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Insurers and brokers wake up – “you’re haemorrhaging money”

Insurers and brokers wake up – “you’re haemorrhaging money”

Insurers and brokers wake up – “you’re haemorrhaging money” “You’re haemorrhaging money.”

That is the eye-catching message from Robin Reames, founder of Swiftcover and former chief claims officer at AXA, who is now business development director at Auto-Rescue Logistics (ARL). Thanks to his new role working closely with the breakdown industry, including ARL’s roadside rescue service RecoverMe, he has discovered that insurers and brokers are potentially throwing millions down the drain due to their lack of knowledge about claims relating to road damage. 

“The problem relates to damages to ground property and road furniture in motorway accidents,” he said. “Highways England will generally have a managing agent or contractor for a stretch of road who has an authorised threshold up to a certain amount, which varies a lot. If it goes over that threshold it goes to Highways England to settle the matter with the insurer. However, generally this is delegated out and these agents are being allowed to almost charge whatever they like.

“In some cases they have been charging for labourers who clear the road at around £73 an hour – that equates to a salary in the region of £130,000 a year, when in fact their actual salary is considerably less. So what on earth is going on? Why are insurers just paying these charges?”

ARL has a history of involvement in challenging unfair charges. It has aimed to combat many of the inflated charges that insurers have been paying for recovery from its inception.

During the period from 2002-2006, for example, Reames commented that it was not unusual for an insurer to be paying around £30,000 for a commercial vehicle to be recovered from the side of a road after an accident, prompting ARL to look carefully at the law and realise it had been misinterpreted and that the statute limit that was allowed was just £105. It managed to persuade an insurer to take this to court and fight a £30,000 recovery, the settlement for which was exactly £105 – which set a precedent in law from then on.

Now, Reames wants to see insurers and brokers take the agents and contractors appointed by Highways England to task over charges he believes, in many cases, they simply shouldn’t be paying.

He said: “There are two issues here – the acceptance that damage has been caused, in which case you just argue about how much has to be paid for it; and a second aspect, which is whether it is legal at all to charge the insurers for this?”

“If we assume the first, then insurers take the loss adjustor approach and don’t fight, they just try to get the charge down to a reasonable level – but even in these instances they’re not doing it particularly well. There is also a lot of nefarious activity going on – for example, in one case, someone charged nearly £5,000 to clean up a road spillage. They were at the scene for 16 minutes – and even if you add on travelling costs it doesn’t justify that charge. Many insurers might think that because they’re able to talk someone down from £5,000 to £4,000 they’re getting a good deal – when in reality they should be asking why they were charged that in the first place.

“What’s more is that in many cases insurers should not have to pay even anything. According to the law, the managing agent or contractor has to prove certain things. One is that there was significant disruption and the second is that there was managerial time involved.

“It seems 99 per cent of claims are just paid unchallenged. Yet the onus should be on the agent or contractor to prove they had significant disruption. If they have to have a team on board 24/7, well that’s their job – they have to have that team anyway so the insurer being charged for it is just nonsense. Staff, equipment, etc. – there are a lot of instances in which they just shouldn’t be able to charge.”

Reames believes that insurers need to wake up to the situation and actually examine the charges that are being put in front of them. ARL has a strong history of working with big insurers like Allianz and AXA – yet Reames believes that insurers in general aren’t taking advantage of the expertise that’s available enough.

He concluded: “My question is: why aren’t you using the experts? Many insurers have personal injury lawyers… but they don’t necessarily understand road traffic law. There are different experts in different areas. Often insurers don’t understand what they can and cannot challenge and they’ve got to wake up.”

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  • Adam Brown, TSS - part of QuestGates 14/06/2016 08:36:25
    Robin makes some valid points and this is an issue that both insurers and brokers have been aware of for many years. Those that aren’t using the expert support that is out there are, as Robin says, potentially throwing money down the drain if they fail to take advantage of the experts that are available to them. However I would have to say that in our experience, many insurers and brokers do recognise the value of working with an adjusting firm that employs civil engineers who have a background of working with the likes of the Highways England and Network Rail. That level of expertise is imperative in relation to whether a claim is deemed fair and reasonable and also acts as a crucial negotiation tool providing queries and opinions against charges presented within claims. Technical investigations conducted by experts deliver results where legal theories fail.
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