The car insurance industry is a racket: I think we all suspected that. But unless you’ve had personal experience of its devious workings you probably have no idea just how much of a racket. I didn’t myself until just recently when I had to make a claim for a tiny bump on the door of my car. Soon, I found myself sucked into a system that taints almost everyone it touches — insurers, garages, solicitors, car hire firms and claimants alike — with corruption so flagrant it’s hard to believe such a thing could be possible in hyperregulated modern Britain.
It all began when Mark, a nice, decent chap who does odd jobs for us round the house and garden, accidentally reversed his van at low speed into the side of our car in front of our house. The dent was so trivial that I probably wouldn’t have bothered trying to mend it if it hadn’t been a lease vehicle. ‘Whatever happens, I want to get this sorted out as quickly and cheaply and painlessly as possible,’ I said to Mark. ‘Let’s not even go through our insurers, if it’s easier for you.’
Unfortunately, Mark discovered after a few inquiries, it wasn’t one of those cosmetic dents that could be knocked out in a trice. So reluctantly, with his agreement, I put in a claim. I thought it was going to be simple — he admitted liability; there was no disputing the details of what had happened; no one had been hurt. What could possibly go wrong?
My first indication of the kind of vultures I was dealing with were the succession of phone calls inviting me to remember the back pain or similar debilitating complaints I’d suffered as a result.
The initial wave came from cold-callers with Scouse accents; then from people in call centres in India. I kept telling them, ‘Look. I’m fine, the other guy is a friend and I want to keep his costs down.’ But these people have an answer for everything. My compensation pot had already been allocated — as much as £10,000, I was told. And it wouldn’t make any difference to my friend’s insurance status. All I needed to do was give the right answers on the form and the cheque would be in the post.
When I havered over the ethics of this to a young female cold-caller from India, she passed me to her male supervisor. ‘Everything is perfectly above board,’ he said. ‘Have you suffered back pain as a result of your accident?’ ‘No,’ I said. ‘Yes, but still you have been greatly inconvenienced and might yet be experiencing symptoms?’ he prompted. ‘Like what?’ I asked. At which point he began coaching me on exactly the kind of imaginary problems I should report to my doctor in order to expedite my claim.
Well I didn’t, obviously, but I can see why others might be less punctilious. Even if you haven’t set out to cheat the system, those cold-callers can be very persuasive. Ten grand of free money is quite a lot to turn down, especially when you’ve been reassured that it’s already in the price, that no one is going to get hurt and that anyway, you actually might have been slightly injured, it’s just that you haven’t quite realised it yet.
After three or four months, the personal injuries calls dried up, but the hassle wasn’t over. There was still the business of getting the coachwork on the car fixed, which I’d expected would take a couple of days at most. And so, in an honest world, it would do: it’s not like your car needs to be steeped in baby oil for a week before it’s ready for the panel-beating process. That job could have been finished in an afternoon.
But car insurance doesn’t work like that. The system is designed so that as many subsidiary industries as possible can get their snouts in the trough. The panel-beating company will arrange to have your car in for seven days when it only really needed one. This in turn benefits your insurer’s hire company partner, which rents you a vehicle on a like-for-like basis, and often can charge more than the actual repair of your car.
It did in my case: the repair costs were £997; the car hire costs £1,326. Would any of us have permitted such wanton extravagance if we’d been paying for it ourselves? I don’t think so. First, I would have insisted that my car was mended in a day (or a couple, max), as it should have been. Second, I would have rented the cheapest runaround possible, rather than forking out for the top-of-the-range beast that was imposed on me by my insurer to keep me going while I was deprived of my ordinary Skoda.
And guess where I got those repair figures? Only from the solicitor’s letter I had the other day informing me that Mark’s insurance company was contesting my claim — why, it was never explained — and that therefore this solicitor’s firm had been instructed to pursue it on my behalf at the rate of £200 per hour plus VAT. I wouldn’t have to pay this myself, the letter explained. My legal expenses insurance cover would indemnify me. Well great. But this money doesn’t come from nowhere, does it? It will end up, like all those fake whiplash claims, being used to drive up the cost of motor insurance for everyone else.
The average cost of fully comprehensive car insurance is now well over £1,000. If even half of that money is honestly earned and spent, I’d be amazed. Our motor insurance industry is run like a Mafia cartel and almost everyone involved should be thoroughly ashamed of themselves. The Office of Fair Trading claimed to have been investigating the problem three years ago. It doesn’t appear to have made much progress.
This piece was first published in The Spectator