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Presentation by M. Taylor Chartered Insurer ACII HSBC INSURANCE (UK) LTD

Rising costs of credit hire – who is to blame?. Presentation by M. Taylor Chartered Insurer ACII HSBC INSURANCE (UK) LTD. Size of the problem. According to the Department of Transport there were: 33.4 million vehicles on UK roads in 2006 Of those, 5 million were involved in accidents

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Presentation by M. Taylor Chartered Insurer ACII HSBC INSURANCE (UK) LTD

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  1. Rising costs of credit hire – who is to blame? Presentation by M. TaylorChartered Insurer ACIIHSBC INSURANCE (UK) LTD

  2. Size of the problem According to the Department of Transport there were: 33.4million vehicles on UK roads in 2006 Of those, 5 million were involved in accidents Resulting in 3.1 million motor insurance claims

  3. Based on data from ABI, Lloyds and MIB: Total estimated number of non-fault claims 1,160,000 70% of all claims with third party element are non-fault Estimated overall cost of credit hire for 2006 was £500m

  4. Who is to blame? • Badge of Honour • Business Models • Misinterpretation of the GTA • Complaint raised to OFT • Market diversity

  5. GTA Subscribers

  6. Average hire period via credit hire route is 22 days Average hire period via intervention scheme is 15 days This represents a 40%longer hire period if the claim is processed via credit hire route Why ‘Conflict of Interest’

  7. The Future The question now to be asked as to what the future holds? Clearly one thing both CHOs and Insurers will agree upon is the fact this area of our industry is Big Business, which is in the spotlight, this means things have to change.

  8. Route 1 ‘Credit Crunch’ • Intervention • Bilateral • Matching commission payments • Multilateral • Better internal processes

  9. Route 2‘Credit where credit is due’ • Revised GTA / Governance • Proper rules association / membership • Powers audit / control existing members • Annual subscription fees • Appropriate sanctions

  10. Common purpose Consensus majority market Communication TCF awareness Race to customer and associated costs must be something which is controlled by the market and not individual schemes

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