Provident Insurance v Royal Sun Alliance
Discussion
In case you do not see Post magazine, the lead story this week is interesting. It seems that Provident are accusing RSA of inflating third-party repairs. It is suggested in the article that other insurers are also inflating claims::
“RSA has become embroiled in a legal spat with Provident Insurance over subrogated motor repair costs, an issue that has already been described as the new credit hire.
According to sources close to Provident, the dispute surrounds third-party repairs, and allegations of inflated costs through RSA subsidiary Motor Repair Network Management.
RSA is accused of inserting additional costs into body shop repairs through the subsidiary, with final inflated invoices issued to the at-fault driver's insurer.
Post understands the disagreement relates to close to £1m of Provident motor claims — with the up-for-sale insurer having refused to pay subrogated claims from RSA for the past eight-and-a-half months.
Provident is currently defending its right not to pay six claims in the courts, with RSA and Provident represented by their individual policyholders.
Initial discussions to settle the dispute between the two firms did not reach agreement, sources added.
Provident is arguing that final costs imposed by RSA do not reflect the actual repairs made, on claims it investigated.
A source close to the insurer estimated that the case could impact millions of pounds in claims costs across the market: "A breakdown shows the body shop repair and the invoice have differences over issues such as collection and delivery fees and labour parts. There are no explanations for this. RSA will argue overall costs are reasonable."
David Cresswell, chairman of the ABP Club, which represents the body repair industry, declined to comment on individual cases, but told Post: "There have been rumours this has been going on, and it is shocking. Insurers should not be profiting from a claim. We could end up with another credit hire scenario. It is worrying what people outside of our industry would make of this."
It understood other insurers, including Groupama and Co-operative Insurance Services, have experienced similar difficulties over the issue, though both were unavailable for comment as Post went to press.
Speaking at the Post motor claims conference, Steve Caffrey, head of technical claims at Groupama, said anecdotal evidence suggested "at least three major insurers" were guilty of inflating subrogated claims costs.
Sources close to RSA claimed the issue did not put the firm in a precarious legal standpoint, and that it adhered to ABP Club guidelines.
When approached by Post, RSA declined to comment on the ongoing legal matter.
Provident was also unavailable for comment.
“RSA has become embroiled in a legal spat with Provident Insurance over subrogated motor repair costs, an issue that has already been described as the new credit hire.
According to sources close to Provident, the dispute surrounds third-party repairs, and allegations of inflated costs through RSA subsidiary Motor Repair Network Management.
RSA is accused of inserting additional costs into body shop repairs through the subsidiary, with final inflated invoices issued to the at-fault driver's insurer.
Post understands the disagreement relates to close to £1m of Provident motor claims — with the up-for-sale insurer having refused to pay subrogated claims from RSA for the past eight-and-a-half months.
Provident is currently defending its right not to pay six claims in the courts, with RSA and Provident represented by their individual policyholders.
Initial discussions to settle the dispute between the two firms did not reach agreement, sources added.
Provident is arguing that final costs imposed by RSA do not reflect the actual repairs made, on claims it investigated.
A source close to the insurer estimated that the case could impact millions of pounds in claims costs across the market: "A breakdown shows the body shop repair and the invoice have differences over issues such as collection and delivery fees and labour parts. There are no explanations for this. RSA will argue overall costs are reasonable."
David Cresswell, chairman of the ABP Club, which represents the body repair industry, declined to comment on individual cases, but told Post: "There have been rumours this has been going on, and it is shocking. Insurers should not be profiting from a claim. We could end up with another credit hire scenario. It is worrying what people outside of our industry would make of this."
It understood other insurers, including Groupama and Co-operative Insurance Services, have experienced similar difficulties over the issue, though both were unavailable for comment as Post went to press.
Speaking at the Post motor claims conference, Steve Caffrey, head of technical claims at Groupama, said anecdotal evidence suggested "at least three major insurers" were guilty of inflating subrogated claims costs.
Sources close to RSA claimed the issue did not put the firm in a precarious legal standpoint, and that it adhered to ABP Club guidelines.
When approached by Post, RSA declined to comment on the ongoing legal matter.
Provident was also unavailable for comment.
Edited by anniesdad on Friday 18th February 19:41
Quite surprised that nobody appears interested in this story! It is after all quite incredible that an insurer would inflate a repair invoice to make a profit out of another insurer. So the "approved" repairer agrees to repair a damaged car for a vastly reduced labour rate and provides a discount to the insurer on the parts. That insurer then re-invoices through a subsidiary at an increased labour rate and with no parts discount (thereby making most of the profit that the garage should make) requesting that your at-fault insurer pay the costs. Of course the paying public pick up the tab through their premiums being increased...not to mention often gets sub-standard work done on their car...(anyone?)
Maybe it's not much of a story at the end of the day but I thought PHers may have shown at least some interest.
Perhaps the thread title could be changed to "Official - Ferrari 458 not as good as new McLaren"?
Maybe it's not much of a story at the end of the day but I thought PHers may have shown at least some interest.
Perhaps the thread title could be changed to "Official - Ferrari 458 not as good as new McLaren"?
