Aviva’s Andrew Morrish said there is still room for more costs to be taken out of the system
The Competition and Markets Authority (CMA) has moved to defend itself in the face of criticism about its lack of action on credit repair.
The CMA has proposed action against credit hire costs but has not made similar proposals for remedies relating to the credit repair market.
Aviva motor claims director Andrew Morrish said the CMA had not gone far enough to help reduce the cost of claims in this problematic area.
“There is additional cost that can be taken out of the system,” he said. “We believe that the CMA has not tackled the fundamental issue of cost liability versus cost control. Notably absent is any meaningful reform covering non-fault vehicle repair, which leaves the door open for additional costs and referral fees to be added to the repair process. The at-fault insurer continues to have to pay for these extra costs, despite having no control over how those costs are incurred.”
“Ultimately, these costs impact customer premiums,” he added.
The CMA had initially found that the credit repair market was increasing the cost of claims, but has now performed a u-turn saying the effect is not substantial.
Alasdair Smith, who led the CMA investigation, said: “The deals that insurance companies can submit to at-fault insurers for repairs and the actual cost of repairs is much smaller than the gap that exists in credit hire.
“In credit hire we were looking at 100% mark-ups over cost. In the repair business the law does allow some retail mark-up to be added to the bill that’s passed to the at-fault insurer, but it is a much more modest mark-up.”
He also said that the issue of the mark-ups that are present could easily be resolved through the use of bilateral agreements between insurers and did not need regulatory intervention.