Insurers and car hire companies have been battling it out for some time now, but new legal developments mean the market may not be such a war zone from now on. John Jackson reports.
Legal clarification in the courts of many outstanding issues on accident management will hopefully lead to a more settled marketplace in what has been an often bitter battle between insurers and car hire companies.
For example, Lord Justice Tuckey has been scathing about delaying tactics in the courts by insurers refusing to pay car hire fees after hearing two recent accident cases. In both cases - Clark vs Dyer and Burnett vs Harper - the insurers had to pay up in full.
Reacting to the criticism, insurers set up the Morgan Cole initiative, named after the legal firm that has come up with dozens of outstanding points of principle in an attempt to resolve the situation from their point of view.
General secretary of the Accident Manage-ment Association (AMA), Tony Baker, said: "The insurers have gone to town in saying this is what Lord Justice Tuckey wanted and that the courts can resolve it.
"The AMA view is that this is not what the judge intended at all and it is just insurers trying to starve the industry out. It would take years to settle all this. It is much better to have commercial negotiations between the interests through, say, an independent QC, to resolve all these historical issues."
Time to deliver on agreement
There has, however, been acceptance among insurers and credit hire companies of the Assocation of British Insurers' (ABI) general terms of agreement (GTA). This sets out how credit hire should work and what procedures credit hire companies should follow if they wish to be paid promptly by insurers.
Baker says: "Most insurers have not been able to deliver on the GTA, but the credit hire companies have come on board and reduced their rates to the level set out in the agreement. There have been months of delays before money flowed through from insurers.
"There is no suggestion of a deliberating ploy on delays, but perhaps the insurers have not yet got their act together in informing and training their staff, so they can fulfil the obligations of the GTA."
Primarily, the legal wrangling has been over historical debt issues. Most of the big credit hire companies have had commercial negotiations with individual insurers to resolve their own particular position. But this leaves out a great mass of small companies, some of which have gone out of business, where recovery of money is more difficult.
Expect a deluge
In another blow, insurers are also facing higher damages awards following the recent decision of the Lord Chancellor to set a 2.5% discount rate in personal injury claims.
This higher insurance bill is underlined by a report last month (July) by information services analysts Datamonitor, that there could be one million personal injury claims a year. Datamonitor estimates there are 10.4 million accidents a year - about 1.7 million could potentially result in a personal injury claim.
With the current deluge of litigation, the need for good customer relations is paramount. This fact has not been lost on the brokers - both national and regional.
Bennetts, a leading broker chain, has set up its own accident management centre to handle claims from its clients, run by personal injury specialist law firm Donns.
National broker Willis, with a large corporate client base, has also set up its own accident management service, Drive, and rival national broker Aon has set up a Europe-wide accident management service to standardise service, helping companies cut the cost of running their fleets.
Outsourcing is also a growing practice. Accident management group Auto Indemnity is working with outsourcing specialist Capita Assistance to provide replacement vehicles.
Auto Indemnity has also joined with Fleet Accident Repair Group in a repairer network of 120 outlets to carry out work sent in by brokers and insurers, and, in addition, has teamed up with RAC Motoring Services.
Town and Country Assistance is involved in an outsourcing trend called first-line response, whereby insurers and brokers outsource their call centres for accident reporting, but the first-line response is in the name of the client, not Town and Country.
Meanwhile, Cornhill has just opened its new accident management operation Claims Start. Cornhill claims project manager Lesley Proctor says: "It takes away all the hassle, gets things moving more quickly and is available online 24 hours a day."
Proctor adds that, while the management is outsourced, there is a dedicated team handling the calls trained by Cornhill.
Finding new ways of reducing and evaluating injuries is always a major factor in accident management.
The Motor Insurance Repair Research Centre (MIRRC) at Thatcham in Berkshire has just received £1m from insurers to investigate whiplash injuries. A special machine - a Hyper-G 70 sled - is being purchased, which will dramatically speed up research.
MIRRC research director Ken Roberts says: "With this new machine, we will be able to conduct a dozen tests a day.
"With the conventional crash rig we have at the moment, it takes two or three days to set up a vehicle to do one crash, so it will be very productive."
A special building is being constructed to house the huge US-made machine and it is expected to be up and running early next year.
Another significant development is being launched next month (September) by the MIB
- a database that will match car registrations with the insurer. This will tackle one major problem at many accidents - the refusal of a driver, although insured, to tell the other driver who covers their insurance.
MIB technical director Roger Snook says: "We have never been able to do that before. After that, it becomes a matter of enforcement - we will have to wait and see. But how many uninsured drivers have not had an accident yet?
"Prosecutions are between 300,000 and 320,000 a year for uninsured drivers. When we have this database running, we will know how many uninsured vehicles there are."
The MIB has seen a 5% annual increase in claims it handles, totalling 50,000 a year. But with around 30 million vehicles on the road, it is open to question whether this is really a large figure or not.
One area of concern is the company car driver. Head of accident services at the RAC, John Ashcroft, says ten motorists are killed on the road every day, and three of them are driving company cars.
He adds: "After deep sea diving and mining, the third or fourth occupational risk is death in a vehicle while at work. It's a major problem for us."
That is why RAC Motoring Services puts such strong emphasis on risk management of fleets, including driver training as part of its programme for commercial clients.
Clearly, the accident management business is going through a period of dramatic change, with the way ahead likely to be clearer in the coming months. Perhaps the insurance industry will finally get on top of what has been to date a largely intractable problem.