RBSI says motor parts scheme 'not viable'

The embryonic scheme to use recycled parts to repair vehicles has been dealt a blow after being rejected by Royal Bank of Scotland Insurance (RBSI).

Motor giant Norwich Union also now says it has reservations about the project, despite, it is understood, showing initial interest.

RBSI said the pilot project being overseen by the British Vehicle Salvage Federation (BVSF) was not workable.

A spokeswoman for RBSI said: "We do not feel that it is viable at this time from either a practical or service level perspective to utilise recycled parts in the repair of older vehicles.

"Furthermore, in our view, a great deal of work would need to be done to ensure that customers would find this approach satisfactory."

NU said it did not consider the use of recycled parts to be popular among policyholders.

Phil Gledhill, claims technical manager at NU, said: "The problem we find at the moment is that customers who have a car that is repairable where we might suggest recycled parts say 'why should I?'"

Gledhill added that overall the financial benefits were not great but NU would monitor the scheme. The insurer turned its back on a similar scheme that failed to take off last year.

Alan Greenouff, chairman and secretary general at the BVSF, insisted that insurers needed to show their customers the benefits, which could include lower premiums or a two-tier policy, for them to become interested.

The BVSF says the venture could be in place by the autumn and insurers could save in excess of £200m.

The scheme does have supporters, including Highway.

Peter Goodright, supply chain manager and head of accidental damage claims at Highway, said: "The key is distribution. If we can buy the parts on the basis there's a guarantee that distribution will be the same or even better than the manufacturer then we would certainly be interested in using recycled parts for older vehicles."