car rental cover
Ernesto Suarez
CHIEF EXECUTIVE OFFICER HALO INSURANCE AND ICARHIREINSURANCE.COM
Next in line for regulation?
The personal lines underwriting agency - Halo Insurance Services - was launched in March 2010 with an innovative suite of car hire insurance covers aimed to compete with those sold at car rental desks.
Insurance People invited its founder, Ernesto Suarez, formerly of AIG, to expand on his views on this sector of the market as the European car rental industry goes under the regulator’s microscope
C
ar rental contracts can be incredibly complicated. Plus, the fairness of some of the terms can be questionable. Many agreements are designed in such a way that in case of an accident, the consumer has to bear the preliminary costs, sometimes even when it cannot be accurately established that he or she is at fault.
The car hire industry experienced several years of rapid growth before the economic downturn, fostered by a steady increase in the volume of consumers travelling across Europe, and the growth of online bookings.
This prompted the development of standard contracts trying to cover all instances. Today consumers very
12 insurancepeople JUNE 2010
often sign papers without reading the complicated provisions, and are therefore unaware of their rights and obligations. This is something the regulators are now looking into.
Another important issue is the car rental companies’ ability to charge consumers’ credit cards without protracted formalities. The customer who disputes the charges very often has no other option but to follow lengthy procedures. Furthermore, if there is a complaint from abroad the situation may become even more complex.
In the UK, there is a well represented trade association called the British Vehicle Rental and Leasing Association (BVRLA). Every year, they publish
their conciliation report, which details the complaints trend received into their office. Between 2003 and 2009 the number of annual reported complaints doubled to 154. The biggest areas of complaint fell into the ‘End of Rental Damage’ and ‘Charges’ areas. The BVRLA quotes in various publications that there are 11 million annual car rental transactions in the UK. This would make the complaints percentage miniscule, probably invisible to our own actuaries. But are we missing something here? Clearly, travel and personal finance journalists have field days writing week-in, week-out about customers who were charged Excess Damage charges from their credit card, without being told, and with no
explanation of what the charge entailed.
So, how can there only be 154 complaints? I hire cars and have had a bad experience, and so have five other colleagues. Most people know someone with a car hire horror story.
I believe that UK consumers don’t know where to turn for complaints and this is something that will interest the regulators as they review the complaints process within the industry. Across Europe, there are a lot more complaints, and this has now received the attention of the European Consumer
Commission. It recently held a conference in Brussels bringing together car rental company executives; affected customers; and EU Commission
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