Insurance Industry Reform
Discussion
Since the subject of insurance is probably more common now than the ubiquitous 'what car' threads on the pages of Pistonheads, I thought I would share an example of exactly why your premiums are all going through the roof.
One example of 'insurance industry abuse' I was personally subjected to, was the 'handling' of a claim in which I was the fault party back in 2009. I pulled out on a car and caused some minor damage to the rear quarter panel, mostly just a scratch and small exchange of paint, akin to that of a car park scrape. Confident that the damage would not cost too much to repair, I offered to pay for the repairs outside of insurance so as to protect both of us from an increased premium, and the third party was perfectly happy for this to be the case. After obviously informing my insurance of the incident regardless of my intention not to claim, I awaited some repair quotes from the third party, although I expected these to take a week or so as they had claimed at the roadside that they were in fact on their way to France for a week's holiday.
Some two weeks after the incident, some quotes from various local body shops drop through my door and the quotes are all just a bit more than the amount I had set that I would accept to pay for myself, so I informed both the third party and my insurers that the claim would go ahead and that was that. Total cost of the repairs was around £650, which I thought was a little steep considering it looked like it would actually just polish out!
Fast forward some 12-18 months, and a county court claim lands on my doorstep claiming that I owe the third party over £4500 in 'damages' for a credit hire charge relating to the accident. Unaware of what credit hire was, a bit of research showed that credit hire is the new hot potato for the insurance parasites...
What happens with one of these claims, is the nominated garage (on referral from the insurer) will have recommended an accident management company (on referral from the garage) who have recommended a credit hire company (on referral from the accident management company), who offer the third party a like for like replacement their damaged vehicle. That's potentially a few hundred pounds in referral fees already.
The hire car is provided on credit (hence the name) at an inflated price over the regular arrangement where the third party would hire a car out of their own pocket, and then claim back the charges from the insurance once their car is repaired. Normally this provides a valuable service to a family who have say, their three year old Mondeo damaged, and require a like for like replacement instead of the standard Smart courtesy car, but cannot afford to front up the cash for straightforward hire. This is all well and good in this case.
The problem arises when you are involved in an accident with a 'premium vehicle', in my case an 11 year old SLK in average-to-poor condition, as observed at the roadside from the horrendous corrosion to the alloys. In this case, 'like for like replacement' is more than likely a brand new, top of the range SLK, or possibly even something better. The obvious gap between the cars (£5k value vs some £50k) is one thing, (and perhaps still partially justifiable if the Smart just doesn't quite convey the image of wealth and success to your neighbours), but the charges for these premium credit hire cars are nothing short of extortion. You could quite easily be racking up hundreds of pounds a day in charges depending on the model leased. There have been reports of credit hire charges going in to six figures for the hire of things such as Porsche GT3s and the like!
Furthermore, since the credit hire company, accident management company and the garage are all in cahoots, it is in the interests of the garage to take a little longer on the repairs. The longer the repairs take, the longer the hire car is on lease for, and the larger the kickback the garage sees as a result. The third party obviously doesn't care while they have the hideously expensive hire car to roll around in, and all the time my insurance are none the wiser to the rapidly inflating bill.
When they do eventually get the bill, my insurers rightly refuse to pay the simply ridiculous hire charges, stating that there was absolutely no way the claimant could justify that kind of expense. What the claimant has failed to do in this case, is read the contract they were asked to sign on taking delivery of the hire car, which states that should my insurers deem the charges unreasonable and refuse to pay, that they will be held liable for the charges. Nobody reads the small print here, why would you when as far as you know, someone else is picking up the tab? But that line causes more problems...
Now that my insurers have told the third party to poke it, they enter into negotiations which take months to resolve, all the time while the credit hire charge is still accruing interest at an alarming rate. Eventually the third party insurers resort to scare tactics, opting to fire a county court claim at me in the claimants name, for the full amount outstanding, in this case some £4700 once you add on solicitors fees, court costs and whatnot.
The intended response here is that I;
A. Don't respond, and get a CCJ
B. Get scared and pay up myself to avoid a CCJ
C. Forward it on to my insurers who are then obliged to respond within 14 days to avoid me getting a CCJ.
Dirty tactics to end the negotiations quickly, I think you'll agree. There was one more little bit of icing on the cake. Within the breakdown of costs for this credit hire, I noticed that the hire company were charging interest from the day of the accident. I recalled the lady said she was on her way to go on holiday and would sort it out when she returned, so thought this a little strange. Sure enough, rooting through my paperwork I find the repair quotes, all dated 10-11 days after the date of the accident. Given that she would have had to have posted those quotes and awaited my response before booking the car in for the repairs, it would be reasonable to expect that there are around two weeks where my insurers are being billed for an expensive hire car that wasn't even being used! I obviously highlighted this, including the quotes when I forwarded the court claim on to my insurers. I heard no more on the matter, but I hope they fought it based on the evidence I provided them, as it is clearly a racket that needs to be shut down.
