Insurance & Reinsurance
"It is the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed." - Charles Darwin
Much of the commentary about the impact of social distancing measures in the UK regarding credit hire matters has inevitably focused on challenging the need to hire, and the availability of parts to allow repairs. This is not surprising, and is entirely consistent with how claims operate in ordinary circumstances. However, we find ourselves in extraordinary circumstances. It is these circumstances that present an opportunity for those who deal with credit hire matters to abandon a confrontational approach and consider collaboration.
The bilateral agreements between APIL and FOIL, and the ABI and claimant representatives, are extremely welcome. However, not all parties are signatories, and some representatives continue to oppose requests for extensions of time or refusals to agree stays where witnesses may be unable to attend.
Some credit hire companies continue to seek unlimited extensions on hire periods as they are unable to collect the hire vehicles. Those same companies need to stop working on the premise that insurers have bottomless pockets. Likewise, those who represent insurers must pay more heed to the fact that many claimants will carry real fears about the unprecedented times we find ourselves in.
The need to hire, as we know, is the very first hurdle a claimant needs to get over in order to recover any credit hire damages.
Objectively, does someone who uses their vehicle sparingly, perhaps to travel to the shops for food once or twice a week, really need a replacement vehicle? If this question was to be considered in normal circumstances then the answer would be a very firm no.
However, we need to factor in the human fear factor for someone wanting the comfort of knowing the vehicle is there. That is something the Judiciary may have some sympathy with, and therefore, the usual arguments deployed in credit hire claims may not carry the same weight. This is one of several issues which insurers may face during the ongoing measures:
Insurer workforces may be reduced or working in unfamiliar circumstances. It would be unsurprising (and forgivable) for proceedings to be missed. At the risk of Judgment in Default, the timely nomination of solicitors has never been more important.
Some claimant representatives may choose to issue proceedings in bulk as a protective measure or tactic. It is important that insurers have a "surge" plan in place. Our credit hire team has experience of developing and implementing such plans which take out some of the uncertainty of having to deal with large influxes of work.
Additional claims for hire are likely to proceed through the MOJ portal. The tight deadlines that exist within that framework will likely mean cases will exit the portal process on a more regular basis, leaving insurers exposed to a higher costs bill and increased indemnity spend. Putting credit hire through the MOJ portal, where it may not face any meaningful degree of scrutiny is a tactic we have seen deployed extensively by some credit hire companies. Our credit hire team has the experience of developing a market leading product to handle claims in the portal, which achieved savings of over a million pounds per annum net of fees.
Traditional claims handling for credit hire is unlikely to be of benefit during the ongoing measures, and this position will be the same for both sides of the market. Therefore, these claims will require creative initiatives on the part of insurers and representatives in order to keep costs down and bring about prompt settlements.
Many insurers will have an intervention strategy in place and in our view this will prove to be the most useful tool allowing insurers to keep costs down whilst also considering the "human" element of the current crisis. The offer of services should be sent as many times and in as many formats as possible, many of which can be automated. Credit hire companies are likely to be more amenable to accepting the intervention rates, particularly those who have their own fleet.
In the current circumstances, both sides may have to "give" a little to gain more. It may also be a good time for a "clearing of the decks" in terms of debt.
Whilst it is hoped that this strategy would bring about settlement promptly, it is not always possible to agree settlement terms and we would strongly advocate sensible, costs protective offers made on a Calderbank basis or subject to Part 36.
Should any insurers wish to discuss assistance we can offer in terms of surge planning for credit hire, claims handling in the MOJ portal, managing existing protocols or debt negotiation, our team of market leading credit hire experts are on hand to assist.