Insurance companies squabble over vehicle repair cost
“RSA repair firm fabricated charges”
That was the headline of Insurance Times on 15 September 2011.
Much has been reported about the cost of road traffic accident compensation claims. The insurers blame claimants, claimants solicitors, claims management companies, but do not ever look at their own methods.
This case involved repairs to a vehicle insured by RSA. The accident was the fault of another driver so RSA asked that insurer to pay up for the repairs. Most insurers deal with such payment without argument but this time exception was taken to the figure demanded by RSA.
RSA set up a company to handle repairs called RSA Accident Repairs Ltd. That company either did the repairs itself, or contracted out the job. When the work was contracted out RSA Accident Repairs Ltd paid the contractor, but then invoiced RSA for a higher sum. The insurer of the person to blame for the accident was presented with that higher bill, and objected. Hence the argument before a Court.
The decision in the case rejected the additional items billed between the two RSA companies, a sort of repair surcharge if you like. The party at fault should pay for the loss caused by the accident, but not the extra sum created by RSA’s internal arrangements.
Full decision in the case between Kevin Fallows and Harker Transport of 2 September 2011 is available by clicking here.
“RSA takes very seriously any suggestion that it has acted inappropriately and strongly refutes any suggestion that it has acted so. Our model remains legal and compliant,” according to the BBC. The decision in question is a County Court decision and the report suggests there will be an appeal.
The insurers used to have an agreement between themselves called “knock for knock.” That meant insurers swallowed their own losses regardless of fault. This avoided administration costs and squabbling but more recent entrants to the insurance market brought this to an end. What is not acknowledged by insurers is that when a compensation claim is made that sorts out which insurer ought to pay, so in one way at least claiming compensation suits insurance companies.
The BBC report ran on to report David Creswell, a director of ABP Club which represents car repairers and insurers, says these disputes are proving very damaging.
He added: “The trust certain of the insurers have with RSA Insurance has gone to a very large extent. He said it was ordinary people who pay their car insurance premiums would ultimately suffer. “It is shocking. The whole principle is recovering the cost outlaid, not making a profit out of it.”