A judge has strongly criticised the way a major motor insurer recovers the costs of repairing vehicles.
Judge Platt says Royal and Sun Alliance has used a subsidiary which inflates charges simply to boost profits. He found the subsidiary increased labour costs without carrying out any work itself and made other charges it could not account for. RSA Insurance said it strongly refutes any suggestion that it has acted inappropriately.
Judge Platt says the hourly rate for the repairs was increased from £36 to £39.50 an hour without explanation. £118 was added for a road test, cleaning and an environmental charge which was not on the original bill. £110 added for taking the car to the garage and back when it was drivable and the owner lived nearby.
Judge Platt sent out this warning for the insurance industry in general: "If RSA Insurance is correct in its argument there is nothing to stop every insurer adopting the same procedures which, if this case is a typical example, will lead to an overall increase of some 25% in the cost of minor motor repair claims. That cannot be in the public interest."
David Creswell, a director of ABP Club which represents car repairers and insurers, says these disputes are proving very damaging. He added: "The trust certain of the insurers have with RSA Insurance has gone to a very large extent” He said it was ordinary people who pay their car insurance premiums would ultimately suffer. "It is shocking.
The whole principle is recovering the cost outlaid, not making a profit out of it."
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