The Insurance Council has changed its views on the use of cellphones in cars following new evidence that 17 people have died in phone-related accidents in the past seven years.
In a submission on whether cellphones should be banned in cars the council had originally opposed such a move, saying hands-free kits should be allowed.
But chief executive Chris Ryan said new evidence was emerging which suggested even hands-free phones were a distraction.
"At that time [of the submission] we felt hands-free were ok, but now, looking at the anecdotal evidence that is growing, I think phones themselves are seen as quite dangerous."
Mr Ryan said while there was less danger with hands-free kits, motorists were still distracted and that could lead to accidents.
"Even though you have both hands on the wheel you are distracted from what's going on around you by the conversation.
"There is no doubt in our minds that having even a hands-free conversation raises the potential for a mishap."
Mr Ryan's comments follow a Herald story reporting the dangers of using a cellphone while driving.
A Cabinet paper prepared by the Ministry of Transport last April found that seven fatal crashes and 84 smashes involving injury in the two years to the end of 2002 were "directly attributable" to drivers using mobile phones.
It also suggested that using handheld phones quadrupled the risk of an accident and banning cellphones would save at least one life a year.
Despite these findings the Government has not decided to include a ban in upcoming road rule changes, upsetting many who fear more lives will be claimed.
Transport Safety Minister Harry Duynhoven defended the decision, saying more information on the link between cellphone use in cars and road accidents was being sought.
Cellphones are banned in 26 countries, including Australia and Japan, where phone-related crashes have fallen by 34 per cent.
The AA, guided by a membership survey, has said it would prefer a ban on all cellphone use by drivers but would accept the use of hands-free kits.
U-turn on car phones
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