Former Justice Secretary Jack Straw wants referral fees banned.
Straw, speaking in The Times today, called the fees a "racket", blaming them for the rising cost of motor insurance.
Straw says that too many insurers refer their clients to personal injury lawyers without permission.
The Labour MP for Blackburn has been investigating complaints made by his constituens.
Straw has called on the government to implement recommendations made last year by Lord Justice Jackson, who said such referral fees should be banned.
"It's become a huge racket," said Straw. "The insurance companies are complicit in this. They should and could have said this is outrageous."
Insurers receive between £200 and £1000 for each referral. The cost of personal injury claims has doubled from £7bn to £14bn in the last 10 years.
The ABI's director of general Insurance and health, Nick Starling, told the BBC: "We are pleased that Jack Straw has joined our call for referral fees to be banned.
"It is not right that people take cash for tipping off lawyers about accidents which fuel personal injury claims, driving up costs for all motorists.
"They must be banned as part of a whole package of civil litigation costs reform which includes looking at solicitors' fixed fees and hourly rates."
He added: "With whiplash now at epidemic levels in the UK, we support Jack Straw's call to look at how whiplash is treated, how people's personal data is used and how claims management companies are regulated."
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