25 motor insurers will challenge the goverment's plan to raise vehicle recovery charges
The UK’s biggest motor insurers are gearing up for a legal battle with the government over the charges for removing broken down vehicles from the roadside, it emerged this week.
Twenty-five motor insurers will launch a joint application for a judicial review if the Home Office presses ahead with its proposals to hike charges, payable by insurers, to as much as £8,400 per time. Cardiff-based law firm Rausa Mumford has been drafted in to advise on the potential action.
ABI director of general insurance Nick Starling condemned the proposed charges as excessive in a letter to the Home Office in January.
Under the plans, the existing flat-rate charges of £105 per removal, £12 per day for storage, and £50 for disposal would be replaced with 23 fee bands ranging from £150 up to £8,400 – a minimum hike of at least £45 per vehicle, and possibly much more. The charges are paid to vehicle recovery companies who, on police instruction, recover vehicles that are illegally, obstructively, or dangerously parked, abandoned or broken down.
The group consists of members from the Insurance Forum, which meets every quarter at Lloyd’s to discuss motor insurance issues. Norwich Union, Highway, Zurich, Chaucer, Brit, and Allianz Cornhill are all represented, alongside the ABI, Highways Agency and vehicle recovery companies.
A spokesman for the forum said 66 motor insurers had asked to join since the Home Office published its proposals. Michael Eagles, joint chairman of the forum, said: “It is still hoped that the Home Office will review its proposals and produce a charging regime that more accurately reflects the marketplace.”
The Home Office has admitted that motor insurers could be forced to raise premiums if the proposals are implemented. According to the ABI, vehicle recovery already costs the industry £50m a year.
The ABI has recommended its own scheme, with lower charges and a flat-rate fee of £150 for all vehicles under 3.5 tonnes.
It also submitted a dossier of removal receipts, suggesting that the Home Office has over-estimated the cost of removing vehicles.
Public consultation for the proposals closed on 25 January, but government departments have until the end of May to respond.
A Home Offcie statement said: “Most respondents to the original consultation had given its proposals their broad support. They thought that the introduction of scenario based charging would be a significant change for the better. No one proposal was unanimously rejected by any sector. In deciding on the charges that were finally put to ministers recently, we took account of material submitted by respondents.
“The charges put to ministers were within the minima and maxima of charges suggested by different respondents. ”