This example was a legit claim, from an amicable lady in a fairly modest car, resulting in barely more than a scratch, costing my insurers nearly £5500, which could quite easily have been resolved for a few hundred pounds. Now imagine this scenario, but with the type of person pre-disposed to claim for damages they have not even suffered, say perhaps falsified whiplash claims for multiple fabricated passengers. It could potentially add tens of thousands of pounds on to the bill. Even if they don't claim immediately, you'll have injury lawyers on further referral fees chasing the claimant for months, even years after the accident, encouraging them to claim for injuries that would have long since faded, or possibly never existed at all. Imagine if this was part of a pre-planned accident... All that money paid out, all over a scratch.
With the industry so open to abuse, this kind of claim is rife, and it's easy to see how insurers are losing so much money prompting the massive increases in premiums that we are currently seeing. All the while, us motorists simply shrug it off and pay the premiums, simply accepting that that's the way it is. You can blame it on young drivers, uninsured drivers, old people in automatics or a few hours snowfall, but whatever the cause of the claim, you can bet there will be one of these paper trails behind it in some way or another.
I feel this issue needs to be bought to more people's attention, and while some may shrug it off in the same way they shrug off attempts to influence the price of petrol, it is clearly something which needs more attention than it gets, as it affects us all and is becoming a serious impairment to the mobility of people most affected.
An insurance reform is clearly needed, some initial concerns that should be considered:
A ban, or serious regulation on referral fees.
Regulation of the credit hire industry, including a far clearer indication of the implications of entering into a credit hire contract to the claimant, and a
regulation of the charges imposed and stricter regulation on the running of these companies to prevent charges being artificially increased through the practices highlighted above.
Regulation on the interference of accident management company middle men with a claim. Clearer indication to the claimants on the services they provide and charges they levy.
A ban on unsolicited contact from no-win no-fee lawyers encouraging people to claim for injuries.
A change in practice to effectively end the no win no fee system, whereby a claimant is made liable for the legal costs of raising the claim if the court rejects the claim.
Stronger penalties for those involved in crash for cash schemes, not only for those running the rackets, but for those participating in them.
That's a start, but what else would you like to see changed about the insurance industry, to make it a fairer system for everyone?
(Sorry for the massively long post, hope you didn't fall asleep!)
One example of 'insurance industry abuse' I was personally subjected to, was the 'handling' of a claim in which I was the fault party back in 2009. I pulled out on a car and caused some minor damage to the rear quarter panel, mostly just a scratch and small exchange of paint, akin to that of a car park scrape. Confident that the damage would not cost too much to repair, I offered to pay for the repairs outside of insurance so as to protect both of us from an increased premium, and the third party was perfectly happy for this to be the case. After obviously informing my insurance of the incident regardless of my intention not to claim, I awaited some repair quotes from the third party, although I expected these to take a week or so as they had claimed at the roadside that they were in fact on their way to France for a week's holiday.
Some two weeks after the incident, some quotes from various local body shops drop through my door and the quotes are all just a bit more than the amount I had set that I would accept to pay for myself, so I informed both the third party and my insurers that the claim would go ahead and that was that. Total cost of the repairs was around £650, which I thought was a little steep considering it looked like it would actually just polish out!
Fast forward some 12-18 months, and a county court claim lands on my doorstep claiming that I owe the third party over £4500 in 'damages' for a credit hire charge relating to the accident. Unaware of what credit hire was, a bit of research showed that credit hire is the new hot potato for the insurance parasites...
What happens with one of these claims, is the nominated garage (on referral from the insurer) will have recommended an accident management company (on referral from the garage) who have recommended a credit hire company (on referral from the accident management company), who offer the third party a like for like replacement their damaged vehicle. That's potentially a few hundred pounds in referral fees already.
The hire car is provided on credit (hence the name) at an inflated price over the regular arrangement where the third party would hire a car out of their own pocket, and then claim back the charges from the insurance once their car is repaired. Normally this provides a valuable service to a family who have say, their three year old Mondeo damaged, and require a like for like replacement instead of the standard Smart courtesy car, but cannot afford to front up the cash for straightforward hire. This is all well and good in this case.
