Media Information

CHO comments on replacement vehicle cost dynamics and agrees with OFT on issue of referral fees

Wednesday, June 6th, 2012

Contact: Katie Russell, 020 7824 1859/ 07973 505 207/ katie@insightpa.com

CREDIT HIRE ORGANISATION RESPONSE TO OFT REPORT ON MARKET STUDY OF PRIVATE MOTOR INSURANCE

CHO EXPLAINS REPLACEMENT VEHICLE COST DYNAMICS

Credit hire companies are being wrongly attacked by commentators for the differences in the costs of replacement vehicles.

There are two common ways that non-fault accidents can be managed and which result in the non-fault party being offered a car:

1)      Where the fault insurer admits liability promptly they may go to a credit hire company (or other rental company) to supply the car for the non-fault driver. 

Two factors can minimise the consequential costs:

a)      The non-fault party will probably be offered a cheaper, lower specification car in the first instance (and their legal entitlement to a like for like car not fully explained); and

b)      The fault insurer will have entered into a contractual relationship with the credit hire company (or other rental company) under which the insurer will be offered volume based discounts in exchange for volume commitments and prompt settlement of the invoices. (30 days is typical)

2)      However, at-fault insurers, more often than not, do not admit liability promptly. They therefore do not offer a car at all to material numbers of genuine non-fault parties. The non-fault party still has rights to a vehicle where he or she believes they are not at fault for the accident and credit hire companies will act on behalf of these drivers, providing them with a like-for-like vehicle before taking up the challenge of recovering the associated rental fees from the fault insurer (where such recovery can take over a year to achieve.) The insurer will still have been offered material discounts for prompt settlement of these charges (under the ABI sponsored General Terms of Agreement protocol) but for a variety of reasons, including the point on admission of liability, more often than not they fail to take full advantage of these discounts.

Data submitted by credit hire companies to the OFT has enabled them to identify that the costs to the fault insurer of the second scenario outlined above, are £560 per hire on average than the first scenario as explained above. It is not the case, as has been misrepresented today, that credit hire companies deliberately charge higher amounts than are legally due.

Both types of service provision are offered by credit hire companies.  The difference in costs is as a result of the behaviour of the insurer, not the credit hire company.

REFERRAL FEES: OFT CORRECT TO ACKNOWLEDGE FURTHER

INVESTIGATION INTO MARKET DYNAMIC IS REQUIRED

The issue of referral fees has attracted considerable debate both in the market for personal injury claims (where they will be banned from April 13) and in relation to the provision of replacement vehicles. In the case of the latter, these referral fees, as identified by the OFT report, are received by insurers and assist in the off-setting of the costs associated with replacement cars. 

The CHO is pleased that the OFT has identified that there would be considerable uncertainty attached to the outcome of a ban or cap on referral fees and that it is premature for it to make a recommendation without an in-depth enquiry into the consequences of such a ban or cap.

A non fault parties’ entitlement to a replacement car is established in law and the CHO is keen to ensure that any recommendations ultimately made by the OFT or a consequent Competition Commission investigation do not make access to that replacement vehicle very unlikely indeed for the UK consumer.

Notes to Editors

·        The CHO Limited represents the interests of credit hire companies (“CHCs”) in the UK. 

·        CHCs are regulated by the Financial Services Authority. 

·        CHCs provide continued mobility solutions (vehicle rental) to the innocent parties of motor traffic accidents. 

·        CHCs provide complete advice to the consumer as to their legal rights and assume the risks of dispensing this advice and also assume the risk of ultimately failing to recover the costs of providing the vehicle rental if their analysis of, inter alia, fault in each accident is wrong.

·        For more information please contact Martin Andrews on +00 44 (0)7730517699.

·        http://www.thecho.co.uk/

RESPONSE TO PROVISIONAL DECISION BY THE OFT TO REFER THE PRIVATE MOTOR INSURANCE MARKET TO THE COMPETITION COMMISSION

Thursday, May 31st, 2012

CREDIT HIRE ORGANISATION RESPONDS TO PROVISIONAL DECISION BY THE OFFICE OF FAIR TRADING TO REFER THE PRIVATE MOTOR INSURANCE MARKET TO THE COMPETITION COMMISSION

 

DETAILS

Story: The Credit Hire Organisation (The CHO) responds to the decision by the Office of Fair Trading (OFT) to undertake further studies before they potentially refer the private motor insurance market to the Competition Commission.

