We recently wrote about a final report from the British government’s competition watchdog, the Competition and Markets Authority, which while pushing for the authorities to help crack down on insurers offering certain comparison sites better deals than others and thereby creating a general inflation of prices across all comparison sites, failed to go after some of the biggest problems with insurers at the moment, including the inflation of car hire prices. Apparently the boss of AVIVA insurance was keen for it to do more, especially with relation to courtesy car hire and he’s been talking publicly about his distaste for the report.
Mark Wilson, group chief executive of the insurer, said (via The Telegraph) that: “the CMA investigation had a flat tyre before it hit the road. The review failed to grasp the key issues affecting UK motorists. If we look at the major challenges facing the market – whiplash claims, fraud and escalating legal costs, to name a few – the scope of the investigation was inadequate.”
Wilson actually wanted the group to look into lots of things more closely and wishes it had been given more leeway when it came to its investigation. He wanted the CMA to review the “motor claims process as a whole,” describing it as a “system of spiralling costs,” that was more interested in providing financial claims to opportunistic injury claimants than it was in routing out the real cause of accidents.
Ultimately he said, the insurance industry was currently awash with fraudulent claims – part of the reason many are so keen to see telematics adopted a little more often, since it can help avert much of it – and that ultimately it was what was holding premium pricing back from being historically low.
This might seem like an odd claim to make at the moment, since insurance premiums are at an all time low right now, but according to Wilson they could be lowered even further if so many people weren’t seeing their insurance premiums as a way to make money through fraudulent claims.
Wilson also specifically targeted the CMA’s soft hands approach to car hire, which he sees as one of the most damaging aspects of the industry at the moment.
“The CMA failed to address referral fees in car hire and repair claims. Aviva believes all forms of referral fees should be banned. These are commonly paid in exchange for details about accidents so that the car hire firm, garage or recovery agent can attract work associated with the claim. They add a significant level of cost into motor claims, but from a customer’s point of view, they add nothing.”
The same goes for claim management companies he said, who when pricing how much a car would cost to repair or whether to write it off, they often choose the latter, or price the repairs so high that it wouldn’t be worth it. Usually because that results in a better financial turn out for them.
Ultimately Wilson said that the CMA had a chance to fix many of these issues, but chose not to, making for a luke-warm report as far as he was concerned.
Do you guys agree?