Credit hire organisations could be incentivised to take on more split liability cases as a result of the proposed CMA remedies

The volume of credit hire cases could increase as a result of the proposed Competition and Markets Authority (CMA) remedies for the private motor market.

The majority of credit hire claims that are submitted are currently for cases where the claimant is 100% not at-fault, but under the proposed dual price cap credit hire organisations (CHOs) may be incentivised to take on more split-liability cases.

LV= claims strategic development manager David Butcher said this is because the money made on a case that receives the higher rate at split liability could still be higher than the income for 100% of a claim at the lower rate.

“What this remedy could potentially drive is for [CHOs] to be prepared to take on a lot more customers who don’t have 100% liability in their favour, because if they pursue a claim and are successful in getting a 75% offer, they will still have recovered more than 100% of the lower rate where the insurer accepted full liability,” he said.

Butcher said this could also result in insurers accepting full liability in cases for which they are not 100% at-fault.

“There is a potential incentive for credit hire companies to take on more split liability cases than they do currently, and potentially an incentive to accept those at 100% liability because they are going to be cheaper [than split liability at the higher rate],” he said.