There is no doubt that credit hire remains a sizeable problem for insurers. Equally, credit hire fraud is at the top of many insurers fraud agendas mainly because it remains extremely easy to perpetrate; the onus being firmly on the industry to ensure that their detection and validation processes are robust and comprehensive. This is especially true when it comes to credit hire claims involving taxis and private hire vehicles. The scale of the problem isn’t difficult to ascertain with the number of taxis and taxi journeys in the UK being quite staggering.
Taxis account for 600 million journeys per year in the UK
There are 231,000 licensed vehicles in total with nearly a third in London
There are over 297,000 individuals who hold taxi drivers licenses issued by over 350 local licensing authorities in England Wales
Source: https://www.gov.uk/government/collections/taxi-statistics
The UK taxi industry is significant and the impact of that industry upon credit hire and credit hire fraud is not going unnoticed by insurers. Whilst, statistically, taxis are more likely to be involved in a road traffic accident, does this alone account for the volume of claims (both fraud and non fraud) that we are currently seeing? Interestingly, in a recent study commissioned by the Department of Transport (DoT), taxi/minicab drivers showed a low ‘blameworthiness’ ratio in their accident involvement.
Credit hire claims involving taxis and private hire vehicles bring their own challenges, particularly around the rate and period of hire (both of which regularly appear to be excessive). Indeed, taxi credit hire is predominantly the domain of the non GTA credit hire company and this should immediately put one on notice. Such claims warrant careful handling and in depth checks around:
Ownership, insurance and roadworthiness of the claimant’s vehicle
Ownership, insurance and roadworthiness of the credit hire vehicle(s)
The proper licensing of the claimant, his vehicle and the hire vehicle(s)
The claimant’s compliance with Local Government (Miscellaneous Provisions) Act 1976 around the condition of his vehicle and accident reporting
The claimant’s finances
Any relationship between the claimant, the vehicle owner (if not the claimant) and the CHO
Such investigations form the backbone of Keoghs’ strategy on taxi claims in the credit hire and credit hire fraud arenas.
When dealing with credit hire fraud claims involving taxis and private hire vehicles, I always ask myself whether the claimant had any motivation for staging or inducing an accident. This might be a financial motive, for instance, the claimant had a County Court Judgment (CCJ) registered against them shortly before the accident. Alternatively, the claimant’s own vehicle could give rise to that motivation. A large number of private hire vehicles are ‘of an age’ and so at risk of failing their licensing authorities local regulations in respect of age of vehicle at first licensing or emissions standards.
At the present time, the current framework of regulation for private hire vehicles and taxis is completely local and there is no minimum national standard to which all Local Authorities must subscribe and impose.
The Law Commission (LC) is currently reviewing the law relating to the regulation of taxis and private hire vehicles and their final report and draft bill are due to be published at the end of April 2014. It is anticipated that the LC will seek to implement uniform national standards - with additional local standards permissible for example colours and signage. However, for the time being at least, there could be as many licensing standards as there are authorities. It is vital therefore, that on any claim involving a taxi that enquiries are made of the licensing department.
Some local authorities impose area specific regulations around the age of the vehicle at the renewal of, or first application for, a licence. It is not uncommon to see a local authority refuse to licence a vehicle that is over three years old at first licensing, or seven years at renewal time.
Consider therefore, the cabbie with a 10 year old Vectra. They are unlikely to satisfy the above criteria and therefore will fail when applying for renewal of their licence. What are the options in these circumstances? There would seem to be few. One would be to purchase a new vehicle that would satisfy the age test ie less than three years old but if, as the majority of taxi drivers would plead, they are impecunious, then how do they fund the replacement vehicle? An easy answer would be to stage or induce an accident for the purpose of writing off the old vehicle. The “innocent” cabbie then lands the bill for the much newer vehicle at the door of the at fault insurer - who no longer faces a £1,200.00 PAV claim but an £8,000 claim for the cost of its newer replacement.
Alternatively, consider the cabbie with a vehicle that is four and a half years old at the time of the accident. If the vehicle is written off as a result of the accident then they are in the same position as the owner in the first example. However, there is an option for the insurer in this instance. As long as the vehicle is a CAT C or D write off, then it is open to the insurer to repair the damaged vehicle and get it back on the road in order that, when it comes to renewal, the vehicle satisfies the age test. Doing this would save the insurer the cost of a newer replacement vehicle (as in example one).
Interestingly, in the DoT taxi and private hire vehicle licensing best practice guidance, it advised against setting, “arbitrary and inappropriate,” age limits for vehicles and instead advocated a greater frequency of testing. This would seem sensible but, when dealing with a taxi claim, always establish that authority’s own standards. Furthermore, any driver/owner aggrieved by the decision to revoke or refuse the vehicle a licence may appeal to the Magistrates Court pursuant to S60 of the 1976 Act. Therefore, all is not necessarily lost when it comes to the question of vehicle age.
Vehicle emissions are also an area that is concerning many local authorities with regard to the taxis and private hire vehicles they licence. In 2005, a review carried out by the National Society for Cleaner Air, found that, perhaps unsurprisingly, vehicles used as taxis were more likely to fail an emissions test than those that weren’t.
In addition, every council/local authority appears to have differing standards on vehicle emissions. For example, London requirements are that, from 1 April 2012, unless exempted, all newly licensed private hire vehicles must, as a minimum, meet Euro 4 standards for emissions and be no older than five years old, and all newly licensed taxis must, as a minimum, meet Euro 5 standards for emissions. In Norwich however, hackney carriage requirements are Euro 3 for taxis registered after April 2015, Euro 4 for April 2017, and Euro 5 for April 2019. This is another example of how important it is to ‘know your authority’. Each can also defer the implementation of the European standards as it sees fit.
Going back to the cabbie with the 10 year old Vectra, they are also at risk on the emissions rules and the same motivation to stage or induce an accident will be present. Therefore, always examine when the vehicle’s licence was due to expire or when its annual test was due, and map that against the accident date. If there is a temporal link then further questions should be put to the claimant.
One last thing to mention is S68 of the 1976 Act, which states that any licensing officer can inspect any taxi or private hire vehicle to ascertain its fitness and, if they are not satisfied, suspend its licence. Interestingly, if the officer does not re-inspect the vehicle and class the vehicle as fit for use within two months, the licence is deemed to be revoked. If the claimant disagrees with that decision then they can appeal to the Magistrates Court pursuant to S60. It is not uncommon to see taxis remain unrepaired after a non fault accident for much longer than two months. Pursuant to S68, the vehicle’s licence is revoked automatically after 2 months. If the claimant is aware of this then I would expect them to be pro-active and ensure that the vehicle is repaired within two months and I would question the claimant if this is not the case.
Credit hire and credit hire fraud cases involving taxis and private hire vehicles are, according to our data, on the increase and all of the insurers I talk to flag taxi claims as a major area of concern. Searching on the internet for “taxi claims in road traffic accidents” throws up multiple results for claimant firms who profess an expertise in pursuing such claims. I believe it is vital for insurers to be able to identify, validate and resolve such claims by way of focused, robust investigation. Engagement with the appropriate Local Authority is a vital piece in that investigation, as is a holistic strategy that deals with all aspects of the claim. Insurers must put themselves in a position to deal effectively with such claims and we would be happy to advise on a bespoke strategy.
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