October 5, 2011

Say what you like about judges (provided you’re not in their courtroom, ideally), but those guys know how to have fun with language. Take His Honour Judge Platt presiding at Romford County Court over the case of Fallows v Harkers Transport (a firm) last month, who suggested that a charitable interpretation of RSA’s adoption of a subrogation model that inflates repair charges billed to defendant insurers by around 25% might be that RSA was seeking to “pass on to the defendant’s insurers some part of the administration expenses” it incurred in dealing with the claim by “inflating the total repair costs” with made-up add-on charges, but that “other and less innocent explanations are not necessarily to be rejected out of hand.”

The specifics of the case entailed a firm subcontracted by RSAARL billing repair costs of £1,542.78, subsequently billed on to defendant insurer Equity Red Star at the new improved cost of £1,825.32 via an inflated hourly rate charge, collection and recovery costs (which Judge Platt ruled could have been avoided by driving the none-too-seriously damaged vehicle to the repairers), and a “sundry allowance.” Judge Platt assessed the contention that this sundry charge was “simply a fiction invented by RSAARL” as “wholly compelling.”

Ruling that only the lesser sum of £1,542.78 was recoverable, Judge Platt noted that “Behind this simple story lies a giant struggle which has been going on for many months between RSA on the one hand and a number of defendant insurers over a method of business which is seen on the part of RSA as perfectly legitimate and by a number of defendant insurers as involving methods of business which fall somewhere between very sharp practice and outright fraud. While the sums in each case are very modest it is clear that across the industry millions of pounds are a stake.”

Now, according to that prolific progenitor of new collective nouns for insurers Insurance Times [cf. last week’s evocative clutch], a veritable “phallanx of leading motor insurers” have ranked up to hold “talks on mounting a class action against RSA for inflating costs.” Who are these potentially litigious hoplites? IT names: Ageas, Allianz, AXA, Equity Red Star, Groupama, NFU Mutual, QBE and Zurich.

Interestingly (no, really), Post Magazine reports that the inflated charges in the Fallows v Harkers case came to light due to a careless accounting slip when RSA neglected to “add VAT to its added charges so the original £229.78 of VAT was incorrect on the inflated invoice.”

Like Solange Knowles and Dr Sashi Tharoor, RSA Insists it has done nothing illegal. While IT reports that chief exec Adrian Brown “has contacted his counterparts at other insurers in a bid to resolve the tidal wave of outstanding legal actions triggered by their refusal to pay the add-ons.”
Look out RSA


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