Credit hire extortion racket
Discussion
Most of you will have heard of credit hire – if you have a no fault accident an accident management company will supply you with a `free’ hire car, and then claim the hire charges back from the other driver’s insurers.
It’s a racket, but because (as I said in my reply on the other thread) insurers’ main target is to increase premium income they go along with it. The credit hire rates for each individual car have been negotiated, and are contained in the GTA Agreement. For those who would like to see the agreed daily rates for their own car they are set out in an Excel spreadsheet which you can download here - http://www.gtacredithire.com/ It's the file entitled "New maximum car hire settlement rates with effect from 1st July 2014."
Many of you will be surprised to see how high these rates are compared to ordinary hire rates. For example, a bog standard VW Golf GT Tdi 1.9 is £55 a day, and a BMW 325 coupe is £258 per day. These very high figures vividly illustrate how insurers and claims companies actually work together against the public to increase the cost of claims.
However, there’s a sub-species of credit hire called `impecunious credit hire’. This is hiring to people who are too poor to be able to hire a replacement car themselves. Such people are excluded from GTA rates, and due to an unfortunate 2004 decision, Lagden v O’Connor, they are allowed to claim even higher rates.
The original decision may – marginally – have been justified, but the consequences have been to open the floodgates for extortionate claims by credit hire operators (CHO’s).
Some of the amounts claimed by are just mind-boggling. There was a recent case - EUI Ltd v Charles & Others - which shone a light into this murky corner of RTA litigation. (The case can be read at http://www.bailii.org/ew/cases/Misc/2018/B7.html but for some reason I can't hyperlink it, so you'll have to copy and paste it).
The sums claimed in the 7 cases involved were as follows:
CHARLES: £8,608.08 claimed for 52 days credit hire to replace a Honda PCX 125 motorcycle.
CZYRKIEWICZ: £11,915 claimed for 52 days credit hire to replace a Suzuki GSR 750 motorcycle.
MIRZA: £3,145 claimed for 13 days credit hire to replace a Kawasaki Z1000 motorcycle.
VRINCIANU £28,030 claimed for 42 days hire to replace a Mercedes E220.
WILSON £37,819 claimed for 45 days credit hire to replace a Mercedes C63 AMG.
ALI £13,628 for 102 days credit hire to replace a Hyundai I20.
FELLOWS £11,203.20 for 40 days credit hire to replace a Mercedes B180.
These figures are utterly ridiculous, and as they were so far outside the `normal' rates they were actually challenged by EUI (who, although nobody's heard of them sell policies branded Admiral, Elephant etc).
It'll come as no surprise that the claims were all submitted by a firm of scouse solicitors with a faux-respectable name. They were previously known as
and had a dreadful reputation, which presumably explains the name change.
Both the solicitors and the accident management company / credit hire company are part of a group called which floated on AIM last year. The judge's quotes from and comments on the prospectus (paragraph 12 onwards in the judgment) make for interesting reading.
Their niche is to target `impecunious' claimants and then whack in these ludicrous charges that are well above even the very generous rates agreed in the GTA agreement on the basis that in addition to the actual credit they are also providing `accident management services'.
It frankly stinks that solicitors should even be able to be owned by companies who freely admit that their prime goal is to screw insurers - so much for professional ethics.
Although the actual case was only about a fairly minor aspect of this racket it went against and will potentially cause some harm to their business model, which is good news.
This extortion racket simply cannot be allowed to continue, and for what it's worth I think that the insurers will eventually test the `impecunious' argument in court again, though it would probably need to go to the Supreme Court.
I've also written to my MP about it, as it may be that legislation is the only way to bring it to an end.
Either way, a company that's built on such an unethical basis doesn’t deserve to succeed, and if I owned shares in them I'd be looking to get rid while I still could. For those interested in shorting opportunities this could be a prime target (this does not constitute investment advice!)
(Edit due to Name & Shame)
It’s a racket, but because (as I said in my reply on the other thread) insurers’ main target is to increase premium income they go along with it. The credit hire rates for each individual car have been negotiated, and are contained in the GTA Agreement. For those who would like to see the agreed daily rates for their own car they are set out in an Excel spreadsheet which you can download here - http://www.gtacredithire.com/ It's the file entitled "New maximum car hire settlement rates with effect from 1st July 2014."
Many of you will be surprised to see how high these rates are compared to ordinary hire rates. For example, a bog standard VW Golf GT Tdi 1.9 is £55 a day, and a BMW 325 coupe is £258 per day. These very high figures vividly illustrate how insurers and claims companies actually work together against the public to increase the cost of claims.
However, there’s a sub-species of credit hire called `impecunious credit hire’. This is hiring to people who are too poor to be able to hire a replacement car themselves. Such people are excluded from GTA rates, and due to an unfortunate 2004 decision, Lagden v O’Connor, they are allowed to claim even higher rates.
