Insurance industry ‘walloped’ by Channel 4 Dispatches

This article was published on: 01/10/13

Dispatches, Channel 4 TV series

On Monday night, Channel 4 aired their latest edition of Dispatches. It was presented by Harry Wallop, who exposed what many representatives from the personal injury sector have been screaming about for the past few years when it comes to the way insurance companies operate.

For the personal injury lawyer or solicitor this was not a shocking, or particularly revealing episode of Dispatches, but for the general public and for those who are perhaps struggling to understand how the industry works i.e. the government ministers who continually side with the insurers when it comes to passing legislation that affects the industry’s future, it certainly was an eye opener.

On average 70% of the population in the UK own a car. To the majority a car is a fundamental aspect to daily life, a necessity to get to work on time, a safe form of transportation for the family and to a few, a fashion accessory or form of identity.

For all the positives of owning a car, the main negative is the rising cost of car insurance premiums and with the number of insurance companies available to us in the UK, the quest to find the best can often be daunting.

As a consumer we look for the most reasonably priced quote, an insurer we can rely on when the unthinkable happens, and to be safe in the knowledge that the consumer’s well-being, safety and interests are the most important factor to the insurance company we choose to use. On Monday night Channel 4 Dispatches revealed to the nation that in a lot of cases this is certainly not the case.

So what did we learn from Harry Wallop’s investigation? That the insurers only have the consumer’s safety and best interests in mind? Or that the previously claimed reasons for increasing insurance premiums are in fact solely down to fraudulent claims and ‘ambulance chasing’ lawyers?

The answer to both of these questions would appear to be a resounding no. What was revealed by the documentary was a culture of bullying body shop repair workers into reducing repair costs by the insurers and inconsistency in the way they negotiate repair prices between ‘at fault’ and ‘not at fault’ accidents in order to manipulate profits in the insurance companies favour, whilst driving up premium costs for the consumer.

It was a damning half hour for the car insurance industry as it exposed the more sordid side to them. A side that would, for instance be unwilling to pay for a car door to be replaced, despite having a damaged impact bar.

For those who are unsure, the impact bar helps to form a cage around the passenger seating area and divert the impact of a side on crash to sturdier areas of the vehicle such as the floor or roof, thereby helping to restrict and prevent injury.

The problems surrounding the insurers and their reluctance to pay for thorough and proper repairs have been further projected by major car manufacturers Fiat and Volvo who have both issued warnings to consumers about the practice of their insurance companies.

Volvo released a statement saying: “You may not be aware that insurance companies are reducing costs by having non genuine parts fitted or panels repaired rather than replaced, which may compromise the cars safety and integrity.”

Fiat’s statement was along similar lines saying: “Most insurers want to repair your car as cheaply as possible. The body shop they choose won’t know your car; they may not adhere to our Fiat repair standards and could avoid using Fiat genuine parts. This will affect your vehicles resale value and safety.”

Of course the Association of British Insurers (ABI) were quick to defend the industry’s conduct and denied that they looked to ‘squeeze’ body shop workers, despite a damning video recording of a engineer representing Direct Line attempting to do exactly that as part of a carefully laid trap by the programme’s presenter.

An ABI spokesman said: “We certainly do not look to squeeze repairers but must ensure that they get the balance right between paying fair and reasonable costs and ensuring the best value for money for their consumers.”

Something that will have interested the personal injury sector though was the revelation that for ‘not at fault’ accidents the insurance companies take the opposite approach and attempt to ramp up the costs.

Yes that is right the insurance company ramps up repair costs for ‘not at fault’ accidents, safe in the knowledge that the opposition’s insurers will have to cover the cost.

They then profit significantly by forcing the body shop to use more expensive paint and parts when repairing the car and receive a rebate from the companies they recommend, for referring the business to them.

Trend Trackers Industry Analyst Robert McNab, who appeared on Dispatches on Monday night, estimates that this system earns roughly £100m a year for the insurance companies.

With the Office of Fair Trading (OFT) recently stating that on average the consumer is currently paying £155 more than they should be on their car insurance, you would think that the consumer loving motor insurance company would feed back a slice of this profit to ease this figure. Yet this is not the case and Director General of the Vehicle Builders and Reporters Association (VBRA) Malcolm Tagg has lambasted the process as immoral and said that it was wrong that the consumer did not benefit from the relationship between the insurers and the paint and parts shops.

So next time the government open the debate on whose interests the insurance industry has closest to their heart, maybe they should consult with the various body shop workers who deal with them on a day to day basis.

What answer will they get? Well as part of a survey, body shops across the UK were asked what took priority with the motoring insurers when it came to dealing with a claim. A staggering 88% replied with ‘their own profits’ ahead of repair quality and customer service.

The industry itself continues to be investigated by the Competition Commission after being referred by the Office of Fair Trading and this will conclude in 2014.

Image source(s)

1. Channel 4;