The problem arises when you are involved in an accident with a 'premium vehicle', in my case an 11 year old SLK in average-to-poor condition, as observed at the roadside from the horrendous corrosion to the alloys. In this case, 'like for like replacement' is more than likely a brand new, top of the range SLK, or possibly even something better. The obvious gap between the cars (£5k value vs some £50k) is one thing, (and perhaps still partially justifiable if the Smart just doesn't quite convey the image of wealth and success to your neighbours), but the charges for these premium credit hire cars are nothing short of extortion. You could quite easily be racking up hundreds of pounds a day in charges depending on the model leased. There have been reports of credit hire charges going in to six figures for the hire of things such as Porsche GT3s and the like!
Furthermore, since the credit hire company, accident management company and the garage are all in cahoots, it is in the interests of the garage to take a little longer on the repairs. The longer the repairs take, the longer the hire car is on lease for, and the larger the kickback the garage sees as a result. The third party obviously doesn't care while they have the hideously expensive hire car to roll around in, and all the time my insurance are none the wiser to the rapidly inflating bill.
When they do eventually get the bill, my insurers rightly refuse to pay the simply ridiculous hire charges, stating that there was absolutely no way the claimant could justify that kind of expense. What the claimant has failed to do in this case, is read the contract they were asked to sign on taking delivery of the hire car, which states that should my insurers deem the charges unreasonable and refuse to pay, that they will be held liable for the charges. Nobody reads the small print here, why would you when as far as you know, someone else is picking up the tab? But that line causes more problems...
Now that my insurers have told the third party to poke it, they enter into negotiations which take months to resolve, all the time while the credit hire charge is still accruing interest at an alarming rate. Eventually the third party insurers resort to scare tactics, opting to fire a county court claim at me in the claimants name, for the full amount outstanding, in this case some £4700 once you add on solicitors fees, court costs and whatnot.
The intended response here is that I;
A. Don't respond, and get a CCJ
B. Get scared and pay up myself to avoid a CCJ
C. Forward it on to my insurers who are then obliged to respond within 14 days to avoid me getting a CCJ.
Dirty tactics to end the negotiations quickly, I think you'll agree. There was one more little bit of icing on the cake. Within the breakdown of costs for this credit hire, I noticed that the hire company were charging interest from the day of the accident. I recalled the lady said she was on her way to go on holiday and would sort it out when she returned, so thought this a little strange. Sure enough, rooting through my paperwork I find the repair quotes, all dated 10-11 days after the date of the accident. Given that she would have had to have posted those quotes and awaited my response before booking the car in for the repairs, it would be reasonable to expect that there are around two weeks where my insurers are being billed for an expensive hire car that wasn't even being used! I obviously highlighted this, including the quotes when I forwarded the court claim on to my insurers. I heard no more on the matter, but I hope they fought it based on the evidence I provided them, as it is clearly a racket that needs to be shut down.
This example was a legit claim, from an amicable lady in a fairly modest car, resulting in barely more than a scratch, costing my insurers nearly £5500, which could quite easily have been resolved for a few hundred pounds. Now imagine this scenario, but with the type of person pre-disposed to claim for damages they have not even suffered, say perhaps falsified whiplash claims for multiple fabricated passengers. It could potentially add tens of thousands of pounds on to the bill. Even if they don't claim immediately, you'll have injury lawyers on further referral fees chasing the claimant for months, even years after the accident, encouraging them to claim for injuries that would have long since faded, or possibly never existed at all. Imagine if this was part of a pre-planned accident... All that money paid out, all over a scratch.
With the industry so open to abuse, this kind of claim is rife, and it's easy to see how insurers are losing so much money prompting the massive increases in premiums that we are currently seeing. All the while, us motorists simply shrug it off and pay the premiums, simply accepting that that's the way it is. You can blame it on young drivers, uninsured drivers, old people in automatics or a few hours snowfall, but whatever the cause of the claim, you can bet there will be one of these paper trails behind it in some way or another.
I feel this issue needs to be bought to more people's attention, and while some may shrug it off in the same way they shrug off attempts to influence the price of petrol, it is clearly something which needs more attention than it gets, as it affects us all and is becoming a serious impairment to the mobility of people most affected.
An insurance reform is clearly needed, some initial concerns that should be considered:
A ban, or serious regulation on referral fees.
Regulation of the credit hire industry, including a far clearer indication of the implications of entering into a credit hire contract to the claimant, and a
regulation of the charges imposed and stricter regulation on the running of these companies to prevent charges being artificially increased through the practices highlighted above.
