The AA says claims for whiplash injury contributed to the biggest car insurance premium increases ever recorded. Ken Clarke said Government plans will aim to make it "easier for valid injury claims to be dealt with through the small claims court".
The head of the Association of British Insurers Otto Thoresen said that insurers face "unecessary costs" of between £1.5 billion and £2 billion.
He was speaking ahead of the Government's announcement of measures to tackle false insurance claims for whiplash.
"Insurers are doing everything possible to ensure motorists get the best possible insurance deal," he said. He called on the Government to "tackle the whiplash claims epidemic and excessive legal costs that riddle our compensation system."
Simon Douglas, director of AA Insurance, has said he hopes the Government will announce robust measures today to tackle the steepest rise in insurance premiums ever recorded. He said:
I hope that today's Government announcement will see a tight timescale applied to reform of the civil litigation which at present, encourages people to make a claim regardless of how serious their injury is or even if they have not suffered injury at all. Importantly, we need reforms that clamp down on cold-call claims management and personal injury firms who have contributed to the growth of claims. The present dysfunctional system has also spawned a fraudulent multi-million-pound 'cash for crash' industry.
Jonathan Djanogly, the Under-Secretary of State for Justice, has said that the number of whiplash claims is unrealistically high and that standards of evidence need to be toughened up.
Speaking on BBC Radio 4's Today programme, he said that whiplash hardly exists as an insurance claim in other countries, and while neck injuries are possible from road accidents the standards of diagnosis are too low.
Justice Secretary Kenneth Clarke said the Government's plans will aim to tackle questionable medical evidence and make it "quicker, cheaper and easier for valid injury claims to be dealt with through the small claims court".
Proposals, to be outlined in a consultation document this summer, will include consulting on the feasibility of introducing independent medical panels.
The independent medical experts, who would have no direct links to either claimants or defendants, would replace the current assessment of whiplash injuries by either GPs or doctors employed by medical reporting organisations.