The Home Office has been forced to cut the charges insurers pay for removing broken-down vehicles.
The government performed a dramatic U-turn this week on its plans to hike the charges for removing broken-down vehicles from the roadside. It slashed its proposed fees by up to £2,400 per removal, following pressure from the insurance industry.
The Home Office published its final proposals for the charges this week, after Insurance Times revealed that 25 top motor insurers were willing to go to court to stop it introducing the huge new charges initially proposed.
Government lawyers have started drafting the new legislation, which will come into effect on 1 October.
Michael Eagles, joint chairman of the Insurance Forum, which represents the 25 motor insurers, said: “It’s a vast improvement, and something the Insurance Forum is going to be much happier with. I think the Home Office has taken up a lot of what we have said in terms of the definitions, and it can be applauded for that.”
The ABI also lobbied for lower charges, with director general Stephen Haddrill writing to the Home Office.
It said in a statement: “Premiums will not be ramped up in immediate response to the changes. It remains to be seen how premiums will change in the future. Our concerns have been largely taken on board. Of course, these charges have got to be fair and reflect the amount of work involved in a recovery.”
The charges currently cost the industry more than £50m a year, according to the ABI.
Under the original range of proposals, recovery companies could have been charged £8,400 for removing a fully laden HGV over 18 tonnes that had broken down off the road, and had one or more wheels off the ground.
Under the new laws, the company can charge only £6,000, and the HGV would have to be on its side or substantially damaged.
The scheme will be reviewed regularly.