Contact: Katie Russell, katie@insightpa.com, 020 7824 1859 / 07973 505 207

In response to today’s decision by the Office of Fair Trading (OFT) to undertake further studies before it potentially refers the private motor insurance market to the Competition Commission, Martin Andrews, Director General of the Credit Hire Organisation (CHO) said:

“The original decision of the OFT to investigate the private motor insurance market came after insurer claims that motor insurance premiums had risen by almost 40 per cent to compensate for the increased costs of personal injury claims (whiplash) and other costs including those of credit hire. The Transport Select Committee subsequently identified that these claims were unfounded and the rise in premiums was in fact closer to 12 per cent and was caused by the increase in whiplash claims more than any other factor.

The provisional findings from the OFT today conclude that the costs of any market dysfunctionality in the UK private motor insurance market place are £225 million, representing less than 2 per cent of the insurers’ total annual spend of approximately £13 billion. Quite clearly then the costs of any market dysfunctionality are not the reason for the recent rise in the cost of premiums.

The CHO welcomes the opportunity for further constructive, but more intensive, engagement with the OFT over the coming months to assist it in arriving at a final decision about whether to refer the complex motor insurance market to the Competition Commission and of the scope of that investigation.

Furthermore, the CHO is pleased that the OFT has identified in paragraph 2.12 that there is a consensus among market participants that credit hire does address a gap in the market and improves the quality of service to not-at-fault drivers following an accident.”

24 April 2012 – CHO Welcomes Opportunity for Ongoing Dialogue with the OFT

Friday, May 25th, 2012

 

THE CREDIT HIRE ORGANISATION WELCOMES ONGOING DIALOGUE WITH OFT ON PRIVATE MOTOR INSURANCE IN THE UK

 

DETAILS

Date: 24 April 2012

Story: The Credit Hire Organisation (The CHO) has met with officials at the Office of Fair Trading (OFT) as part of their Market Study into Private Motor Insurance in the UK.

Contact: Katie Russell, katie@insightpa.com, 020 824 1859 / 07973 505 207

Today, members of the Credit Hire Organisation met with officials at the Office of Fair Trading as part of the OFT’s ongoing Market Study into Private Motor Insurance in the UK.

Martin Andrews, Director-General of the CHO, said:

“We welcome the opportunity for further engagement with the OFT today as we continue to make the case for the UK motorist’s right to mobility. In our dialogue with officials today we once again highlighted the importance of safeguarding access to justice for the motoring consumer, in particular providing access to the mobility to which they are legally entitled in the event of a road traffic accident.

“We greatly valued the opportunity to further explain the mutual benefits of the ABI General Terms of Agreement; the protocol whereby the costs and time periods associated with a claim are minimised. Crucially, the GTA is agreed and adopted by the majority of UK motor insurers and UK credit hire organisations and is specifically designed to facilitate the prompt and cost efficient resolution to claims.

Members of the CHO will continue to work alongside the OFT in this endeavour and look forward to the publication of their findings this Spring.”

-ENDS-

Notes to Editors

·       More information regarding the OFT’s Market Study into Private Motor Insurance in the UK can be accessed here: http://www.oft.gov.uk/OFTwork/markets-work/motor-insurance/

·       The CHO Limited represents the interests of credit hire companies (“CHCs”) in the UK. 

·       CHCs are regulated by the Financial Services Authority. 

·       CHCs provide continued mobility solutions (vehicle rental) to the innocent parties of motor traffic accidents. 

·       CHCs provide complete advice to the consumer as to their legal rights and assume the risks of dispensing this advice and also assume the risk of ultimately failing to recover the costs of providing the vehicle rental if their analysis of, inter alia, fault in each accident is wrong.

·       For more information please contact Martin Andrews on +00 44 (0)7730517699.

