Review of the quarter

In the last few months much of the wider industry debate has centred around the Government’s consultation on reform to the personal injury market and the small claims track limit.  Credit hire is referred to in Part 7 of the consultation. The Government is looking to obtain stakeholder views, and “is not minded to reform immediately”, but will “reflect carefully on responses” when deciding how to proceed.  Answers are to be provided by the consultation deadline of 6th January.

The views being sought are based on the models essentially outlined in the investigation undertaken by the CMA into private motor insurance; namely variations of first and third party models of vehicle mobility, and / or whether to regulate the credit hire market.  The claimant / CHO lobby will clearly feel that the outcomes of previous reviews make a strong case for no further intervention.

Whilst many compensators will agree with the Government’s is concern in respect of  displacement and unintended consequences; they will remain concerned that spending further time and effort on an area that historically yielded little financial benefit, will only serve to divert critical resource from the wider reform agenda.

Away from the developments in the legislative world, the industry seems to be in relative calm, though whether this is the calm before a storm remains to be seen.  The long awaited case of McBride v UKI is set to be heard in the third week of February, and this will influence (or not) the way in which the daily rate of hire is established outside of the confines of the GTA.  

Whatever the outcome of McBride, insurers will likely continue to be bolstered by the relative good news being handed out by the judiciary on a regular basis on these matters.  The recent outcome of Powell vs Palani again shows that District Judges are supportive of arguments made in relation to genuine mitigation.

Perhaps it is as a result of this landscape that a number of parties are reviewing their terms of ‘fixed / reduced’ price protocols and whether they do in fact still represent the best deal.  The larger data set and more sophisticated analysis that insurers now have access to, from numerous sources, perhaps shows that these protocols are no longer on the right terms.

Consultation questions

Question 22: Which model for reform in the way credit hire agreements are dealt with in the future do you support?

a) First Party Model
b) Regulatory Model
c) Industry Code of Conduct
d) Competitive Offer Model
e) Other

Please provide supportive evidence/reasoning for your view.

Question 23: What (if any) further suggestions for reform would help the credit hire sector, in particular, to address the behaviours exhibited by participants in the market?  Please provide the factors that should be considered and why.

Question 24: What would be the best way to improve the way consumers are educated with regards to securing appropriate credit hire vehicles?