One motor car insurance company recently faced strong judicial criticism in regards to its cost recovery procedures for covered vehicles that are in need of repair following an accident.
Cheap car insurance provider Royal and Sun Alliance was found to have been using a subsidiary firm to receive repair invoices before inflating repair charges in a bid to increase their profits by Judge Platt. RSA has denied the allegations, claiming that the insurer was acting appropriately.
However, Judge Platt remarked that evidence was presented to him that the subsidiary firm has been inflating the cost of labour and many other fees that it was not able to account for prior to passing the cost onto the car insurance companies of the drivers who were liable for the traffic accident. This differs from the normal way the process should work, where the insurer of a victim would arrange for any damaged vehicles to be repaired before sending the bill to the insurer of the perpetrator for settlement.
RSA Insurance deviated from this practice, Judge Platt found, by receiving the invoice after repairs had been completed before passing it on to RSA Accident Repairs Ltd, its subsidiary. Only then would RSA send a final bill to the insurer of the driver who had caused the accident.
Some of the invoices had been packed with inflated charges added by the RSA subsidiary, said Judge Platt. This is suspect because insurance companies are not to profit from any repair work they undertake.
Some insurance companies have disputed the charges and have refused to pay, claiming that RSA Insurance has aded its own unjustifiable charges. RSA has brought suit against these insurers in an attempt to enforce payment on the bills.