Tensions build as hire firms prepare for next round of negotiations.

Credit hire companies and insurers could jointly cover the cost of administering the shaky peace between them, it was proposed this week.

In the latest salvo in the long running battle between the companies that provide replacement vehicles after accidents and the insurers who pay them for it, it was proposed that a new organisation could be set up to run the agreement that governs their transactions – known as the General Terms of Agreement (GTA).

The ABI, which currently governs the GTA, has said it no longer wishes to do so. At this week’s National Association of Credit Hire Operators (Nacho) annual conference, delegates were asked for alternative ideas on how it could be funded and administered.

Nacho chairman Ralph Ferguson said he would present the idea of lowering credit hire fees and using the saving to offset the cost of running the GTA to the GTA’s technical committee that includes insurers, Nacho and members of an alternative industry body, the Accident Management Association.

The battle over credit hire rates has slogged on for years, with insurers wanting to pay less for cars supplied after an accident, while the suppliers – credit hire companies – want more.

Last month, credit hire companies scored a victory when the industry agreed to increase rates by 3.5% for 2008. But the deal will only last for the year and then it will have to be renegotiated. The industry wants a set formula for regular rate increases, with rates effective for two or three years.

Meanwhile, sparks flew at the AGM after Nacho told its members, some of whom are also AMA members, that the AMA was responsible for the delays in setting the new credit hire rate.

Ferguson said: “The positions of Nacho and the AMA were quite apart but, with our position of trying to negotiate, it helped to bring a conclusion to the negotiations.”

But AMA director general Tony Baker said insurers were actually the roadblock. He said: “Insurers stated that they were unwilling to agree to any increase in rates for the 2007 review in spite of detailed evidence submitted by the AMA that justified an increase.”

An ABI spokesman said: “There are always going to be disagreements in anything like this, but that’s why you have the negotiation process. We also don’t want to overstate the ABI’s role in all of this because these are rates that are the outcome of discussions that we facilitate rather than directly influence.”