Claims management companies are forcing up insurance premiums for businesses with vehicle fleets, experts have claimed. Fleet specialists ConstructionInsure.co.uk have warned that premiums have rocketed due to claims management companies putting in big bills for hire vehicles.
These include bills of up to £25,000 for replacement vehicle hire costs even though the cost of repairing vehicle damage might be only hundreds of pounds. The experts say fewer people are claiming for personal injury after a crash and claim management companies are replacing this lost revenue with excessive hire charges.
Examples cited by the ConstructionInsure.co.uk experts include a scaffolding company’s van which was involved in a minor collision with a parked motor cycle. The motorcycle, worth £1,500 was parked and hit by a van. The claims management company placed the motorcyclist on a hire bike at a cost of £150 a day.
By the time the management company had finished their admin of the claim the hire bill came to £45,000 – far higher than the cost of the actual repair. The subsequent insurance claim forced the scaffolding companies Fleet Insurance premium up from £12,000 to £60,000 the following year – an increase of 500%.
In another case a haulage vehicle knocked a parked Jaguar which incurred wheel rim damage and a punctured tyre (pictured) costing around £1,000 to repair. (Insurance Edge note; the bodywork is also damaged requiring a partial respray, we don’t accept an estimate of £1000 for all the damage on this one, sorry.)
To avoid any hire charges, all the claims management company had to do was replace the tyre and wait for other repairs to be authorised.
Instead they claimed the car was undriveable and the hire costs of the replacement car came to £10,000. On another occasion a fleet van reversed into a Bentley Continental causing minor damage to the rear bumper.
The damage was estimated at £3,000 but the claims management company took the Bentley away although still driveable and eight weeks later billed insurers for £25,000 of car hire costs as well as the £3,000 repairs.
Mark Herbert of ConstructionInsure.co.uk said claims management companies were to blame for this worrying trend. He said: “As a broker we try our very best to keep down the cost of client’s fleet insurance premiums every year with fleet management techniques. As a result, loss ratios for these clients are kept to a minimum, meaning premiums are bearable for the client and the cost of their fleet insurance is not eating into their profits and gives them a better bottom line.
“It’s difficult for clients to take when they manage their vehicles and fleet policy well. A fleet renewal gets looked at by an individual who looks at how the fleet performs. When a fleet gets hit with a hire of over £20k on their claims history, their premium soars.
“There is no control over what these companies believe they can charge and how their actions have a huge impact of a company’s premiums by trying their luck to get these extortionate figures paid.
“It is circumstances like this which is putting pressure on the industry.”
There are always two sides to every collision story and the variation in costs from a backstreet car repair specialist to a prestige marque franchise can vary enormously. Equally an older motorcycle may need specialised attention from an expert. For example, if I owned a Ducati 916 SPS I would want to make sure that a well-known Ducati specialist obtained the correct genuine, factory made, carbon fibre parts and Termignoni exhaust silencer, not standard 916 model parts. When it comes to checking over and setting up a Ducati, Honda, Yamaha or similar 180mph superbike after a collision the rider’s life is on the line – an ill-handling bike with a poorly set up suspension could cause a high speed crash at a track day.
These are extreme examples of course, but many owners of expensive cars also want a great deal of attention to detail when it comes to repairs. There is no one size fits all when it comes to fixing up a Bentley, or a Jaguar XF. That said, insurers need to play their part in capping vehicle hire costs by automating much of the tedious claims handling admin that goes with any RTA.
One thing the industry can agree on is that the process needs to get slicker, and much, much quicker, while safety standards and like-for-like parts are used to repair vehicles, subject to owner approval.