The original decision may – marginally – have been justified, but the consequences have been to open the floodgates for extortionate claims by credit hire operators (CHO’s).
Some of the amounts claimed by are just mind-boggling. There was a recent case - EUI Ltd v Charles & Others - which shone a light into this murky corner of RTA litigation. (The case can be read at http://www.bailii.org/ew/cases/Misc/2018/B7.html but for some reason I can't hyperlink it, so you'll have to copy and paste it).
The sums claimed in the 7 cases involved were as follows:
CHARLES: £8,608.08 claimed for 52 days credit hire to replace a Honda PCX 125 motorcycle.
CZYRKIEWICZ: £11,915 claimed for 52 days credit hire to replace a Suzuki GSR 750 motorcycle.
MIRZA: £3,145 claimed for 13 days credit hire to replace a Kawasaki Z1000 motorcycle.
VRINCIANU £28,030 claimed for 42 days hire to replace a Mercedes E220.
WILSON £37,819 claimed for 45 days credit hire to replace a Mercedes C63 AMG.
ALI £13,628 for 102 days credit hire to replace a Hyundai I20.
FELLOWS £11,203.20 for 40 days credit hire to replace a Mercedes B180.
These figures are utterly ridiculous, and as they were so far outside the `normal' rates they were actually challenged by EUI (who, although nobody's heard of them sell policies branded Admiral, Elephant etc).
It'll come as no surprise that the claims were all submitted by a firm of scouse solicitors with a faux-respectable name. They were previously known as
and had a dreadful reputation, which presumably explains the name change. Both the solicitors and the accident management company / credit hire company are part of a group called
which floated on AIM last year. The judge's quotes from and comments on the prospectus (paragraph 12 onwards in the judgment) make for interesting reading. Their niche is to target `impecunious' claimants and then whack in these ludicrous charges that are well above even the very generous rates agreed in the GTA agreement on the basis that in addition to the actual credit they are also providing `accident management services'.
It frankly stinks that solicitors should even be able to be owned by companies who freely admit that their prime goal is to screw insurers - so much for professional ethics.
Although the actual case was only about a fairly minor aspect of this racket it went against
and will potentially cause some harm to their business model, which is good news.This extortion racket simply cannot be allowed to continue, and for what it's worth I think that the insurers will eventually test the `impecunious' argument in court again, though it would probably need to go to the Supreme Court.
I've also written to my MP about it, as it may be that legislation is the only way to bring it to an end.
Either way, a company that's built on such an unethical basis doesn’t deserve to succeed, and if I owned shares in them I'd be looking to get rid while I still could. For those interested in shorting opportunities this could be a prime target (this does not constitute investment advice!)
(Edit due to Name & Shame)
Edited by Scrump on Saturday 26th January 12:37
98elise said:
How does increased cat hire cost benefit the insurance company? That makes no business sense.
They own the hire company. I haven't read the referenced case, but the normal scam is they hire the car from themselves under a different name, slap 20% on the invoice and then send it to the other driver's insurers for payment.There have been allegations in court that they do it even when a courtesy car is provided foc by the repairing garage.
You need to go back to school, as this is very, very wrong.
Impecuniosity is a requirement for all credit hire. It effectively states that there was a need for credit to pay for the hire car, as there were no other funds available to the hirer at the time. What you’ve tried to describe is a credit hire company that operates outside the voluntary GTA. Many insurers are outside the GTA now, as there have been two rulings that have effectively killed credit hire. Stevens vs Equity, which was followed by McBride vs UKI, which was to all intents and purposes an appeal to Stevens that failed and set the Stevens ruling into case law.
All insurers use credit hire, as they would suffer the pain and use it to offset some of this. However most have now entered into bilateral agreeements to limit the costs to each other and bring some sense back into this. If they had co tinted litigiously, then the hire costs would be similar, but with hefty legal bills attached.
All insurers will challenge a big hire bill, if there is no bilateral in place and will challenge under the basics of
1. Need for hire
2. Need for credit ie impecuniosity
After the needs are established then, the basics of time to repair will be challenged.
You’ve asserted elsewhere that insurers make most of their money from investing premiums. This is simply,y not true. Some money is made doing this, but given the requirements of Solvency II the manner of these investments means they neeed to be held in readily accessible and ultra safe investments, which by definition pay very little return.
You seem to have an issue with one particular company and have chosen to name them (is this against the rules?), said company is one of the ones that often flags up as excessive to most insurers, but they are very good at maximising their income by being just the right side of the latest legal rulings. There is nothing illegal with this. You might not like it morally, but morals and the law aren’t always aligned.
(Edit to remove N&S quote)
Edited by Scrump on Saturday 26th January 12:40
As the previous poster has said, you need to show impecuniosity to be able to avail yourself of any credit hire services whatsoever. It's nothing new. If the claim for credit hire runs to a final hearing. the hirer is expected to disclose their financial details to prove they couldn't go out and hire themselves a vehicle at normal spot hire rates and reclaim it back from the third party insurer.
