We discussed a while ago the use of tip offs & referral fees etc by insurance companies. A recently reported court case exposes another practice which may have been inflating claims and premiums.
Fallows v Harker Transport is about a minor road accident in Romford. Liability was accepted but the damages recoverable were in dispute. Should have been settled without coming anywhere near a court. However it has been used to challenge the practices of one of the UK’s largest insurers, Royal Sun Alliance (RSA). The court would seem to have decided to make an example.
In brief, RSA set up a subsidiary to do repairs but in practice it was subcontracting the work to private bodyshops. The bodyshop then billed the RSA subsidiary the cost of the repair on a parts/labour + VAT basis. The subsidiary was then adding various charges, including uplift to the repairer’s labour rate and seeking recovery of the higher sum from the defendant. The charges were not transparent or justifiable and were in part brought to light by discrepancies in the VAT charged.
The judge disallowed all the additions, awarding only the bodyshop charges and made a costs order against the claimant. He roundly condemns RSA for their practices, what he sees as their persistent attempts to evade the court’s disclosure protocols and to ‘venue shop’ around County Courts in the hope of finding a more sympathetic bench.
Full text is at www.bailii.org/ew/cases/Misc/2011/16.html
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