The Ministry of Justice has said it expects the legal sector to urgently ‘take forward’ recommendations from a review of the factors behind insurance fraud, announcing that it will publish its own action plan ‘in due course’.

Earlier this year the Insurance Fraud Taskforce, a body established by the ministry and HM Treasury but dominated by insurer interests, said more could be done by insurers, solicitors and regulators to bring down fraudulent claims.

Its report identified particular concern about the preponderance and costs of fraud in low-value personal injury claims.

In a written ministerial statement published today, justice minister Lord Faulks said the government accepted each of the recommendations addressed to it ‘and we will set out in due course how we propose to implement them’.

He added that the government was ‘pleased’ that the report’s recommendations ‘reflect and support’ its programme of reforms in relation to low-value personal injury claims.

Earlier this month, Faulks told personal injury lawyers that the ministry intends to press ahead with proposals to scrap general damages for whiplash claims and raise the small claims limit to £5,000 for all personal injury claims.

However, the justice minister said today that a ‘concerted effort’ was needed by all those involved in the insurance process to tackle the ‘serious’ problem of fraud, which he said was estimated to cost policyholders up to £50 each per year and the country more than £3bn.

Faulks said: ‘We therefore expect that all those organisations to which recommendations are addressed will take them forward with urgency.

‘The government will do what it can to assist and, in order to make sure that all of the recommendations are actively pursued, we will seek an update on progress later in the year.’

The Solicitors Regulation Authority welcomed the government's announcement that it was accepting the taskforce's recommendations.

SRA chief executive Paul Philip said: 'In particular, I'm pleased that the government supports the call to look at the Solicitors Disciplinary Tribunal adopting the civil standard of proof. We agree that is the right way forward. Alongside that, reviewing our fining powers would make the system more efficient and effective.'

Philip said the regulator had made 'some good progress' on tackling financial crime. 'But we know we have more to do and are taking steps to act on the taskforce's report. As part of that, we are already working with the Insurance Fraud Bureau to bolster efforts to improve evidence-sharing,' he added.

The Law Society said the taskforce's recommendations would help to bring down the overall cost of insurance premiums but it believed more could be done.

Chief executive Catherine Dixon said steps should be taken to stop the inappropriate use of pre-medical offers which mean that the value of claims cannot be properly assessed against 'robust' medical evidence.

The practice of contacting those involved in an accident and offering money to settle a claim before any evidence of injury is produced, and in some cases before independent legal advice has been obtained, should also be stopped.

Dixon added: 'Determining the scale and cost of fraud within the motor insurance industry is no easy task but it needs to be tackled by both claimants and defendants working ever more closely together and both taking responsibility for stamping out fraud.

'A starting point would be to have a clear definition of what constitutes a fraudulent claim so that the levels can be measured and targets set to reduce the cost of fraud. In particular, the scale of fraudulent behaviour in obtaining a quote and securing a new motor insurance policy is unclear. Likewise, we do not know the cost of fraud to the consumer through higher motor insurance premiums.'

Andrew Twambley, spokesperson for A2J, which is campaigning against the government’s personal injury reforms, questioned Faulks' £3bn estimate, saying there was ‘no reliable figure’ to assess the cost of insurance fraud.

Twambley said: ‘The government has accepted figures from the Association of British Insurers, which are nothing more than guesswork. A2J strongly supports efforts to crack down on fraud, to bring down the cost of insurance, but the best way to do so would be for insurers to share their data, and more importantly prosecute suspected fraudsters in the courts.’