Latest Analysis

As the volume flowing through Keoghs’ credit hire products continues to grow, so too has our ability to present data to insurers on our experiences across the market. As we have the ability to extract data from FNOL to trial we can provide insurers with a greater insight than that produced by those only dealing with one part of the claims process.

In recent issues of Credit Hire Aware we have analysed our anonymised data to illustrate our experiences and how the market is shaping from our point of view. Clients have recently asked for further information on the ongoing inflation in credit repair, how the market has reacted post Stevens and how the additional dynamic of a tough GTA rate review is impacting. Below we continue our analysis with our latest data.

Chart 1 shows the average hire days claimed and paid on settled cases. An important caveat is the fact that, to some extent, Keoghs’ average duration will be affected by our mix of referrals; for example we receive NGTA cases only from some new referrers, or high value claims from others.

Chart 1: Hire Period Claimed and Paid

The data shows that when comparing with the equivalent point in 2014, we have seen c. 1 / 1.5 days inflation in 2015. The start point for this inflation was over the winter period, and close to the conclusion of the CMA enquiry, but this has continued at a time when there has been downward pressure on rates.

When we look at the impact on overall hire spend inflation we see a similar trend.

Chart 2: Hire Claimed and Paid

Inflation in the amount claimed and paid for hire has very much mirrored that witnessed in durations, and the impact of our new referral sources arguably plays a more instrumental role to this metric.

However, the unrecoverable nature of the majority of these increases is demonstrated by the rise in percentage savings in late 2014 and early 2015. An element of this will be seasonality and delays over the Christmas period, but as this has settled we have still seen our claims experience increase by c. £100 per case when comparing 2015 vs the previous year.

The amount claimed and paid for credit repair has continued to increase across the board over the period reviewed.

Chart 3: Repair Claimed and Paid

A combination of CHOs being more aggressive in terms of credit repair cost, has caused the inflation on repair costs. Our figures show a decreased percentage saving over the period with the predominant reason being two protocol agreements being introduced with two large CHOs with significant credit repair volume by an insurer we act for. The basis of the protocols means the repair element is paid as presented, although we are discussing some concerns that have been highlighted through audits.

Chart 4: Credit Repair Frequency

It will be concerning for insurers that as damages have continued to increase, so too has frequency of credit repair. The combined impact is one that the market is increasingly being asked to bear. During a review of the vehicles going through credit repair in 2014 and 2015 we expected the inflation to be driven to some extent by an increase in prestige repairs. However, the data showed that the mix of vehicles being repaired is almost identical and therefore this is not the cause of the rising costs.

Some clients are reporting an increase in cost of AD repair of certain vehicles and manufacturers due to the types of technology now fitted as standard. Whilst we understand and experience similar increases this does not appear to account for the majority of the rises in damages claimed.

Finally with 23% of our volume coming from CHOs outside of the GTA we are being asked to show how the case of Stevens v Equity is affecting that part of the market. This is of particular interest for our clients with the slow moving GTA rate review.

Chart 5: Settlements & Litigation

Chart 5 shows a fairly sharp and perhaps expected decrease in pre-litigation settlements following the Stevens judgment in February. To that point we had seen CHOs starting to understand the methodology of making an offer in a genuine attempt to resolve cases amicably. As settlements have reduced we have witnessed litigation unsurprisingly increase as CHOs look to see if the County Courts will apply a different approach to that set out by the Court of Appeal.

The answer for them is that in the main they are not.

Chart 6: Hire paid – NGTA

The average amount we are paying for NGTA claims since the Stevens judgment is falling dramatically as cases flow through to trial and Stevens is applied.

This data is perhaps a timely reminder for the credit hire market that the GTA does still offer a viable solution to settle claims quickly and efficiently. The smaller CHOs sitting outside of the GTA are finding an increasingly challenging environment.

For more information on the data presented please do not hesitate to contact me and I will be happy to discuss in more detail.