Keoghs’ unique exposure to the whole credit hire process across our pre-litigation and litigation teams puts us in a great position to identify any change in behaviours at each point in the process; from GTA notification through to trial. To assist our clients, we produce quarterly CHO analysis highlighting changes in durations, vehicle mix, paid amounts, and market share. John Gibson, shares some of our latest findings.
Graph 1: Repair claimed and paid shows the average value of credit repair in the market for 2014. We witnessed further inflation in the average cost over the year.
What is perhaps more interesting is the frequency of credit repair across the market in this period. Graph 2: Credit Repair Frequency shows the frequency of credit repairs as overall claims in 2014. The rise in quantum of repair is mirrored by the increases in percentage of hires where a repair is provided. This would arguably suggest, in some quarters, a planned approach to increase revenues.
To try to understand what has driven this increase in quantum we assessed the mix of vehicles credit repaired in 2014 vs 2013. We expected to see a shift away into more prestige type vehicles, which would be more expensive to repair. This was the case to some extent, by a couple of percentage points, but this was much less than we anticipated.
Graph 3: Credit Repair ABI Grouping, shows the split of credit repair matters by type of vehicle repaired by GTA category in 2014.
When we replicated these charts by CHO we saw significant variations in costs, but many similarities in the vehicle mix. Reviewing the three largest CHOs showed that their costs deviate by up to £350 per case.
Away from repair we also looked at outcomes where we had received the case as a first notification and the case had subsequently litigated. The litigation rate we experienced was 2.2% overall (based on litigated claims as a percentage of those settled via negotiation in the year). The GTA CHO litigation rate was 0.6% and the NGTA litigation rate was 14.9%.
In litigation, we identified that generally we pay significantly less than what was originally claimed. This can only be achieved by running sustainable arguments at the pre-litigation stage and only ‘digging your heels in’ on the right cases. Our comparisons for these purposes are against the ‘Hire Claimed GTA’ amount in the data, and the original billed amount in respect of NGTA.
We saw in the second half of the year that there was a significant decrease in GTA litigation, and we are confident this decrease in GTA volume was/is due to the consistency of our arguments, the court’s support of these arguments and the fact CHOs were generally seeing the cases they were running failing to recover the GTA rate.
Graph 4: Litigated matters 2014 shows the average litigated settlements month on month for 2014.
On a positive note less than 1% of GTA claims are litigating, and of the 25,000 credit hire claims per year our unit handles, 75-80% of the GTA claims are settled within 30 days. I think it is vital for the next rate review to reflect a sensible recognition of where the market is now at. Also CHOs for their part perhaps need to self-regulate a little more and remove some of the inflationary tactics we are seeing, which only serve to add frictional cost into what is already a difficult process and additionally has a negative impact on cash flow. I’ve said it before… it’s only the lawyers that win when that happens!
John Gibson
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