Darren Bent - a lesson in credit hire

The Aston Martin DB9 is one of the world’s sexiest sports cars, so England footballer Darren Bent was hardly likely to refuse when offered one as a courtesy car after his Mercedes was damaged in a crash.

The offer of the £105,000 supercar was made by credit hire operator (CHO) Accident Exchange after Bent's car suffered £20,000 damage.

Bent ran the Aston for 94 days while his Mercedes was being fixed, racking up hire costs totalling £63,406.90. The Mercedes was worth £75,000.

The other motorist in the collision was liable, but claim managers at his employer’s insurance company, Allianz, were still flabbergasted when they received such a large bill. They decided to fight Accident Exchange in the courts.

Allianz believed that a wealthy footballer who owned other flash cars did not need to hire an Aston Martin. The group also challenged the length of the hire and the cost.

More than three years later, the dispute rages on. Allianz won the last round at the Court of Appeal in March, Lord Justice Jacob stating: “The provided car was more expensive, and so likely to be more costly to hire than Mr Bent’s own car.”

The case has been passed to a lower court for retrial and should be heard for one final time next month, unless the parties come to a private settlement.

One of many

This is the highest profile battle between insurers and CHOs, third parties that provide vehicles to motorists.

CHOs are meant to make life easier for drivers involved in accidents: they remove the hassle and stress of the motorist having to pay for a hire car and bill the insurer.

However, insurers are tired of some CHO practices, believing they push up premiums by hiring indecently expensive cars for too long.

Last month Allianz, in a separate case against Accident Exchange, had a bill reduced by £30,000 to £3,000 having proved that there was no need for a hire car.

Roy Hebburn, divisional claims manager (technical) at Allianz, says: “Credit hire is a major issue. We’ve found that 10p in every pound in commercial motor insurance [claims] is going to the credit hire company. You start to ask, ‘are they properly pricing the hire?’”

Hebburn says the credit hire cost has risen hugely. At one stage it was only 3p-4p in every pound. Inevitably, this cost gets passed on to policyholders.

By going to the courts insurer hope people will find out about CHO actions that Hebburn says may be within the law but are “pushing the envelope”. He believes that the Bent case has “laid down a marker”.

Landmark case

The Allianz case that was settled last month has been referred to as a landmark. Audi dealer Beechwood Birmingham referred itself to Accident Hire when one of its own vehicles was damaged. It claimed £33,345.40 for the hire over 120 days even though it had more than 60 cars in its fleet at any one time.

This case has established basic principles, such as the CHO having to prove that there is a need for hire.

However, the CHO industry plays down the significance. The Credit Hire Organisation's director-general Tony Baker , says: “It is not that important a case as it didn’t create any new law or clarify it.

"There are about 20,000 [credit hire] claims a year and about 80% of them go in favour of the credit hire company in point of principle or point of detail.”

Baker also points to Accident Exchange’s court actions against Autofocus, a consultant that provides evidence to settle the cost of credit hire.

Autofocus is alleged to have underestimated costs, hurting the CHO’s finances. One Autofocus employee received a 28-day suspended sentence in March, though the group is to renew battle in the Court of Appeal later this year.

Building bridges?

Baker’s organisation is the result of a recent merger between two industry bodies, and it is hoped that the merger will simplify communication between CHOs and insurers.

CHO Vision Vehicle Solutions commercial director, Tony Copeland, says: “The new trade body will be one voice to the insurers and they will be able to attend any of the open meetings. Looking at the positives, the general terms and agreement (GTA) is annually reviewed. It was a very amicable agreement to increase rates this year.”

This may not be enough to mend relationships. Many insurers felt that their doubts were borne out earlier this year when CHO Drive Assist was accused of falsifying hire days to get more money from insurers. A member of staff sent an email to employees explaining how to claim two extra hire days. Steve Binch, the chief executive, disciplined the person and hired forensic accountants at KPMG to look at his company's books.

They found that insurers had been cheated in roughly 1,250 claims. They were swiftly reimbursed and Binch – who did not return calls from Insurance Times for this article – at the time blamed the incident on a “misunderstanding”.

Although Drive Assist acted by the book, this incident shows how rogue staff can cause problems for both CHO and insurer.

“Sometimes an organisation gets someone who’s heard something a bit dodgy and heads off and follows that idea,” admits one claims source. “The way Drive Assist handled this does give some confidence.”

Filling the void

Credit hire companies emerged in Britain in the late 1980s when entrepreneurs noted that insurers were not providing a simple replacement service to policyholders.

“Insurers were a little bit shortsighted on the issue of mobility,” explains Axa Insurance technical manager of motor claims, Phil Rawlings. “We should have said ‘that’s our customer, let’s get him a car’.”

CHOs filled the void and created an industry – and competing aims mean they row with insurers.

Insurers want cars to be fixed quickly to limit the claims while CHOs are obliged to monitor the process but without an incentive to seek a speedy resolution.

Rawlings says: “There’s the guy whose Vauxhall Astra is off the road for 11 days who has a genuine need to get out and about. But then there are the Darren Bent and Beechwood Audi cases that have pushed the legal doors right open. It looks like people are exploiting what is just an answer to a mobility problem.”

His day in court

Insurers, then, share a fear that CHOs have some Machiavellian practices. While those suspicions continue, more court cases seem likely.

While Bent's Sunderland teammates can concentrate the new football season, the striker himself will be distracted by headlines over when the Accident Exchange case is next in court.

He must be wondering if hiring that Aston Martin, blinding car though it may be, was really worth the hassle.