Some car insurance premiums have reached "extortionate" levels, former Home Secretary Jack Straw told MPs.

Mr Straw, the Labour MP for Blackburn, said "perfectly law-abiding people" in the north-west of England were being particularly badly hit by sky-high insurance costs.

He told the House of Commons Transport Committee that some involved in the car insurance business were "parasites" who were engaged in "bribery".

Highlighting the "cold calling" that the public can be subjected to, Mr Straw told MPs that he had been contacted by phone and asked if he had had a road accident recently.

The committee's chairman, Louise Ellman (Labour: Liverpool Riverside) then said that she had been contacted by telephone and also asked about road accidents.

"I don't know how they got hold of my ex-directory phone number," Mrs Ellman said.

Mr Straw said: "Claims management companies are parasitic. In any other walk of life, we would describe this racket by referral companies as bribery.

"These practices are leading to very substantial [insurance] increases on law-abiding motorists."

Paul Evans, chief executive of insurance company AXA UK, said the increases in premiums had slowed to about a 1-2% rise a month.

He went on: "We shall continue to see continuing increases in the months to come."

Mr Straw questioned the validity of some whiplash injury claims, saying that some of these claims showed "the avaricious tendencies of an industry chasing income and damages."

Justice Minister Jonathan Djanogly told the committee the Government had decided to have referral fees banned as this was "an appropriate" thing to do and had been "generally welcomed."

Endorsing a remark by Mrs Ellman, Mr Djanogly said "a merry-go-round" was an apt description of the motor claims system.

He added that referral fees were part of the "sick, suing culture" now prevalent.

Mr Djanogly said that as far as whiplash cases were concerned "there is a growing amount of fraud."