(Edit to remove N&S)
(Edit to remove N&S)
Edited by Scrump on Saturday 26th January 12:41
KungFuPanda said:
As the previous poster has said, you need to show impecuniosity to be able to avail yourself of any credit hire services whatsoever. It's nothing new. If the claim for credit hire runs to a final hearing. the hirer is expected to disclose their financial details to prove they couldn't go out and hire themselves a vehicle at normal spot hire rates and reclaim it back from the third party insurer.
Not entirely true. When you have a specialised vehicle, ie a driving school car with dual controls, these are not generally available to hire off the shelf and so the accident management company will supply a vehicle with outrageous hire rates regardless of your financial position.macushla said:
eybic said:
Neither does the fact that they sell your details to claims companies to claim against them/ other insurers, absolutely ridiculous.
It’s been illegal since April 2013 to sell this informationbimsb6 said:
Someone sells this info , after a prang last year we were inundated with calls yet the police wouldn’t release the other parties contact details to us as it contradicted data protection !
It isn't necessarily sold, just fished for. I get occasional texts and calls about accidents I haven't had so ignore them. If you respond positively to the first contact they'll take note and start badgering you.When I had a crash the credit car was an A class which they were charging over £230 daily for, as well as a ridiculous delivery and collection charge. told them I needed a saloon like-for-like which they wouldn’t provide.
Told them to collect the car as it’s no longer needed. 3rd party admitted fault and supplied me with a more suitable 530d from enterprise and only cost c.£39 a day.
Told them to collect the car as it’s no longer needed. 3rd party admitted fault and supplied me with a more suitable 530d from enterprise and only cost c.£39 a day.
I'm trying to do my bit for the industry.
Where possible, I'll avoid arranging credit hire for my clients & sort out same class ERAC myself at a much reduced rate.
So what if the repairs take another week longer than you think they should, or a part's on back order at the garage with a delay of a month?
If I've sorted hire at a rate of one-fifth the cost of credit hire, then the third party insurer won't bat an eyelid when they get our outlay.
I wish more claims handlers would take this approach. We are not required to outsource to an accident management company and if this approach was more commonplace, it's bound to have a positive effect on lowering premiums and retaining business.
Where possible, I'll avoid arranging credit hire for my clients & sort out same class ERAC myself at a much reduced rate.
So what if the repairs take another week longer than you think they should, or a part's on back order at the garage with a delay of a month?
If I've sorted hire at a rate of one-fifth the cost of credit hire, then the third party insurer won't bat an eyelid when they get our outlay.
I wish more claims handlers would take this approach. We are not required to outsource to an accident management company and if this approach was more commonplace, it's bound to have a positive effect on lowering premiums and retaining business.
jeremyc said:
Because it means they can increase the premiums they charge each year due to their costs increasing. 
To be fair, car insurance premiums have been going down pretty much across the board over the last 18 months or so.You need to be prepared to shop around at renewal though.
https://www.moneywise.co.uk/news/2018-07-26/car-in...
Had a no fault accident in November, Admiral passed claim handling to Auxilis (I agreed too avoid them charging me the large excess and refunding it when the claim was resolved).
Auxilis sent their hire agreement and rates for cars, before I agreed this the other insurer (NFU) asked if they could provide a car at much lower rates.
Auxilis handled the repair and NFU provided the car via Enterprise.
Question - how can anyone justify a C63 as a courtesy car when a Focus will get you from a to b?
Auxilis sent their hire agreement and rates for cars, before I agreed this the other insurer (NFU) asked if they could provide a car at much lower rates.
Auxilis handled the repair and NFU provided the car via Enterprise.
Question - how can anyone justify a C63 as a courtesy car when a Focus will get you from a to b?
IJWS15 said:
Had a no fault accident in November, Admiral passed claim handling to Auxilis (I agreed too avoid them charging me the large excess and refunding it when the claim was resolved).
Auxilis sent their hire agreement and rates for cars, before I agreed this the other insurer (NFU) asked if they could provide a car at much lower rates.
Auxilis handled the repair and NFU provided the car via Enterprise.
Question - how can anyone justify a C63 as a courtesy car when a Focus will get you from a to b?
If a third party are liable, as far as is reasonable or possible, they should put you in the position you were, should the accident not have happened. You have a duty to minimise any losses but it can be like for like. This is separate to dealing with your contractual arrangement with your insurance company.Auxilis sent their hire agreement and rates for cars, before I agreed this the other insurer (NFU) asked if they could provide a car at much lower rates.
Auxilis handled the repair and NFU provided the car via Enterprise.
Question - how can anyone justify a C63 as a courtesy car when a Focus will get you from a to b?
This whole scheme will push up premiums, once the insurers lose control of the providers, and they are the main customer, then prices can rise without any market forces to hold them back. There are a lot of parallels with US health insurance.
Edited by Graveworm on Saturday 26th January 09:40
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