The genesis of the GTA

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A key part of the insurers’ strategy was the launch of the General Terms of Agreement (GTA), through the insurer trade body the ABI, on 1 September 1999.

CHOs had little involvement in agreeing the terms and conditions of the GTA. The GTA was initially piloted with just two national CHOs (Enterprise Rent-a-Car UK Ltd and National Car Hire Ltd). GTA hire rates amounted to a reduction of over 10% on the prevailing rates being sought by CHOs and less than the courts would have awarded.

In summary, the GTA set the administration requirements, over and above those necessary to pursue a claim on a purely legal basis, to assist insurers to deal with claims under the scheme and the payment terms and amounts. The GTA therefore provided and still provides a centralised framework for agreeing the basis for settling claims. In the absence of this a vast number of bilateral agreements would need to be put in place to cover the market.

The stated intention of the GTA was to rein in the number of credit hire claims being brought before the Courts. In practice the key aspect of the GTA was to create a protocol, including approving hire rates, that insurers were willing to pay.

From June 2000, the GTA was extended to enable other CHOs to join (it was extended to cover credit repairs in February 2001). The rates and details were set by insurers, and CHOs were invited to accept the GTA as a ‘voluntary’ agreement. Many CHOs had little or no choice but to accept, as they were starved of cash flow and many were in danger of bankruptcy. Indeed many CHOs went under through non-payment of claims.

When the GTA was opened up the accepted GTA rate fell by around 25% but a £30 administration fee was included to cover some of the additional administrative burdens on the CHO – the Credit Hire Organisation - from GTA requirements.