Regulation on the interference of accident management company middle men with a claim. Clearer indication to the claimants on the services they provide and charges they levy.
A ban on unsolicited contact from no-win no-fee lawyers encouraging people to claim for injuries.
A change in practice to effectively end the no win no fee system, whereby a claimant is made liable for the legal costs of raising the claim if the court rejects the claim.
Stronger penalties for those involved in crash for cash schemes, not only for those running the rackets, but for those participating in them.
That's a start, but what else would you like to see changed about the insurance industry, to make it a fairer system for everyone?
(Sorry for the massively long post, hope you didn't fall asleep!)
The insurance industry is a joke or rather the hangers on are. A few years ago an elderly woman pulled out on me from a petrol station, I hit the brakes but hit her unfortunately.
The accident damaged the front bumper of my wife's new car.
I wanted it fixing si contacted my insurer as I had her details, all I got were phone calls harassing me to go for injury claims.
All I wanted was the car repairing but nobody was interested in that, they just wanted me to go for whiplash.
I left it in the end, too much hassle
The accident damaged the front bumper of my wife's new car.
I wanted it fixing si contacted my insurer as I had her details, all I got were phone calls harassing me to go for injury claims.
All I wanted was the car repairing but nobody was interested in that, they just wanted me to go for whiplash.
I left it in the end, too much hassle
I've had worse after a day at a theme park...Bump for the Facebookers, want to try and get this out to a few more people as I'm astounded by how many people have no idea what goes on with their money.
http://www.facebook.com/pages/Insurance-Industry-R...
http://www.facebook.com/pages/Insurance-Industry-R...
Kozy said:
Good stuff
That is without doubt one of the best posts I have read on here in a long timeTrouble is we have a snowflakes chance in hades of seeing anything change...
On reflection it tops my previous all time favorite
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Kozy said:
Bump for the Facebookers, want to try and get this out to a few more people as I'm astounded by how many people have no idea what goes on with their money.
http://www.facebook.com/pages/Insurance-Industry-R...
Your problem isn't that people don't know, it's that people don't care. People see 'FREE MONEY' and they reach out with their pudgy little trotters and snaffle it all up. They may even know that it all leads to increased premiums but they wholly believe they're fully entitled to it and with AMCs, ambulance chasing spastics and pure, old fashioned greed, we don't stand a chance. http://www.facebook.com/pages/Insurance-Industry-R...
Rawwr said:
Kozy said:
Bump for the Facebookers, want to try and get this out to a few more people as I'm astounded by how many people have no idea what goes on with their money.
http://www.facebook.com/pages/Insurance-Industry-R...
Your problem isn't that people don't know, it's that people don't care. People see 'FREE MONEY' and they reach out with their pudgy little trotters and snaffle it all up. They may even know that it all leads to increased premiums but they wholly believe they're fully entitled to it and with AMCs, ambulance chasing spastics and pure, old fashioned greed, we don't stand a chance. http://www.facebook.com/pages/Insurance-Industry-R...
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Rawwr said:
Your problem isn't that people don't know, it's that people don't care. People see 'FREE MONEY' and they reach out with their pudgy little trotters and snaffle it all up. They may even know that it all leads to increased premiums but they wholly believe they're fully entitled to it and with AMCs, ambulance chasing spastics and pure, old fashioned greed, we don't stand a chance.
Of course, there'll always be this problem, and sure people do know about it, just perhaps not the extent to which it happens. Perhaps I should have rephrased that bit. Everyone knows about whiplash claims. Very few are aware of the credit hire stuff...Urban Sports said:
Worth a go though? Shirley?
Exactly, enough people are getting riled up about this now. I moved closer to work because it was cheaper than insuring my car!If the Courts weren't making the awards (either for whiplash or credit hire) the insurers wouldn't be paying it (and we wouldn't be paying for it via increased premiums).
There are massive amounts of Case Law relating to both these major issues, and the relatively small amount of referral fees is negligible in comparison to the bigger picture.
What can the insurance industry do when the Courts continue to make judgments against them on these issues?
There are massive amounts of Case Law relating to both these major issues, and the relatively small amount of referral fees is negligible in comparison to the bigger picture.
What can the insurance industry do when the Courts continue to make judgments against them on these issues?
It's not the insurance industry, it's the legal "profession". None of this would have started if they hadn't allowed conditional fee arrangements a few years ago; you will have noticed this by the appearance of "had an accident at work/ in a shop/ on the road...." type ads on daytime TV & radio.
