Labour backbencher and former cabinet minister Jack Straw has called on the coalition to dismantle the "lucrative and self-serving merry-go-round" of personal injury claims made after car accidents.
Introducing a bid to ban referral fees in personal injury claims on 13 September 2011, Mr Straw said there had been a 40% increase in average car insurance premiums.
Yet there had been no corresponding rise in the number of accidents on the roads, Mr Straw alleged.
Instead he blamed the creation of a "claims industry" in which the personal information of people injured in traffic accidents "is traded like a commodity" between claims management companies, personal injury lawyers, credit hire companies and vehicle recovery firms.
Mr Straw added: "Some police and NHS employees have been unlawfully engaged in this trade. Some police authorities have officially been charging recovery firms to pass on information about drivers and vehicles involved in accidents - one made over £1.3m in two years.
Mr Straw welcomed the government's announcement that it would push ahead with one of the proposals in his bill - the banning of referral fees.
But he urged ministers to also agree with the bill's other provisions, which would ensure that compensation payments in whiplash cases would only be made if there was "clear objective evidence" that a "real injury" had been suffered.
Mr Straw said that, in too many cases, whiplash was "a profitable invention of the human imagination, undiagnosable except by third-rate doctors in the pay of claims management companies or the personal injury lawyers".
The legislation would also deal with "exorbitant profits" in personal injury cases by cutting the flat fee paid by insurers on claims valued below £10,000 from £1,200 to £600, reducing the amount of money claims firms could promise to new customers.
MPs gave the bill an unopposed first reading.