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editorial@barkerbrooks.co.uk Complex settlement chain hurting drivers' pockets, says Competition Commission
Post-accident repairs branded 'sub-standard'
T
he Competition Commission has told the post-accident repair industry that its standards have to improve following the release of its preliminary report on the
motor insurance market in December. The report, which also says that premiums for motorists remain
far too high, said that the complex chain for the settlement of non- fault claims was still increasing the cost of both replacement cars and repairs, which is passed onto the insurers of at-fault motorists. Problems with the sale of add-on products, as well as with the
contracts between price comparison websites and insurers were also identified by the Commission. Alasdair Smith, the Commission's deputy chairman and chair
of the private motor insurance investigation group, said the UK's 25 million privately registered cars were footing the bill for unnecessary costs incurred during the claims process. "In most cases, the party managing the accident claim,
typically a non-fault insurer or intermediary, is not the party liable to pay the costs of the claim. There is insufficient incentive for insurers to keep costs down even though they are themselves on the receiving end of the problem," he said. "We have concerns about the quality of post-accident repairs
because too many repairs are substandard," he added. However, the ABI questioned the data used by the Commission
in reaching its conclusions in relation to repairs. "The Commission’s findings are largely based on an inspection report which contains fundamental flaws and is based on an
08 /Claims Magazine/Issue 11
analysis representing 0.001% of the 1 to 2 million vehicles insurers repair each year," said James Dalton, the ABI's head of motor. "This is a tiny sample size on which to make sweeping
recommendations about the future of the market. And the findings are at odds with insurers’ own complaints data." The National Association of Bodyshops (NAB) was also quick to
question the small sample of post-repair inspections carried out by the Commission, and argued that a much larger sample of post repair inspections need to be analysed so that "more definitive conclusions" could be reached. However, NAB said that it had told the Commission during its
investigation that cost controls employed by some insurers were having a detrimental effect on repairs. It has called for a pan- industry adjudicator to provide governance across the sector and help deliver audits of post-accident repair work. The Commission has drawn up a list of possible remedies
for the issues it has unearthed, including: making a driver’s own insurer responsible for providing a replacement vehicle or allowing at-fault insurers to take control over managing claims; more transparency on pricing displayed on comparison websites; and improving claimants’ understanding of their legal entitlements in the event of an accident. In relation to repairs, the report has outlined the possibility of
capping the cost of replacement vehicles and repairs as well as following NAB's suggestion of introducing compulsory audits of repair quality.
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