·       http://www.thecho.co.uk/

20 April 2012 – CHO Welcomes Transport Select Committee’s Commitment to Safeguarding Access to Justice

Friday, May 25th, 2012

THE CREDIT HIRE ORGANISATION WELCOMES TRANSPORT SELECT COMMITTEE’S COMMITMENT TO SAFEGUARDING ACCESS TO JUSTICE FOR THE UK MOTORIST

 

DETAILS

Story: The Credit Hire Organisation (The CHO) responds to the Transport Select Committee’s Special Report on the Government’s response to its report on the cost of motor insurance in the UK.

Contact: Katie Russell, katie@insightpa.com, 020 824 1859 / 07973 505 207

Embargo: Friday 20 April 00:01 BST

 The House of Commons Transport Select Committee has today issued a Special Report on the Government’s response to its investigation into the Cost of Motor Insurance.

 

Martin Andrews, Director-General of The Credit Hire Organisation, today said: 

“The Credit Hire Organisation welcomes comments from the Committee Chair, Louise Ellman MP, affirming the commitment to safeguarding access to justice. This is a commitment that the CHO and its members also share wholeheartedly, providing consumers with access to the mobility to which they are legally entitled in the event of a road traffic accident.

“To this end, we are continuing to work alongside officials at the Office of Fair Trading in their Market Study of Private Motor Insurance in the UK, the results of which are to be published this Spring.

“We welcome the Government’s commitment today to maintain open dialogue with industry stakeholders and look forward to engaging with Government officials as we work to safeguard the UK motorist’s continuing right to mobility.”

-ENDS-

Notes to Editors 

·       The Transport Select Committee’s report on the Cost of Motor Insurance: follow up, was published on 12 January 2012.  The original report can be accessed here:

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtran/1451/145102.htm

·       The CHO Limited represents the interests of credit hire companies (“CHCs”) in the UK. 

·       CHCs are regulated by the Financial Services Authority. 

·       CHCs provide continued mobility solutions (vehicle rental) to the innocent parties of motor traffic accidents. 

·     CHCs provide complete advice to the consumer as to their legal rights and assume the risks of dispensing this advice and also assume the risk of ultimately failing to recover the costs of providing the vehicle rental if their analysis of, inter alia, fault in each accident is wrong.

·       For more information please contact Martin Andrews on +00 44 (0)7730517699.

·       http://www.thecho.co.uk/

12 Jan 2012 – CHO Response to the Transport Select Committee Report

Friday, May 25th, 2012

The Credit Hire Organisation calls on MPs to acknowledge the difference between whiplash claims and credit hire

 

DETAILS

Story: The Credit Hire Organisation (The CHO) responds to the Transport Select Committee’s report on the cost of motor insurance in the UK.

Who: Interview opportunity with Martin Andrews, Director-General of the CHO

When: Live interview opportunities Thursday 12th January 2012

Format: Landline

Contact: Katie Russell, katie@insightpa.com, 020 824 1859 / 07973 505 207

The House of Commons Transport Select Committee has today issued a report on the cost of motor insurance following responses to its earlier report issued in March 2011.

The Credit Hire Organisation (The CHO) welcomes the Committee’s acknowledgement that the recent rise in insurance premiums is predominately attributed to an increase in the volume of whiplash claims. This is due to the inability of insurers to defend these claims given the difficulty in diagnosing whiplash effectively.

Martin Andrews, Director General of the CHO, said;

“We have long maintained that credit hire costs are not the reason for a rise in insurance premiums and it is vital that the distinction is made between Personal Injury claims (whiplash) and those relating to credit hire.

Due to the difficulty in proving whiplash and subsequently the difficulty in quantifying damages, the magnitude of the legal costs is substantial. By comparison, credit hire is considerably more transparent.

In the event of a motor traffic accident the damage incurred to the vehicles is materially transparent, as is the need of the parties to a replacement vehicle in order for them to continue with their daily lives.  Credit hire companies review and monitor repair periods, under the auspices of the ABI General Terms of Agreement (“GTA”) so as to minimise the duration of the rental period.

