AS managing director of Retail Motor Law, it’s fair to say that I have a decent understanding of the crash repair sector. I spent 15 years working as a car mechanic and panel beater before retraining as a barrister and solicitor.
Years ago, if you had a crash, an independent engineer would check the vehicle and agree terms with a local independent repair centre. Today, insurers have their own engineers and “approved repairer networks”. These repairers are incentivised to co-operate fully with insurers, relegating us car owners to second-class customers.
With numbers of independent repairers falling sharply, any choice as to who to use is likely to disappear. So why should we care? I believe the current market operates to the detriment of consumers, both in terms of the quality of repairs and, ultimately, in higher premiums.
The average annual premium has increased by 89% over the last four years, according to the AA. The average person now pays £840 a year for comprehensive cover.
Last September the Office of Fair Trading (OFT) referred the motor insurance market to the Competition Commission citing “evidence that insurers compete in a dysfunctional way that may push up premiums for drivers by £225 million a year”. In my view that is a conservative estimate.With no incentive to perform “not-at-fault” repairs efficiently – because the cost is usually charged to the other side – insurance companies are stuck in an endless cycle of ripping each other off, which can only increase premiums.
The Association of British Insurers (ABI) would have us believe it is personal injury lawyers and car hire firms that are driving up costs. To be clear, I am not in that line of business. I simply point out that insurers such as RBS and Aviva receive millions in rebates for referring policyholders to personal injury lawyers and car hire firms. Double standards or what?
Insurers are aware that if they don’t get their house in order the Competition Commission could bring about changes they don’t want – perhaps even banning approved repairer networks. Can we be sure of the quality of repairs at these “approved” centres? I suggest the answer is “no”. An average paint job can hide a multitude of sins.
A recent Irish Times article suggested that 100,000 cars in that relatively small country might have faulty windscreens as a result of similar insurer-repairer relationships. This leads me to ask whether there are thousands of unsafe cars driving around the UK as a result of unsatisfactory accident repairs. Quite possibly.
When we call our insurance company following an accident they will use a number of techniques to “steer” us into their approved network. Some no longer rely upon persuasion. Aviva, Zenith, Zurich and Esure are among those to charge “Non-Approved Repairer Excess” fees.
Incredibly, these insurers not only impose this additional fee, they still want to control the repair. This is what Zenith says: “If you choose not to have your car repaired by our approved repairer we will not pay more than our approved repairer would have charged and an additional £250 excess will apply.”
I believe the method and mode of the repair is being dictated by insurance firms who are in a position to say to the repairer “You must do this, otherwise your supply of work will be cut.” That is concerning because insurers’ interests lie in maximising their profits, not delivering the best quality repairs.
Can we trust insurers to “do the right thing?” Certainly not if the banking crisis is anything to go by! Even their promises about warranties on repairs are questionable. Nothing is given in writing, so how do we know what the warranty covers? How do we claim? Insurers say policyholders benefit from a five-year insurance-backed warranty, but I have never seen a customer copy of such a document.
If you don’t get a written warranty from an approved repairer following a repair, or if you feel your insurance company is not treating you fairly, complain to your local authority and MP.
Insurers will make sure the Competition Commission hears their voice, so we consumers need to shout just as loudly.