Accident Management Abuses Need Curbing
The ABD Calls For Regulation To Curb Financial Abuses Within The Accident Management Services Sector
If you are unfortunate enough to be involved an a road traffic accident in which your vehicle suffers significant damage, while you fortunately don't, your insurer will likely offer you what you and I think of as a "courtesy vehicle" while yours is under repair.
Apparently nowadays the vehicle, of which you take possession, is more typically supplied to you on what is described in law as a credit hire basis.
"So what?", you say.
Well, in signing for possession of that vehicle, you are authorising the provider to charge that vehicle against the outstanding claim for the accident in which you were involved at a daily rate which can typically be in excess of £300. The total credit hire costs will be assigned on a blame-apportionment basis once liability has been agreed between the insurers of those involved in the accident.
For £300 per day, it is possible to hire a piece of exotica such as a Bentley Continental GT Coupé1
; rather than some humdrum cabriolet, coupé, hatchback, saloon, SUV, or indeed van originating from one of the mainstream vehicle manufacturers.
A high street provider — such as Avis, Budget, Enterprise, Hertz etc — could rent you a vehicle comparable to your accident-damaged one at one-tenth of the credit-hire rate; so where is the rest of the credit hire cost going? Well, into the pockets of the insurance company or third party credit hire vehicle provider, presumably...
Further, if non-availability of parts, e.g. pending their manufacture by the supplier, delays the commencement of repairs; a three week credit hire spell could easily result — leading to a consequent £5000+ credit hire cost overhead being added to the total repair bill.
Based on 2014 stats for reported accidents alone 2
(around 150,000 in that year), if provision of replacement vehicles on a credit hire basis adds (say) £1000 to the cost of an average insurance claim, that would be £150M added annually to total insurance claim costs; or roughly £5 per car insurance policy.
When car insurers on the one hand prattle on about the rising cost of accident remediation; while on the other they are complicit in the provision of vehicles at 10 times the daily rate that a high-street provider could furnish them, they are part of the problem, not part of the solution.
Apparently the accident management services sector is currently totally unregulated; with both the Financial Conduct Authority and the government's Claims Management Regulator indicating that it is outside either of their remits.
So one of the ABD's members has referred this whole sector to BBC TV's Watchdog
programme as worthy of investigation.
The blatant profiteering, by both respected insurers and third-party accident management companies alike, which appears to be going on in this sector could easily be constrained by applying a mandatory limit to the credit-hire charges they are permitted to levy. A fixed multiple cap could be applied to credit hire charges; at, say, twice the average of a basket of the daily hire rates of the Top 5 high-street hire-car providers (Avis, Budget, Enterprise, Hertz etc) for a comparable model to the replacement vehicle being offered.
It is anyway high time that the road traffic accident management sector was subject to in-depth official investigation, and subsequent regulation to curb the abuses currently occurring within it.