Edited by anniesdad on Friday 18th February 19:32
randlemarcus said:
You could sort of understand it if RSA created the subsidiary purely to get a bunch of external costs back in-house to limit loss, and added a little bit to every bill, but to only inflate certain invoices? Plain daft.
Not just RSA (three major insurers) and they are only inflating the costs of those cases where they can make a recovery from another insurer. I'm told by the way that RSA would demand two invoices from the repairer. The lower one they would pay and the other would be sent to the other (at-fault) insurer for payment by them.
Edited by anniesdad on Friday 18th February 19:51
This is very interesting for the insurers. Many large ones operate a fixed cost repair system where the repairer gets a fixed sum of money to repair your vehicle. This means in many cases your car is bodged up with large amounts of filler.
If rsa lose this case it will mean that the insurers who run the fixed cost scheme will have to go back to the normal repair costs and that will push up premiums....
A big player is the insurer with the big pink car at the end of the weather adverts with a Mr Winner . They rip off the repairers by giving them a small sum just so they can fill your car full of filler so they dont have to buy parts.
If they have a third party claim they charge your insurer the full cost and make profit out of it
beware if you insurer with them they will try and put into one of their fixed cost bodgers
If rsa lose this case it will mean that the insurers who run the fixed cost scheme will have to go back to the normal repair costs and that will push up premiums....
A big player is the insurer with the big pink car at the end of the weather adverts with a Mr Winner . They rip off the repairers by giving them a small sum just so they can fill your car full of filler so they dont have to buy parts.
If they have a third party claim they charge your insurer the full cost and make profit out of it
beware if you insurer with them they will try and put into one of their fixed cost bodgers
its true............the big insurers do it as well.......I hope provident win.......
the pink car repairers also have to repair plastic bumpers and headlamps....i saw one repairer use half a bumper of one fiesta and join it from another and then paint it and put it on a customers car..they thought they had a new bumper.....
another repair was a fiat punto door........the garage repaired it with 4 gallons of filler...the car needed uprated springs just to support the weight!!!!!
the pink car repairers also have to repair plastic bumpers and headlamps....i saw one repairer use half a bumper of one fiesta and join it from another and then paint it and put it on a customers car..they thought they had a new bumper.....
another repair was a fiat punto door........the garage repaired it with 4 gallons of filler...the car needed uprated springs just to support the weight!!!!!
If this is true, it is a disgrace. It pushes all our premiums up and even makes insurance unaffordable for some. This increases this likelyhood of the uninsured being on the roads. We need corporate governance with teeth in this country. In the US, I supect that if this occured some real hard jail time would be lined up for those responsible.
MondeoMan1981 said:
If insurers are running their own repairers and inflating claims etc, if several are at it, would that not make it a "cartel" ?
Take it to a reputable repairer, one of your choice, and insist that your/the other party insurers authorise repairs to them at a proper commercial rate. You then have a chance of getting a good repair done.
Edited: sorry this was meant for Huntsman. Bloody iPhone! Grrrr.
This has just been mentioned on BBC Breakfast, in a piece that's talking about escalating insurance costs, and has been talked about with credit hire etc in a vaguely "everyone is overcharging and that's why it's going up" why. I think it's going to be on Moneybox Live, Radio 4 midday today.
anniesdad said:
David Cresswell, chairman of the ABP Club, which represents the body repair industry, declined to comment on individual cases, but told Post: "There have been rumours this has been going on, and it is shocking. Insurers should not be profiting from a claim. We could end up with another credit hire scenario. It is worrying what people outside of our industry would make of this."
Pity Dave didn't really know what this was at the time Still rumbling on, with more people pulling out of RIPE, which is not really helpful."Insurers should not be profiting from a claim" is exactly what RSA's counsel said in Bee v Jenson.
DAS provided a "free" hire (via Helphire) to CIS's insureds for non fault accidents.
CIS charged RSA the ABI GTA rate, as at fault insurer. CIS/DAS effectively made a profit, as it should not have cost that much to hire. Plus there was a significant referral fee transfer going on.
RSA's Complaint thrown out by court.
RSA justifiably annoyed, so decide to do something about it. Given a court had told them "it was OK" they used a subsidiary to set up exactly the same arrangement. Exactly the same LEGAL arrangement that they had been stung by.
Of course, those with an axe to grind will want this to be seen as the insurer has just added a few noughts on the repair bill. But they haven't, they feel there is a good basis in law for passing on the subrogated hire costs.
I don't think it is morally right, but I can understand what they have done.
And here is the thing (as per my other post)...this is exactly the same business model as Credit Hire.
So if you have gone "Boo hiss" at this, you must also go "Boo Hiss" at Credit Hire.
Noger said:
Pity Dave didn't really know what this was at the time Still rumbling on, with more people pulling out of RIPE, which is not really helpful.
"Insurers should not be profiting from a claim" is exactly what RSA's counsel said in Bee v Jenson.
DAS provided a "free" hire (via Helphire) to CIS's insureds for non fault accidents.
CIS charged RSA the ABI GTA rate, as at fault insurer. CIS/DAS effectively made a profit, as it should not have cost that much to hire. Plus there was a significant referral fee transfer going on.
