Hughes: Defendant firms being disingenuous
Defendant law firms are making a lot of misleading “noise” about inflation in credit hire rates because “they make their money from litigation”, the Credit Hire Organisation (CHO) has argued.
The trade body for credit hire companies (CHCs) said that while a minority of providers “may have pushed up their rates”, the majority have not because most claims start life in the GTA – the voluntary ‘general terms of agreement’ between insurers and CHCs.
CHO research said that maximum daily hire rates in the GTA have increased by just 5.78% on average during the last decade, the equivalent of only 0.56% per year against the average rate of UK inflation of 2.6% per year in that time.
In seeking to rally support for the GTA, a revised version of which is currently being negotiated, CHO chair and chief executive Anthony Hughes called out assertions from defendant law firms that average hire rates had increased by more than 300% from £69 to £212 a day.
“Defendant firms love to grab a headline, but their broad-brush approach is disingenuous. Our research distinguishes CHCs which subscribe to the GTA and those who don’t, as well as cases which settle without lawyers – which are the majority – and those which involve litigation, the latter being the cases defendant firms will see.
“Even non-GTA subscribers often have protocol or bilateral agreements with insurer partners, and most credit hire claims are responsibly fulfilled as a result of supplier arrangements with insurers.
“The low rate of increase in hire rates under the GTA not only underscores just how valuable it is as a means of keeping a lid on costs for insurers but it also deflates the mean average increases seen in other areas of the market.”
The CHO estimates that a successful conclusion to the current work being done to revise the GTA could take as many as 100,000 credit hire cases out of the county court.
Mr Hughes added: “The GTA clearly won’t benefit defendant firms who make their money from litigation; perhaps this explains why they seem determined to undermine our position, which is in favour of alternative dispute resolution mechanisms and keeping cases inside the GTA framework and away from the courts.”
The proposed revised GTA includes an annual review of maximum daily rates driven by market data.
“This is a key step forward in bringing certainty to what has historically been a contentious issue; it means rate increases, or decreases, will be far more responsive to prevailing market conditions,” said Mr Hughes.
“Of course, there will be a few outlier cases each year that end before a judge, but the courts are there to deal with a few controversial cases. Let’s not fall into the trap of thinking these cases are normal. They are not.”
He argued that it was the rising cost of motor parts that had driven the cost of motor insurance, rather than credit hire rates, and that he hoped that this would be reflected in the findings of the government’s motor insurance taskforce, set up last year.
Meanwhile, the insurer and law firm that acted in the recent case where a senior district judge awarded £1,200 for a credit hire claim valued at £50,200 have said they wanted to “send a clear message”.
We reported that District Judge Richard Lumb, a former president of the Association of His Majesty’s District Judges, placed the blame firmly on the shoulders of the claimant’s solicitors, Newcastle-based Winn Solicitors.
Jan Martin, head of third-party claims at AND-E (Aioi Nissay Dowa Insurance Europe) said the case illustrated how policyholders “could be misled” in the credit hire process.
“We felt it was critical to send a clear message on behalf of the insurance sector that unfounded credit hire claims will be challenged for the benefit of policyholders. In particular, we wanted to highlight the broader issues around the way litigation is all too often run by the commercial credit hire entity stood behind an individual claimant.”
Gary Herring, head of credit hire at defendant law Keoghs, who acted for AND-E, added: “This is another example of an all-too-common feature of modern credit hire litigation, of self-serving evidence being put forward to suit the interests of the hire company, irrespective of its truth.
“Far from being a triviality, this is a serious issue which we are pleased has been highlighted so starkly by DJ Lumb.
“The irony is that these are the same commercial organisations who continue to attempt to evade costs consequences of unsuccessful litigation, arguing that they are not the ‘real party’. We hope that this judgment prompts a swift change of approach by this particular organisation, as well as serving as a warning to similar entities.”
He was referred here to North-East firm Winn Solicitors, whose group chief operating officer Clint Milnes responded: “We continue to believe how little is truly understood about this important element of the post-vehicle collision landscape and a system that supports tens of thousands of innocent drivers every year.
“For the many people who can’t afford to pay upfront for a hire vehicle, credit hire is often the only viable solution for managing a major disruption to their lives.”
Earlier this month, the Court of Appeal heard two combined appeals of insurers against the refusal of county court judges to make non-party costs orders against credit hire companies.
This all needs banning. Ridiculous profiteering.