THE government is being asked to look again at a change of rules which could add £75 to the average car insurance premium.

Pendle Conservative MP Andrew Stephenson has joined industry experts in expressing concern at a new formula for calculating compensation payments for those who suffer long-term injuries.

He and Rossendale and Darwen MP Jake Berry fears it could further penalise East Lancashire motorists, already facing some of the highest premiums in the country.

Mr Stephenson said any further hike could undo some of progress the government had made in combatting bogus whiplash claims after a long-campaign on the issue by former Blackburn MP Jack Straw.

The Ministry of Justice said it had no choice under the current law but to bring in the new rules from Monday, March 20, and said it would consult on possible changes.

The Association of British Insurers (ABI) called the decision 'crazy'.

Accident victims are paid compensation in a single lump sum, which in serious cases is supposed to support them for life.

Anyone who receives a lump sum can increase the amount by investing it, so to be fair to insurance companies the payout is reduced accordingly.

For the past 16 years this ‘discount rate’ has been set at 2.5 per cent, making the payout smaller.

Now the Ministry of Justice has decided to reduce the discount rate to minus 0.75 per cent reflecting low interest rates.

That will result in more money for the victim but a higher cost for the insurer.

Mr Stephenson said: “I am concerned at the potential impact of this technical rule change on motor insurance costs for drivers in Pendle and across East Lancashire.

“We all want to see accident victims fairly compensated for their injuries but do not want to see motorists unfairly penalised.

“I shall be asking the government to look closely at this issue to see what legal changes can be made to ensure the system is fair to all concerned.

“This could have a particular impact on motor insurance premiums in East Lancashire which have been historically high in the BB postcode.

“Following a long-campaign by Jack Straw, the government has made significant progress in tackling the bogus whiplash claims which have inflated premiums in East Lancashire.

“I am concerned that this technical change could undo some of that work.”

In 2010 the BB postcode, covering Blackburn, Burnley, Rossendale, Accrington, Pendle and the Ribble Valley, was identified as one of the most expensive in the country for premiums.

Mr Berry said: “I share Andrew’s concerns and will support his representations to government.

“We want the system to be fair to the victims but not penalise East Lancashire drivers who already pay some of the highest premiums in the country.”

The change could cost drivers under 22 £1,000 a year.