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The rising cost of credit hire……. Who is responsible?

The rising cost of credit hire……. Who is responsible?. Ralph Ferguson Chairman - NACHO. Overview. History – how we got to where we are? Now – why are there still issues? Now – what does distribution look like? Future – taking responsibility for a service that’s here to stay. History.

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The rising cost of credit hire……. Who is responsible?

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  1. The rising cost of credit hire…….Who is responsible? Ralph Ferguson Chairman - NACHO

  2. Overview • History – how we got to where we are? • Now – why are there still issues? • Now – what does distribution look like? • Future – taking responsibility for a service that’s here to stay.

  3. History • Customer led service offering identified where insurers failed to provide a solution • Courtesy cars provided were insufficient – no such thing as a free car! • Legal challenges fought to try and crush the industry (Trojan horses aimed at cost) • Industry protocol (GTA) deemed as the way forward – initial prices dictated by insurers and daily rental companies • CHO industry evolves to make the pricing structure and associated benefits fit. • Subsequent rate increases all agreed by insurers at circa 4% p/a – only most recent ones stalled due to other issues within protocol.

  4. Now – what are the issues? • GTA Protocol has never had teeth / appropriate resource to ensure adherence / policing of activity on both sides • Grey areas in the protocol have led to unreasonable behaviour amongst CHO’s causing the industry to be tarred with one brush • Progress has been hampered by companies turning to litigation (both on an industry basis and a consumer basis) • Bi-lateral agreements don’t tackle the whole issue – why just hire, what happened to PI and repair (which generate more costs?) • Insurers still don’t have adequate resource to deal with volume of claims resulting from growth in referrals • NACHO is a champion of transparency, regulation and governance leading to trust and continued progress with insurers

  5. Now - distribution • Calendar year 2008 will see c500,000 credit hires in UK insurance market with minimum 10% growth in 2009 • Responsibility for distribution can be broken down approximately: Brokers (inc LEI’s, solicitors, CMC’s) 50% Insurers (direct control) 40% Retail (bodyshops / dealerships / manufacturers) 10% • Costs can’t be reduced to direct hire rates until supply chain is under control and because service provided goes way beyond that of a hire company. • Insurer costs (cycle times) are lower so buying power not as great as brokers – do brokers care about the cost of claims? • Retail environment only 10% of volume but creating most cost?

  6. Future & conclusions • Insurers must take responsibility for where we are today and accept CH is part of the claims cycle / supply chain • Insurers with poor payment profiles who provide this service to their own policyholders are in no position to complain! • Certain CHO’s have not helped achieve levels of trust and transparency required to move forward as an industry focusing on reducing costs and customer service • Insurers must take responsibility for current distribution landscape • There needs to be a recognition that current insurer alternative solutions do not deliver the same service, products or benefits that CHO’s deliver • NACHO members are working with dynamic insurers on protocols that go beyond the GTA delivering cost savings and finding new levels of trust, insurers need to communicate this differentiation between CHO’s • We ALL need to take responsibility to ensure the industry matures and customers are provided with replacement vehicles

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