Motor insurance companies are encouraging fake whiplash claims by not subjecting claimants to proper medical checks, the chair of a transport committee has warned.
Louise Ellman MP told Good Morning Britain that industry leaders "have to act more responsibly and not just pay out without an examination".
MPs have called for whiplash payouts to be banned unless victims' claims have been checked independently.
Failures in the "dysfunctional" car insurance market have "encouraged criminality" in some areas, according to the head of a parliamentary transport committee.
Louise Ellman, Labour MP for Liverpool Riverside, said: "This is our fourth report on the cost of motor insurance and while premiums are now falling, aspects of the market remain dysfunctional and have encouraged criminality to take root.
She said further action was needed to tackle fraud which the report said is pushing up insurance prices for motorists.
Motor insurance is a "highly dysfunctional market" which has seen a drive for profits push up prices for consumers, a critical report from MPs has said.
They warned that "new forms of potentially dishonest practice" were emerging, including a new trend for ordering extra medical reports claiming psychological harm from road accidents.
A report called for more work to root out fraudulent claims, including a compulsory scheme to share data between insurers and solicitors.
It also said that lawyers should be banned for offering freebies such as cash or tablet computers to people considering making claims for car accidents.
Car insurers could be banned from paying compensation to whiplash claimants who have not undergone medical tests to check whether their injuries are genuine, a new report from MPs has said.
They said that insurers are too willing to pay compensation even when they suspect claims are fraudulent, said a report from the Transport Committee.
The committee said steps were being taken to prohibit insurers from offering to settle whiplash claims before the claimant had undergone a medical examination.
"We agree and would like to see this practice banned altogether," they said.
The National Crime Agency is warning people they have two weeks to save their computers from a powerful malicious software attack. The malware called GOZeuS is hiding within attachments in emails and, once downloaded, enables hackers to access computers and scan them for valuable information.
If no data is found, a second malware, known as CryptoLocker, locks the computer, displays a window with a countdown, and demands a ransom to grant access again.
According to the NCA, people are asked to pay 1 Bitcoin (£200 - £300) to regain access to their files.
The NCA is advising people to make sure security software is installed and updated, by running scans and checking that computer operating systems and applications are up to date.
Most of the public see insurance fraud as wrong as "stealing towels from a hotel room," an industry chief told Good Morning Britain.
Simon Douglas, director of AA Insurance said there had been an increase in people phoning the industry cheat line to report fraudulent claims.
"They think it may be a victimless crime, but in fact it is not. Just motor insurance fraud alone is probably costing £50 on everybody's premium."
It has "never" been harder to get away with committing insurance fraud, according to an industry watchdog, who warned penalties were now "severe".
Aidan Kerr, the ABI's assistant director, head of fraud, said:
The message is clear: never has it been harder to get away with committing insurance fraud; never have the penalties - ranging from a custodial sentence and a criminal record to difficulties in obtaining financial products in the future - been so severe.
Sixty people, including seven members of the same family, were convicted for their role in a series of staged accidents which involved over £514,000 of fraudulent insurance claims, an industry watchdog said.
The ABI estimated a total £1.3bn in insurance fraud was committed last year. Some of the wackiest fake claims also included:
- A professional golfer who claimed £8,000 on his income protection policy for a knee injury that he said left him unable to work, but was caught on camera giving golf lessons. He was ordered to do 140 hours unpaid community work.
- A woman was jailed for 22 months following a series of invented street robberies for items including laptops and designer clothes.
- A vet was jailed for two years for inventing veterinary claims totalling nearly £200,000 for treating non-existent pets.
The combined cost of fraudulent insurance claims reached a record £1.3 billion last year, according to an industry watchdog.
Data released by the Association of British Insurers (ABI) said the annual cost of insurance fraud passed on to the customer was around £90 per head.
The body said there has also been a "significant" increase in people phoning up to report suspected fraudsters, indicating a growing acknowledgement that this is not a "victimless" crime.
Fraudulent motor insurance claims were the most expensive and common to be exposed, with 59,900 dishonest claims worth £811 million detected last year.
Victims targeted by fraudsters lose "much more" than money, and that is why sentencing needs to be tougher, a high ranking Judge has said.
Sentencing Council chairman Lord Justice Treacy explained:
Fraudsters are in it to make money, but for their victims it can mean much more than losing money.
Our research with victims showed the great impact it can have on them, so the guideline puts this impact at the centre of considerations of what sentence the offender should get.