Motor insurance premiums and associated claims costs are a source of never-ending debate across the industry. Whilst credit hire costs and their containment have been on insurers' radars for some time, there has been little investigation or success in tackling the state of the credit repair market.
Launched in December 2012, the Competition Commission's (CC) investigation, is now however, specifically due to look at the costs of repairs for not-at-fault drivers claiming for an accident. With the CC’s initial findings expected to be published in November 2013, I explore here the challenges faced by the market in relation to credit repair costs and discuss what measures can be taken now to mitigate losses.
Inflated credit repair labour rates, have long been a challenge and a headache for insurers; with some of the blame for increasing motor premiums being placed on the supply chain within the claims sector and in particular Credit Hire Organisations (CHOs) and Claims Management Companies (CMCs).
Whilst CHOs provide a valuable service to the consumer, TCF is supporting insurers and their legal partners to tackle the rogue organisations that drive up the cost of claims and bring the credit hire industry into disrepute.
Insurers have long been looking for a way to challenge the status quo for the handling of credit repair, but have not had a robust, cost-effective solution available to them. Whilst virtually all insurers would agree that they know repair rates are inflated, they have previously struggled to prove it, with the absence of comparative data based on the labour rates quoted to the 'man on the street'.
Having reviewed the market, the challenges and the barriers to traditional practices, we identified the fundamental needs of the industry to be:
In direct response to these market needs, we established a credit repair rates validation service and in the six months since launch we have seen 62% of credit repair cases referred to be proven to include inflated labour rates. The remaining 38% of cases were screened, labour rates validated - and returned for timely settlement.
The CC earlier this year claimed it found evidence that non-fault repair costs were up to £300 higher for repairs managed by a credit repair firm rather than the at-fault insurer. From our evidence to date, the average saving made on challenging the right inflated credit repair invoices is approx. £400.
With insurers receiving tens of thousands of credit repair invoices every year; based on TCF’s results, challenging the correct 100 inflated invoices per month, could save an insurer over £480,000 a year in credit repair charges.
Whilst some say CHOs have long been in the practice of sharing intelligence and knowledge; insurers have largely and understandably held their own counsel. At TCF we strongly believe the sharing of professional insights, experiences and best practice with individual clients, is vital to the industry tackling escalating credit hire and credit repair costs. Collaboration with their suppliers will be key to eradicating the rogue credit hire organisations, and those bringing the sector into disrepute and driving up claims costs. It would seem that the insurance industry agrees as the numbers in our private electronic forum continue to swell and our networking events are over subscribed.
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