The inevitable consequence of the proposed ban on referral fees will be yet again to disadvantage the UK motoring consumer. Motorists will find it harder to gain access to their legal right to mobility and a replacement vehicle so as to be able to continue with their daily lives as it was before someone drove into them.”

-ENDS-

Notes to Editors 

·       The CHO Limited represents the interests of credit hire companies (“CHCs”) in the UK. 

·       CHCs are regulated by the Financial Services Authority. 

·       CHCs provide continued mobility solutions (vehicle rental) to the innocent parties of motor traffic accidents. 

·      CHCs provide complete advice to the consumer as to their legal rights and assume the risks of dispensing this advice and also assume the risk of ultimately failing to recover the costs of providing the vehicle rental if their analysis of, inter alia, fault in each accident is wrong.

·       For more information please contact Martin Andrews on 07730 517 699

·       http://www.thecho.co.uk/

6 Jan 2012 – GTA appoints new independent Chairman and provides a positive update on the GTA protocol

Friday, May 25th, 2012

GTA News Release 6 January 2012

Appointment of new independent GTA Chairman

Update on the operation of the GTA Protocol

The ABI General Terms of Agreement (GTA) is a protocol agreed and adopted by the majority of UK motor insurers and UK credit hire organisations (“CHOs”). It  is designed to facilitate the prompt and cost efficient resolution to claims made by the non-fault party to a motor accident for the costs of their continuing mobility whilst their vehicle is repaired.

Appointment of new independent GTA Chairman

The GTA is overseen by a Technical Committee comprising an equal number of insurer and credit hire representatives who are today pleased to announce the appointment of Tim Wallis as the new independent Chairman of the GTA.

Tim Wallis takes over from Tim Kevan with immediate effect.

Steve Hiscock, Chairman of the ABI Focus Group of motor insurers, commented:

“Tim Kevan has been a very good first Chairman for the GTA but he has decided to concentrate on other areas. The Committee is delighted that Tim Wallis has accepted the Chairman role and members look forward to working with him.”

Tim Wallis is one of the comparatively rare full time independent professional mediators. Tim has been dedicated to mediation since 1991 and has a longstanding involvement in mediation policy work at a national level with the Civil Justice Council. Tim’s diverse range of experience results from posts held such as: law firm partner for over 20 years, Head of Insurance Litigation, Senior Partner, member of the Law Society’s Civil Litigation and ADR Committees, President of FOIL (Forum of Insurance Lawyers) and, currently, chair of the Civil Justice Council’s ADR Working Party and also Independent Chairman of the RTA Portal Co Limited.

Tim Wallis added:

“I am very much looking forward to the challenges of working with insurers and credit hire organisations on what is a unique protocol designed to be of mutual benefit. I hope to build on its development over the last decade by making it as useful and appropriate for the next few years.”

Update on the operation of the GTA Protocol

The Technical Committee has today taken the opportunity to provide an update on the continuing successful and beneficial operation of the protocol.

Early in 2011 it was decided to undertake a number of pilot audits into the operation and adherence to the GTA. Fusion Management was appointed to undertake twelve pilot audits of first tier credit hire organisations that are subscribers to the GTA. They were asked to look at both CHO and insurer adherence to GTA claim settlement processes.

The results of the audits have now been reported to the Technical Committee and key conclusions are:

·       Both insurers and CHOs demonstrated a considerable commitment to the GTA and the great majority of claims were successfully concluded under the protocol, thereby avoiding costly litigation and settlement delays.

·       Where there were problems on individual claims it was clear CHOs and insurers both contributed, virtually equally, to the lack of early GTA resolution.

·       The main challenges for insurers and CHOs are clear; to try and reduce the extent of costs and processes that cause friction within the operation of the GTA and to find a better, cheaper and quicker way to handle disputes on, inter alia, indemnity and liability issues.

The Technical Committee has now decided that further general audits of existing GTA subscribers would produce little additional information of value to the running of the GTA. Individual firms might, however, benefit from audits if they would like their processes and operations reviewed for best practice and it remains a requirement for new GTA subscribers to successfully pass an audit before acceptance to the GTA.

