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Comment: The game's up for dodgy insurers
I’ve just had the most ridiculous tussle with an insurance company – to save them money.
A neighbour had reversed into my car. Since my car was properly parked at the time, the neighbour accepted responsibility.
I’ve used a garage a mile down the road for the last twenty years. They’re straight, fully accredited, they don’t overcharge, and I trust them.
I wanted to use my garage for the repairs. If we timed things properly, they’d deal with the car midweek; I’d use the bus meanwhile, and not need a replacement vehicle.
The neighbour’s insurer wanted me to go to “their” repairer, and pressed me to take a replacement vehicle. This would have added hundreds of pounds to their bill (most likely about £1,000). It was only after I “pulled rank”, explained who I was, that they agreed my chap could carry out the repairs – which he did, satisfactorily.
You may think it’s crazy that this insurer thought it was in their interests to waste money in this way, on a hire vehicle I didn’t need, and on a repairer who was going to inflate their bills.
For the motorist – you and me – who has to pay rising insurance premium – it is crazy. Credit hire costs the industry an estimated £600m per year. For the insurance companies, however, locked into a dog-eat-dog market where dodgy rackets are supreme, it is not as crazy as it appears. For the insurer would be getting “referral fees” of £250 to £400 from the companies who hire out the replacement vehicles; they also receive “rebates” from the repairers, the paint, and the parts’ manufacturers.
It’s all designed “to drive up rivals’ costs” – not my words, but those of the Office of Fair Trading (OFT).
Thanks to the campaign which started with Blackburn motorists complaining to me about their premium, the OFT is now on to to these “arrangements”, which together with the big whiplash scandal, are costing the motorist dear. The Competition Commission has been brought in. I’ll be submitting evidence. As an honest insurer said to me last week: “Gradually, Jack, these guys realise the game’s up.” Let’s hope so.