Claimant law firm Russell, Jones and Walker has launched a scathing attack on Norwich Union (NU) over its proposals to raise motor rates.
This week NU announced it will increase motor rates by an average of 16% (see page 2) blaming rising personal injury costs for the move.
But Russell, Jones and Walker managing partner, Neil Kinsella, said this was a "knee-jerk reaction" caused by the fact that NU, he claimed, had failed to engage with the government's moves to reform the compensation system.
Kinsella called on NU, Britain's largest motor insurer, to be more transparent in how it makes money from personal injury claims.
"Are NU extensively involved in encouraging claims capturing and therefore benefiting from the system it now criticises?" he told Insurance Times.
"They dare not explore legitimate alternatives for fear of being found out about how huge revenue streams are derived from fees gained from selling cases to solicitors to sue other insurers."
NU hit back at the accusations and said it had seen significant increases in the amount it was paying in legal fees on personal injury claims in the last six years.
A spokesman said: "In 1999, 25% of the money spent was for personal injury claims. In 2005 this had risen to 45% - of that figure 35% goes on legal fees."
Dominic Clayden, NU technical claims director, said the insurer was looking across the market at "offerings for tactical means" of changing how it handles personal injury claims.
Clayden said: "We are working at a system level with government, increasing the number of claims we handle without lawyers, and looking at our claims process.
"We would like to see lawyers removed from all claims below £5,000, and would be delighted if Russell, Jones & Walker supported that move."
