Understanding Credit Hire in the Insurance Industry

 
The I
nsurance
Institute of
Sheffield
 
 
Credit Hire –
The What? Why? How? And Who?
10 May 2022
 
 
Please wait for the session to commence
at 11.00
 
 
Bernard Thornton FCII
Chartered Insurance Practitioner
 
The I
nsurance
Institute of
Sheffield
 
 
Credit Hire –
The What? Why? How? And
Who?
10 May 2022
 
 
 
 
Bernard Thornton FCII
Chartered Insurance Practitioner
 
Learning Objectives
 
At the end of this event, the delegate will be able to identify and
understand:
The background and development of the credit hire market
Important test cases which have steered its operation
The ABI General Terms of Agreement and how it works in
practice
The approach to replacement vehicles by different players
Ideas for client communication
 
What is Credit
Hire?
 
‘a means of providing a like-for-like
replacement vehicle to an innocent victim of
an RTA, with the least possible inconvenience
and cost’
 
Who are the Participants?
 
How Does It Work?
 
CHC ‘underwrites’ the risk
Credit Hire Agreement in name of ‘Hiree’
Hiree’s obligations:-
No misrepresentation
No fraud
Co-operation with recovery efforts
 
W
h
a
t
 
a
r
e
 
t
h
e
 
C
r
i
t
e
r
i
a
?
 
Liability
Need
Impecuniosity
Utilisation
 
Credit Hire vs Courtesy Vehicles
 
R
e
a
s
o
n
s
 
f
o
r
C
o
s
t
D
i
f
f
e
r
e
n
t
i
a
l
 
Bad debt
Compromise settlements
Concessions for early settlements
Litigation costs
Uninsured TP
Additional insurance premiums
Unrecoverable damage costs
Settlement delays
‘Free’ upgrades
Admin costs
Collection & delivery
 
What is the ABI
GTA?
 
‘The 
General Terms of
Agreement
 for Insurers and Credit
Hire Companies sets the standards
for the credit hire industry,
ensuring smoother processes and
more productive relationships’.
-GTA Website
 
How Much?
 
T
h
e
 
A
B
I
 
G
e
n
e
r
a
l
T
e
r
m
s
 
o
f
A
g
r
e
e
m
e
n
t
 
Website:
 https://www.gtacredithire.com
 
Who are the GTA Signatories?
 
Why Does Credit Hire Exist?
 
   The Good, the Bad & The Ugly
 
Who is the Celebrity
Credit Hire Claimant
 
WINNER!
 
The Ugly
 
Bent v Highways & Utilities Construction Ltd (2011)
Costly stand-offs
Eye-watering costs
Who pays?
 
 
The Bad
 
Scramble for ownership
>9 different approaches
Little thought for claimant’s best interests
Claimant innocent but confused!
Poor service
 
 
The Good
 
Non-standard vehicle
Lateral thinking
Minimum disruption
Co-operation
Everyone happy!
 
 
Harries v Baguley (2019)
 
Liability dispute
£400,000 hire charges over 3 years
Mitigation attempted but refused
 
Who Regulates?
 
No legal regulation
Most CHCs have other regulatory controls,
e.g. FCA
Credit Hire Organisation
Full members (CHCs)
Associate Members (mainly law firms)
CMA Investigation 2014
 
T
h
e
 
C
r
e
d
i
t
 
H
i
r
e
O
r
g
a
n
i
s
a
t
i
o
n
 
Website:
https://thecho.co.uk
 
W
h
a
t
 
a
r
e
 
t
h
e
T
o
p
i
c
a
l
I
s
s
u
e
s
?
 
The Covid-19 Effect
The Supply Chain
Civil Liability Act
Greater Co-operation?
 
 
Comments & Questions
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Explore the concept of credit hire, its participants, operation, and criteria in the insurance sector. Discover the background, workings, and challenges associated with providing replacement vehicles to innocent victims of road traffic accidents. Gain insights into important test cases, the ABI General Terms of Agreement, and effective client communication strategies.


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  1. Credit Hire The What? Why? How? And Who? 10 May 2022 The Insurance Institute of Sheffield Please wait for the session to commence at 11.00 Bernard Thornton FCII Chartered Insurance Practitioner

  2. Credit Hire The What? Why? How? And Who? The Insurance Institute of Sheffield 10 May 2022 Bernard Thornton FCII Chartered Insurance Practitioner

  3. Learning Objectives At the end of this event, the delegate will be able to identify and understand: The background and development of the credit hire market Important test cases which have steered its operation The ABI General Terms of Agreement and how it works in practice The approach to replacement vehicles by different players Ideas for client communication

  4. What is Credit Hire? a means of providing a like-for-like replacement vehicle to an innocent victim of an RTA, with the least possible inconvenience and cost

  5. Who are the Participants? CLAIMANT ( HIREE ) CREDIT HIRE COMPANY (CHC) THIRD PARTY INSURER (TPI)

  6. How Does It Work? CHC underwrites the risk Credit Hire Agreement in name of Hiree Hiree s obligations:- No misrepresentation No fraud Co-operation with recovery efforts

  7. What are the Criteria? What are the Criteria? Liability Need Impecuniosity Utilisation

  8. Credit Hire vs Courtesy Vehicles FAULT OR NON-FAULT? LIKE FOR LIKE ? COST?

  9. Bad debt Compromise settlements Concessions for early settlements Litigation costs Uninsured TP Additional insurance premiums Unrecoverable damage costs Settlement delays Free upgrades Admin costs Collection & delivery Reasons for Reasons for Cost Cost Differential Differential

  10. The General Terms of Agreement for Insurers and Credit Hire Companies sets the standards for the credit hire industry, ensuring smoother processes and more productive relationships . -GTA Website What is the ABI GTA?

  11. How Much? VEHICLE TYPE S1 S5 P4 PV4 B5 CS4 EXAMPLE Vauxhall Corsa Nissan Qashqai BMW 320 Ford Transit SWB 125cc Motor Cycle Mitsubishi Shogun 7 CH RATE PER WEEK TYPICAL SPOT HIRE 262.15 426.93 821.38 404.11 296.80 731.99 166.40 316.00 349.93 231.00 195.00 511.00

  12. The ABI General The ABI General Terms of Terms of Agreement Agreement Website: https://www.gtacredithire.com

  13. Who are the GTA Signatories? Insurers (and their agents) CHCs

  14. Why Does Credit Hire Exist? Increasingly Assertive Claimants Insurers Slow off the Mark? Opportunist CMCs

  15. The Good, the Bad & The Ugly Ugly Bad Good

  16. Who is the Celebrity Credit Hire Claimant

  17. WINNER!

  18. The Ugly Bent v Highways & Utilities Construction Ltd (2011) Costly stand-offs Eye-watering costs Who pays?

  19. The Bad Scramble for ownership >9 different approaches Little thought for claimant s best interests Claimant innocent but confused! Poor service

  20. The Good Non-standard vehicle Lateral thinking Minimum disruption Co-operation Everyone happy!

  21. Harries v Baguley (2019) Liability dispute 400,000 hire charges over 3 years Mitigation attempted but refused

  22. Who Regulates? No legal regulation Most CHCs have other regulatory controls, e.g. FCA Credit Hire Organisation Full members (CHCs) Associate Members (mainly law firms) CMA Investigation 2014

  23. The Credit Hire The Credit Hire Organisation Organisation Website: https://thecho.co.uk

  24. The Covid-19 Effect The Supply Chain Civil Liability Act Greater Co-operation? What are the What are the Topical Topical Issues? Issues?

  25. Comments & Questions

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