RSA judgement will pave way for insurers to inflate claims by 25% - Allianz

Car crash

Allianz today vowed to appeal the High Court judgement in favour of RSA, saying it would pave the way for insurers to inflate repair charges by 25%.

RSA was today claiming victory following a verdict by Mr Justice Cooke on preliminary issues in Coles v Hetherton, at the heart of which lies a challenge to the RSA repair model.

RSA took the case up to the High Court following a Romford County Court verdict last September which lambasted the insurer for ‘fabricating add-ons to repairs.’

Allianz cited two preliminary rulings by the judge which it felt would inflate claims.

The first was that the measure of loss in a case should be the reasonable cost of repair, rather than what was actually paid. The second was that the reasonable cost of repairs should be determined by what an individual would pay for repairs if they arranged them personally, even if the repairs were arranged by an insurer.  

Because insurers usually have preferred suppliers who charge a lower rate than an consumer could achieve on their own, Allianz argues that these rulings could push up claims costs.

Martin Saunders, head of technical claims, Allianz Insurance said: “The person on the street who pays their motor insurance premium will be bewildered by this.

“The problem is that no insurer can operate in a vacuum at a competitive disadvantage and survive because the commercial environment in which we operate is too challenging.

“If this decision stands we can expect the rest of the market to feel forced to move in the same direction as RSA which we estimate will add up to approximately 25% on to motor insurance repair bills which will ultimately impact significantly on premiums.

“Additionally we can expect to see a far higher volume of county court litigation as insurers challenge ‘notional reasonable repair costs to policyholders’ presented on evidence such as engineer’s reports’.”