Maybe worth reading up about Kenny Clarke's plans to implement the Jackson Report pretty much entirely. The MoJ have also had a programme of changes rolling out, low value RTA stuff included.
Compare and contrast the Insurance Industry view of Jackson with the sceetching of the PI legal community about how it is all a fit up, coupled with Alternative Business Structures coming in soon....Bread, milk , cornflakes, PI claim at Tesco.
Interesting times for PI bods, for sure.
Compare and contrast the Insurance Industry view of Jackson with the sceetching of the PI legal community about how it is all a fit up, coupled with Alternative Business Structures coming in soon....Bread, milk , cornflakes, PI claim at Tesco.
Interesting times for PI bods, for sure.
Agrilla said:
If the Courts weren't making the awards (either for whiplash or credit hire) the insurers wouldn't be paying it (and we wouldn't be paying for it via increased premiums).
There are massive amounts of Case Law relating to both these major issues, and the relatively small amount of referral fees is negligible in comparison to the bigger picture.
What can the insurance industry do when the Courts continue to make judgments against them on these issues?
There are massive amounts of Case Law relating to both these major issues, and the relatively small amount of referral fees is negligible in comparison to the bigger picture.
What can the insurance industry do when the Courts continue to make judgments against them on these issues?
sticks090460 said:
It's not the insurance industry, it's the legal "profession". None of this would have started if they hadn't allowed conditional fee arrangements a few years ago; you will have noticed this by the appearance of "had an accident at work/ in a shop/ on the road...." type ads on daytime TV & radio.
Good points from both of you, and totally agree. One could still argue that the legal professionals and the courts fall under the umbrella of the insurance industry though, but whichever way you look at it the system needs an overhaul. But where do you start?Noger said:
Maybe worth reading up about Kenny Clarke's plans to implement the Jackson Report pretty much entirely. The MoJ have also had a programme of changes rolling out, low value RTA stuff included.
Compare and contrast the Insurance Industry view of Jackson with the sceetching of the PI legal community about how it is all a fit up, coupled with Alternative Business Structures coming in soon....Bread, milk , cornflakes, PI claim at Tesco.
Interesting times for PI bods, for sure.
Will look into it, thanks!Compare and contrast the Insurance Industry view of Jackson with the sceetching of the PI legal community about how it is all a fit up, coupled with Alternative Business Structures coming in soon....Bread, milk , cornflakes, PI claim at Tesco.
Interesting times for PI bods, for sure.
Many moons ago, I had one of those AMC's handling a claim and I got stung as a result. The credit hire company wanted to charge £3000 for 5 days hire of a Rover 420 (it was that long ago) and it was frankly stupidly expensive.
Anyway, thankfully I knew someone who was a bit of a whiz on law and I got them to check a few things out. I hadnt signed anything for the "credit" agreement, I hadnt agreed to the charges (not made clear in advance) and the fact that they costs were treble standard hire costs meant there was NOTHING that they could do. Handed it to the insurance company who did this and told them to sort it out.
I never heard from them again and the insurance claim went away too. Hateful experience and I will never deal with an AMC again.
Oddly, recently I have had two claims with Direct Line (though other direct insurers exist). Both no faults on my behalf and DL couldnt have been better. Collection, fixing, delivery, reasonable costs (including fixing) and a replacement like-for-like hire car from the nearest and easiest hire car company (turned out to be Enterprise who do have a big deal with DL). All up, no issues and happy with the quality of the repair and the service provided. Couldnt fault them and as I mentioned, the costs were all reasonable.
So why cant other insurance companies operate like this? DL are far from perfect, but they have a good price, decent service and on the whole people recommend them.
Anyway, thankfully I knew someone who was a bit of a whiz on law and I got them to check a few things out. I hadnt signed anything for the "credit" agreement, I hadnt agreed to the charges (not made clear in advance) and the fact that they costs were treble standard hire costs meant there was NOTHING that they could do. Handed it to the insurance company who did this and told them to sort it out.
I never heard from them again and the insurance claim went away too. Hateful experience and I will never deal with an AMC again.
Oddly, recently I have had two claims with Direct Line (though other direct insurers exist). Both no faults on my behalf and DL couldnt have been better. Collection, fixing, delivery, reasonable costs (including fixing) and a replacement like-for-like hire car from the nearest and easiest hire car company (turned out to be Enterprise who do have a big deal with DL). All up, no issues and happy with the quality of the repair and the service provided. Couldnt fault them and as I mentioned, the costs were all reasonable.
So why cant other insurance companies operate like this? DL are far from perfect, but they have a good price, decent service and on the whole people recommend them.
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