Nacho is a new trade association for the credit hire industry. Chris Ashworth, the organisation's liaison officer, calls for an end to the confrontational approach between insurers and credit hire companies.
The credit hire industry has been in a state of flux since the Dimond v Lovell ruling in May. The House of Lords ruled in favour of insurance companies in the case, by deeming that their rental agreements fell within the Consumer Credit Act.
Insurers had employed technical arguments, largely because they felt that certain companies were inflating the cost of motor claims. There has long been a culture of confrontation between insurance and credit hire businesses, resulting in unpaid bills and non-settlement of claims. Many in both the insurance and credit hire industries believe that this status quo is unsustainable, causes unnecessary costs on both sides and has led to an inadequate customer service.
It is in recognition of a need to change the way our industry conducts its business that the National Association of Credit Hire Operators, or ‘Nacho' has recently been formed. Nacho aims to provide members with a platform from which to negotiate standardised terms of business with insurers, most importantly on car hire rates, that are sustainable and acceptable to both sides.
Rules and regulation
Nacho's founding members are Auto Indemnity, Car Crash Line, Motor Claims Direct, Drive Assist and Colegate Vehicle Hire. All have agreed to abide by the Association of British Insurers' terms of business for credit hire that are acceptable to all parties involved.
Nacho has had discussions with the ABI, which have led to all Nacho's members becoming ABI-compliant. It has also obtained agreement to amend the original general terms of agreement to give hire organisations the confidence to move forward together with insurers.
Richard Allen, representing the ABI, says: “I welcome the formation of Nacho. This new trade association offers the insurance industry an opportunity to talk sensibly with important constituents within the credit hire industry. This dialogue has been successful as Nacho members have already signed up to the ABI initiative.”
By agreeing to procedures laid down by the ABI, all claims can be dealt with more quickly, thereby ensuring an enhanced service to clients. The terms set by the ABI encompass agreed pricing and certain recovery stipulations. These mean that companies will not expose clients to inflated costs or charges that ultimately lead to increased insurance premiums.
The additional benefits of using ABI-compliant firms include efficient and transparent processes. This can mean that the broker is not burdened with extra administration.
Nacho aims to be an objective body, seeking to ensure that business is conducted in a fair and proper manner. There is huge scope for the organisation to improve other areas of credit hire and address issues, such as vehicle repair, which directly affects its members.
Nacho is attuned to the essential role played by brokers in the industry, and my own experiences as a broker leave me in no doubt as to the importance of claims handling for brokers and their clients.
It is hoped that brokers will increasingly come to appreciate the advantages of recommending ABI-approved credit hire businesses. Nacho hopes its agreement with the ABI will lead to faster claims settlement for brokers' clients.
Alternatively, continued increases in claims costs will eventually lead to increased premiums and mean that the competitiveness of brokers compared to direct insurers would be reduced even further.
Nacho members expect to offer a substantially better service than the industry has witnessed so far. Credit hirers that subscribed to original general terms of agreement did not have to provide a service that catered for the full needs of non-fault accident victims. They often simply provided them with only a replacement car. We are confident that brokers recognise that there are other fundamental aspects of a claim that the client needs assistance in recovering. Part of Nacho's objective is to have companies within the organisation that are able to fully provide all services essential to meet all client needs.
Building on success
Following the positive response that Nacho has received from the insurance industry, the time has come to expand to include a number of other similar-minded companies, who believe that they could capitalise on becoming a Nacho member. Nacho would be happy to invite any companies with the same beliefs and business practices as those set out by Nacho to join the association.
The Dimond v Lovell ruling was expected to bring an end to the uncertainty for accident management service providers and insurers. In the event it has created even more uncertainty for the industry.
There are some companies that believe they can continue to do business in a hostile environment. There are others and, they include the members of Nacho, that believe that the way forward in the best interests of customers, brokers, insurers and providers of accident management services, is to negotiate terms of business that are sustainable and at the same time eliminate unnecessary costs and delays.
At Nacho it is felt that the groundswell of support being received and the dramatic progress that has been made by the organisation have already justified Nacho's strategy.