The Technical Committee has instigated a number of initiatives to build on the GTA protocol and its operational processes:

·       Work has commenced on scoping a possible web based portal to be used for the resolution of credit hire claims. The aim would be to ensure even greater conformity with the GTA, reduce paperwork, improve management information and above all reduce insurer and CHO administration costs and speed up claim settlement.

·       Further initiatives are also underway to explore the reasons for and possible process improvements in relation to, inter alia, the resolution of indemnity and liability disputes so as to reduce the delays and legal costs otherwise incurred prior to claim settlement.

·       Detailed analysis of the audit output is also being undertaken by Fusion Management to see if amendments to the GTA, further guidance or other practical solutions might be developed to the continuing benefit of insurers and CHO’s.

Steve Hiscock, Chairman of the ABI Focus Group of motor insurers, commented:

“The pilot audits have proved very useful in confirming adherence to the GTA and also in identifying further areas of possible improvement including the potential value of a portal for GTA credit hire claims.”

Martin Andrews, Director General of The Credit Hire Organisation, added:

“The GTA is an extremely important protocol that reduces the costs and time periods for the insurer settlement of credit hire claims.  The CHO will be considering as a priority the establishment of a portal and will be producing a scoping proposal early in the New Year for discussion and agreement with insurers.  We wish Tim every success in consolidating and moulding the future of the GTA to the continuing benefit of the motoring consumer.”

The GTA is supported by insurers and credit hire companies representing around 90% of all credit hire in the UK. Brit Insurance has just joined the GTA leaving only a couple of significant insurers that remain outside. Most credit hire companies are GTA subscribers.

-ENDS-

Enquiries to:

Stephen Hiscock (Chairman, ABI Focus Group) Tel: 0777 582 0989

E: stephen.hiscock@churchill.com

Martin Andrews (Director General, The CHO) Tel: 07730 517 699

E: mandrews@thecho.co.uk

14 Dec 2011 – OFT launch study in to private motor insurance in the UK

Saturday, May 19th, 2012

Contact: Katie Russell on 020 7824 1859 / 07973 505 207 / katie@insightpa.com

THE CREDIT HIRE INDUSTRY WELCOMES THE OFT’S GOAL TO UNDERSTAND BETTER THE MOTOR INSURANCE INDUSTRY

Following a Call for Evidence, the Office of Fair Trading has today launched a market study into private motor insurance in the UK, which includes a focus on the provision of third party vehicle claims and credit hire. The OFT’s findings suggest that there are features of the UK’s private motor insurance market that require further analysis. The Credit Hire Organisation (CHO) welcomes the OFT’s goal to understand better the industry and urges the consumer protection and competition body to take into consideration all of the evidence to reach a full and fair set of valid conclusions.

Premiums exaggerated

The CHO’s comprehensive submission to the OFT’s Call for Evidence clearly demonstrated that the average cost of hire across the industry has fallen; the average length of repair and hire has fallen; and that total industry costs for hire have remained static. The CHO strongly disputed the exaggerated claims about the rise in the cost of private motor insurance premiums, and therefore welcomes the OFT’s acknowledgement that “actual premiums being paid appear not to have risen as far as estimates might suggest.” 

GTA provides certainty and cost control

The CHO works in partnership with the insurance industry, for mutual benefit and to the advantage of consumers, via a voluntary protocol which sets the terms, conditions and rates for credit hire in the UK. The ABI General Terms of Agreement (GTA) covers 90 per cent of credit hire in the UK and ensures that all claims are handled at the lowest possible cost. The OFT agreed, following an analysis of the GTA in 2004, that the protocol provides greater certainty and security for those motorists using credit hire vehicles.

Credit hire companies (CHCs) rely for their business on introductions from a variety of sources including motoring organisations, insurance brokers, body-shops and insurance companies.  In most cases the CHC pays a fee to the source in exchange for the introduction. There must be some acknowledgement that such payments in a credit hire setting are thus very different from those within a Personal Injury context.

