A run of sensationalist stories on credit hire is giving the press something to talk about through the traditional pre-Christmas news lull. Anyone who heard the recent Moneybox “exposè” on Radio 4 will appreciate the extent to which credit hire is catching the imagination of the news-agenda setters. On 10 December Insurance Time’s Lauren MacGillivray reported on the “shadowy world of credit hire,” “a game without rules” worth £1bn annually where “anything goes.”
With growing levels of litigation over unpaid credit hire bills, the report says insurers are pitted against “operators who will stop at nothing to get their fee.” The report says credit hire adds £50 to every motor policy, citing “chief executives such as Andrew Torrance of Allianz” blaming credit hire for “denting this year’s results.” It goes on to conclude that the GTA is in danger of falling apart and that the ABI “wants to get rid of the responsibility of administrating the agreement.” NACHO secretary Barry Bromley blames a few bad apples for the industry’s PR problems: “The people who â€¦ are not members of either association (NACHO and AMA), some of their activities are disgusting and do the credit hire industry as a whole no good at all.” But the report questions whether “the bulk of the credit hire industry” is legitimate.
AXA’s Phil Rawlings casts doubt on industry representative’ suggestion that average hire claims for basic vehicles are about £1,400: “The Motor Insurance Bureau reported that a case of hire for £130,000 was recently submitted and rejected. Hire charges of £50,000 are frequent, and those up to £10,000 commonplace,” he says. A major bone of contention, MacGillivray claims, is the GTA’s provision that insurers must pay credit hire invoices within 30 days or face additional 7.5% surcharges at 60 and 90 days.
The AMA’s Tony Baker claims 38% of claims remain unpaid at 90 days, obliging credit hire firms to issue court proceedings. But, the report reports, insurers counterclaim that credit hire firms are “deliberately driving up penalty fees” by “stalling, or providing slipshod paperwork that requires further investigation.” Quoting Baker’s claims that “outstanding debt represents more than 50% of turnover for each operator and, in a credit crunch, this threatens companies’ survival,” the report concludes that “with the recession ramping up the pressure to drive down costs, this is one game that’s about to get dirty.”