of how much money moves around the insurance industry in this way when they make a claim. They deserve to see where their money is going.

‘Wider access to justice is to be welcomed, but it has come at a significant cost, with far more personal injury claims being made than in the past.’

Premiums are rising rapidly because there are an increasing number of personal injury claims, despite the trend of fewer casualties from road accidents, the committee said. It called on the insurance industry to fund a dedicated police unit on insurance fraud, and to do more to tackle fraud generally.