Credit Hire: A brave new world

Fraud does not only affect insurers and their policyholders. For many years fraud has cost credit hire companies in excess of 10% of their annual revenue, with up to another 25% being delayed in legal actions and investigations. This is on top of vehicle theft from ‘alleged accidents.’ Whilst credit hire organisations (CHOs) attempt to be diligent, it is very difficult to keep ahead of the fraudsters with limited data and very little shared information.

Historically, AMCOs passed hire claims to well-known CHOs for hire provision, in an attempt to try to ‘clean up’ the claim.

There are some important changes on the horizon; Chris Grayling, the Justice Secretary, announced legislative changes - to be made by May 2015 - that should reduce fraudulent injury claimants,­­­­­­ whilst the CMA released their proposed remedies on 12 June 2014. The crux of these remedies appear to be based on the current ABI GTA, a process that many insurers and CHOs have worked hard to reduce frictional costs of credit hire.

Both of these announcements have been received positively by the whole industry, so is this the start of a new formula of co-operation between insurers and CHOs?

Whilst the devil is always in the detail, and it is unclear whether CHOs and insurers must be regulated by the new GTA process, there is probably a lot of work ahead to ensure that the detail ensures clients get correct mobility, costs are controlled fairly and premiums are reduced for all. The potential problem is ensuring the conduct of credit hire claims. When you consider that there are over 500 CHOs currently submitting hire claims and that 54 are subscribers to the GTA, nearly 90% of companies may or may not be running hire claims in a correct manner. This problem is far more reaching from decent CHOs and it is usually the actions of a small minority that damage the reputation and perception of the whole market.

The CHOs trade body ‘The CHO’ is actively trying to attract smaller CHOs and advise them of the processes and co-operation required for the good of the industry with The CHO’s code of conduct being the mainstay of maintaining membership. Although there are certain organisations whose reputations precede them, it is important that, with the changes, we help them conduct business in the correct manner.

More work is needed to increase co-operation. If we are to embrace the findings of the CMA, insurers and CHOs must work together openly, sharing data, ensuring that everyone uses the proposed portal and agreed processes correctly. If hire providers do not comply, we need to tutor rather than simply condemn. The courts have powers to deal with those that deliberately defy honest behaviour, but we first need to give the system a chance.

Let everyone move forward together and try to re-ignite what sometimes appears to be sadly lost - ‘The Spirit of the GTA.’