Martin Andrews, Director-General, CHO;

“We are extremely experienced in assessing the accident circumstances and our clients’ needs, striving to bridge the gap in insurance arrangements whilst delivering an excellent customer experience at minimum controlled cost. The Credit Hire Organisation looks forward to working with the Office of Fair Trading and participating fully in this market study. The CHO will continue to work to protect the cost controlled environment that credit hire provides to those innocent victims of motor crashes who need a replacement vehicle to go about their daily lives and thereby ensuring that the needs and rights of motorists are adequately protected.”

-ENDS-

Notes to Editors

The Credit Hire Organisation (CHO) is the official trade body, representing the credit hire industry. The credit hire industry offers mobility solutions and often uninsured loss recovery to the motorists involved in an accident that was not their fault. The industry works closely and in partnership with insurers through an established, voluntary protocol that protects motorists’ needs and rights, recovering the costs involved from the insurer of the person responsible for the accident.

For more information please go to http://www.thecho.co.uk/home/ or contact Martin Andrews, Director General, CHO on 07730 517 699

Appointment of Director General

Monday, October 31st, 2011

The CHO Director General Appointment 31.10.11

AMA and NACHO propose a merger 4.3.10

Friday, March 5th, 2010

The Executive Committees of the Accident Management Association (AMA) and the National Association of Credit Hire Operators (NACHO) have agreed proposals to merge and have recommended acceptance to their respective memberships.This would provide one association to represent and promote the credit hire/credit repair market with at least 65 full members and 25 associate members. Members are expected to account for 90% of the market. It is hoped that some CHOs that are currently not in AMA or NACHO will decide to join.

Tony Baker, AMA Director General, commented:

“We have been working on the merger proposal for some time now. The level of co-operation, the spirit of co-operation and the clarity of agreement on areas of policy and principles between NACHO and AMA has galvanized the two Executive Committees.”  

Ralph Ferguson, NACHO Chairman, added:

“With the recent corporate governance changes introduced within the GTA, this merger is absolutely the right thing for both the industry and for all of our members.” 

There will be a short consultation period with the expectation of working to complete all aspects of the merger in the next three months, with the new association operating fully with effect from 1 June. In the meantime the two associations will continue to work very closely together.

The initial, key objectives for the new association are proposed as:

  • A commercial initiative(s) to try and remove frictional costs from the GTA to the mutual benefit of insurers and CHOs and to help ensure CHOs retained more responsibility for their own destiny.
  • Initiatives to deliver a speeding up of GTA payments by insurers to improve CHO cash flow.
  • Improved performance in the GTA Technical Committee and a successful implementation of the new governance arrangements.
  • Speedy and successful resolution of the 2010 GTA rate review.

The Chairman for the new association will be elected from members of the AMA and NACHO Executive Committees. It is proposed that Tony Baker (Currently Director general, AMA) should be the Director General with Barry Bromley (currently Secretary, NACHO) Membership Secretary.

-ENDS -

Enquiries to:

AMA – Tony Baker (01920 465000 / 07725 462 528)

NACHO – Ralph Ferguson (01827 319416/ 07733 002 003)

AMA response to Review of civil litigation costs report 15.1.10

Monday, January 18th, 2010

Accident Management Association

           15 January 2010

News Release 

The Accident Management Association expressed opposition to many of the proposals in Sir Rupert Jackson’s final report “Review of civil litigation costs” published yesterday.

Tony Baker, Director General of the AMA, commented:

“The positive proposals in the report are dwarfed because of the overwhelming detrimental consumer aspects.  The abolition of recovery of success fees and ATE premiums would reduce access to justice. The legalisation of contingency will be misused and also reduce access to justice. A ban on referral fees is unwarranted and impractical.”

He added:

“It would be amazing if any government sought parliamentary time to carry forward these proposals.”

-ENDS-

Notes for Editors

1. Enquiries to:

Tony Baker

Director General, Accident Management Association

www.amassociation.co.uk

Email: thetonybaker@gmail.com

Tel: 01920 465000

Mob: 07725 462 528

2. AMA has 45 full members and 16 associate members. Members account for around 70% of credit hire and credit repair business in the UK.

3. The credit hire industry provides a service to people by assisting them with an insurance claim where their vehicle has been damaged in a motor accident.  The main elements of the service are the provision of a replacement vehicle (credit hire) and arranging repairs (credit repair).

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