So how do these fees and costs find their way into an insurance claim?
Here is a simple scenario of how a claim’s costs can escalate.
An innocent driver is hit in the rear by another driver. The negligent driver is unhelpful at the accident scene. He only provides basic details. The innocent driver does not know who to contact to make a claim.
The innocent driver talks to his broker who instructs an accident management company to act on behalf of the innocent driver. A fee is paid to the broker by the accident management company.
The accident management company arranges for a credit repairer to repair the vehicle. A fee is paid to the accident management company by the repairer and the repair costs can be inflated considerably because the ‘at fault’ insurer will pay for the repairs.
Whilst the vehicle is being repaired the repairer will offer the innocent driver a ‘like for like’ hire car. The hire rate is likely to be considerably higher than normal rates as the ‘at fault’ insurer will also pay the final hire costs.
The accident management company is likely to encourage the driver to make an injury claim even if the driver had no apparent injury. The accident management company refers the case to a solicitor.
As part of the validation of the injury claim the Solicitor will refer the driver to a medical expert who also passes on a referral fee. Both the medical and legal costs may also be inflated as the ‘at fault’ insurance company will be paying for the damages and costs.
The cost of an incident that may have only cost circa £3,500 could end up being in the region of £20,000 as a result of the above factors.
By stark contrast:
An innocent driver is hit in the rear by another driver. The negligent driver passes all of his personal and insurance details to the innocent driver which includes the telephone number of the ‘at fault’ Insurance Company.
The innocent driver rings the ‘at fault insurance company who instantly arranges for the vehicle to be towed to one of its approved repairers. A courtesy car is also supplied.
The vehicle is repaired (at a much lower rate) and the vehicle is returned. The innocent driver did have mild discomfort from a very minor injury but decided not to seek advice as he was satisfied with the speed of the repair and replacement car service.
The cost of the above incident was about £2800.
Motor accidents are big business with big profits. We are aware that there are competitors and brokers that can earn large sums from these practices.
XL Catlin is making it clear that it does not earn any income from referral fees and the like. In addition XL Catlin will not do business with any organisation which has income streams from referrals. Because of our unique stance in the market we are entitled to call ourselves a ‘clean insurer’.