Starling proposes alternative plan and claims costs have been over-estimated

The ABI has launched a scathing attack on government plans to hike charges for the recovery of damaged vehicles, warning they will lead to confusion and abuse.

In a letter to the Home Office, ABI director of general insurance Nick Starling condemned the proposed charges as “excessive”. Current plans will see the existing flat-rate charge of £105 replaced with 23 different charges, ranging from £150 up to £8,400.

Instead, the ABI has recommended its own scheme, with lower charges and a flat-rate fee of £150 for all vehicles under 3.5 tonnes. It has also submitted a dossier of removal receipts, suggesting that the Home Office has over-estimated the cost of removing vehicles.

The proposals have also come under fire from a leading motor charity. Sheila Rainger, acting director of the RAC Foundation, said: “The consultation’s proposals are a recipe for confusion. The foundation has seen occasions where private companies have taken advantage of sliding fee scales, and in this case, they may increase prices above what a removal costs.”

Paying for vehicle removals ordered by the police – known as statutory removals – already costs the insurance industry £50m a year, and the Home Office admits that the burden of the new charges will be borne by insurers.

In his letter, Starling said: “Although you do not invite (indeed you discourage) comment on the new recovery scenarios, we believe it is important to make you aware of the adverse impact these will have on insurers, their customers and other stakeholders.”

Police-instructed recoveries involve vehicles that are illegally, obstructively, or dangerously parked, abandoned or broken down.

The Home Office has already said that the consultation regarding the 23 scenarios is now closed. The consultation on fees – to which the ABI was responding – closed on 25 January.