But they will not negotiate on credit hire rates in advance of next year’s annual rate review
Credit hire companies (CHCs) have called for insurers to get around the negotiating table for talks about the future of the ABI’s General Terms of Agreement (GTA).
The Credit Hire Organisation (CHO) has today written to insurers with a document entitled Indication of Support - GTA Portal signed by the chief executives of 15 of the UK’s largest CHCs.
The document calls on the insurance industry to enter into talks with the credit hire industry about introducing a portal for managing credit hire claims that will decrease the amount of time it takes to process a claim, driving down frictional costs.
CHO director general Martin Andrews said: “We are issuing an invitation to motor insurers to endorse further work on a GTA portal, which has been in limbo pending the outcome of the Competition and Markets Authority (CMA) report, published last week.”
Andrews added that the GTA Technical Committee had been working on the specifications of such a portal for the last two years, but that its implementation had been delayed by the CMA review.
He said that since the report had concluded that no changes would be introduced for the credit hire industry following the CMA’s investigation, now was the time to push on with developing the portal.
No change in rates
However, Andrews refused to commit to offering lower rates with the industry as part of the talks over the portal, despite the CMA saying that costs were too high and that insurers and CHCs needed to work together to bring down the inflated costs of credit hire.
“Last year (as part of the annual rate review) the rates, with agreement from the insurers, went up 2%,” he said. “The intelligence we had about what happened to basic hire rates in the market showed they had gone up materially more than 2%, but we compromised on our request for only a 2% rise and insurers agreed to it. Insurers go on about rates being too high, but the reality is they are still extremely good value compared to the retail rates.
“Within the GTA there is a process set out for an annual rate review, and if insurers think the rates need adjustment [they must use that process]. The rate review negotiation will start next March or April for implementation in July, so if they think the rates are too high there is an existing process for them to get the data together and show why they should come down. And while they do that we will be telling them why they need to go up.”