Court rules in favour of insurer, could lead to rate hikes

Motor car insurance experts fear that drivers could see rate hikes in their future thanks to a recent court ruling in favour of an insurer that was found to have been inflating repair costs by as much as 25 per cent.

The insurer in question, RSA, which does not rely upon independent garages to undertake repairs on damaged vehicles but uses its own subsidiary firm, stood accused of ratcheting up their repair costs whenever it came to billing rival insurers for damage done by their policy holders. The heightened costs were both unjustifiable and were a source of profit for the company, according to the complaints, but High Court Judge Justice Cooke, disagreed, stating that the actual cost of the repair was irrelevant if the payable amount is equal to what it would cost for an individual to personally arrange for repairs.

Allianz technical claims head, Martin Saunders, commented on the court decision, remarking that the entire insurance market now has to follow RSA’s lead when it came to billing rivals for repair work in order to remain competitive and to offset the increased costs.  Mr Saunders estimated that motor insurance repair bills will most likely increase by around 25 per cent as a result, which will in turn result in bewildering car insurance rate hikes for the average driver.

Allianz was one of the many insurers that took issue with RSA’s actions. Another opponent that had joined forces with Allianz to protest the excessive repair fees, Provident Insurance, agreed that the ruling would ‘inevitably’ lead the rest of the market to follow suit or run the risk of being put in a commercially disadvantageous position.

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