RSA's Complaint thrown out by court.
RSA justifiably annoyed, so decide to do something about it. Given a court had told them "it was OK" they used a subsidiary to set up exactly the same arrangement. Exactly the same LEGAL arrangement that they had been stung by.
Of course, those with an axe to grind will want this to be seen as the insurer has just added a few noughts on the repair bill. But they haven't, they feel there is a good basis in law for passing on the subrogated hire costs.
I don't think it is morally right, but I can understand what they have done.
And here is the thing (as per my other post)...this is exactly the same business model as Credit Hire.
So if you have gone "Boo hiss" at this, you must also go "Boo Hiss" at Credit Hire.
I see what you did there and it's all interesting stuff, but not particularly relevant in the context of this thread...as the case relates to re-invoicing repair costs, not for hire vehicles. Still rumbling on, with more people pulling out of RIPE, which is not really helpful."Insurers should not be profiting from a claim" is exactly what RSA's counsel said in Bee v Jenson.
DAS provided a "free" hire (via Helphire) to CIS's insureds for non fault accidents.
CIS charged RSA the ABI GTA rate, as at fault insurer. CIS/DAS effectively made a profit, as it should not have cost that much to hire. Plus there was a significant referral fee transfer going on.
RSA's Complaint thrown out by court.
RSA justifiably annoyed, so decide to do something about it. Given a court had told them "it was OK" they used a subsidiary to set up exactly the same arrangement. Exactly the same LEGAL arrangement that they had been stung by.
Of course, those with an axe to grind will want this to be seen as the insurer has just added a few noughts on the repair bill. But they haven't, they feel there is a good basis in law for passing on the subrogated hire costs.
I don't think it is morally right, but I can understand what they have done.
And here is the thing (as per my other post)...this is exactly the same business model as Credit Hire.
So if you have gone "Boo hiss" at this, you must also go "Boo Hiss" at Credit Hire.
I can understand why you may draw parallel's with credit hire as there appears on the face of it to be a re-invoicing of a supplied vehicle for a profit. However, in relation to credit hire, ordinarily these vehicles are bought/leased by the credit hire company then hired out to customers at ABI agreed rates or greater or less, whatever. The cost of the service provision has to be met (I can assure you that sometimes it is not) by the value of the invoice, so it is unfeasible to expect a credit hire company (you can draw parallels with a spot-hire company, you don't need me to explain why) to work for a guaranteed loss. Let us not forget that credit hire is a tangible benefit to those taking up the service. Quite rightly our rates and those of other companies are analysed to the 'enth degree to ensure their reasonableness before payment is made. I have absolutely no problem with this. I do have a problem with operators within our field who do undertake questionable trading methods...the sooner they go, the better in my opinion. Listen I'm not trying to get any moral high ground here, but I have read comments posted elsewhere, some loosely based accusations have certainly raised my heckles and I have emailed some of the insurance personnel on here to invite conversation about his thorny subject but to date I'm yet to be taken up on this...or to even get a reply. C'est la vie.
Anyway, in my opinion, what we have in this case is not about this ^, but simply a re-invoicing for profit of a service that the insurers have not themselves provided...surely.
I don't know what you mean by your other post?
Ah, well it is a bit more complicated that "just" hire isn't it. It is more to do with the nature of subrogation.
RSA got stung (Bee v Jenson) for CDW payments that were wrapped up (and remain wrapped up) in the commercial agreement between DAS and Helphire.
Despite the fact we all think we know what was going on in terms of referral fees that no doubt balanced the WHOLE transaction out, the court refused to look under the covers and said "subrogation is subrogation".
So RSA set up a similar arrangement, mindful of what the judge had told them, this time effectively hiding various fees ON TOP of the repair costs. They are NOT inflating the bent metal costs. If you are in RIPE then this looks like inflation of repair costs because you don't get a breakdown and are just taking it on trust. Which is why Provident et al have pulled out of RIPE for the moment.
However, had you been paying attention to Post magazine, you would have seen that Cornish Mutual won a case against RSA on these costs.
"The other post" was referring to something I wrote about the lovely Accident Exchange and Darren Bent going back to court. Be interesting to see how that pans out Millionaire footballer, 3 other cars, bang him in spot hired DB9, what could possibly go wrong 
RSA got stung (Bee v Jenson) for CDW payments that were wrapped up (and remain wrapped up) in the commercial agreement between DAS and Helphire.
Despite the fact we all think we know what was going on in terms of referral fees that no doubt balanced the WHOLE transaction out, the court refused to look under the covers and said "subrogation is subrogation".
So RSA set up a similar arrangement, mindful of what the judge had told them, this time effectively hiding various fees ON TOP of the repair costs. They are NOT inflating the bent metal costs. If you are in RIPE then this looks like inflation of repair costs because you don't get a breakdown and are just taking it on trust. Which is why Provident et al have pulled out of RIPE for the moment.
However, had you been paying attention to Post magazine, you would have seen that Cornish Mutual won a case against RSA on these costs.
"The other post" was referring to something I wrote about the lovely Accident Exchange and Darren Bent going back to court. Be interesting to see how that pans out
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