Richard Harris says insurers should give their customers a like-for-like car

Much has been written on the subject of credit hire and I don't propose opening old wounds by recounting the arguments. The fact remains that many claims managers still moan about the industry and welcome gleefully any opportunity to attack it.

Whatever the market's perception of the credit hire industry, the fact is that customers are voting with their feet. Clever marketing has not created this situation. So dissatisfied are customers, that they are willing to sign credit hire agreements in order to satisfy their need for a like-for-like car.

So, if our customers see benefit and accept this added layer, along with the inconvenience that accompanies it, surely insurers who pride themselves on delivering outstanding levels of service, should recognise this real need.

We should stop resisting and start thinking about how we can satisfy this need in a cost effective way, remembering that we have a duty to control our customers' premium costs also.

In the past few years, many of us have taken the plunge and opted to strike up relationships with credit hire companies. No point attacking them any more; the scales have tipped and a commercial reality now exists.

For many these relationships have changed the perception of claims departments, which now add income generation to the traditional skill of controlling cost.

But herein lies a paradox.

Full of enthusiasm when reporting to the board that we have generated thousands of pounds in credit hire revenue, we are still left with the nagging doubt in the back of our minds, that this cannot be the best way to control cost.

A management consultant once said to me: "Which way are you facing?" In response my blank expression clearly gave the game away.

He qualified the question by asking me to consider whether I was looking at what I could get from the industry, or was I looking at what my customer wanted.

As a claims manager, I replied vehemently that I was of course looking to get the best for my customer and for my company.

But I now ask, which way is the insurance industry facing when we look at the issue of credit car hire? Many say that by joining with the credit hire industry we are now facing the customer, but is this really the case?

Our customers are telling us that when they have a claim ideally they want a like-for-like car. They will even buy a policy to cover this eventuality if the accident circumstances don't permit the use of credit hire.

Surely it would therefore be more cost effective and customer-friendly for us - as their insurers - to arrange like-for-like replacements? By doing this, we avoid the added credit car hire layer and more importantly provide the service that's required.

Imagine for one second recovering this cost, which industry-wide, goes into millions of pounds, as part of your subrogated claim, as part of our RIPE arrangement. Think about the cost efficiencies this would bring. Next time your chief executive is asking you to make efficiency savings, think about what this process change could achieve. IT

Richard Harris is head of motor claims at Fortis Insurance