Insurers; making it up as we go along!

Updated: Apr 23, 2020

After 40 years in the credit hire market I thought I had seen it all. However, since the Coronavirus forced a large part of the UK entering a lockdown, the creative output from some insurers is just breath-taking. Let me tell you about Bob Jones; he is a self-employed taxi driver and has been for a great many years. Regrettably, somebody crashed into his car whilst he was working in Birmingham and his taxi was damaged so badly that it could not be driven legally, and interim repairs were impossible.

Bob was lucky enough to be referred to a credit hire company who provided him with a replacement licensed taxi whilst his own damaged car awaits repair. He was able to carry on working and, in the meantime, he instructed somoene to act on his behalf. They agreed to act and wrote to the negligent party and his insurer to put them on notice. All sounds perfectly reasonable so far.

Bob is self-employed. He has account customers and, during the lockdown when the volume and frequency of public transport is lower than it was before, his normal business volume is reduced, but he is still working. The elderly, disabled, those without access to a car or unable to use public transport as well as contract customers, emergency workers and other essential workers who have used his service are pleased that he is still there.

Bob may need to use the government’s Coronavirus scheme for supporting self-employed workers if his income falls dramatically, but he is able to work and wants to work.

Jim is someone who has also needed the help of a credit hire company and has ended up being unfortunate enough to be making a claim against the same insurer as Bob. I say unfortunate because of what happened when the insurer of the negligent driver joined the fray.

They wrote telling him that even though they have received a claim from his solicitor that they “want to protect [Jim] from any action being taken without their authority”. Even that might sound reasonable had not the letter continued to tell him that he may have been informed that there was a ‘pot of money’ set aside for him, but to be clear this was not the case. They then go on to explain to this innocent victim of an accident caused by their negligent policyholder that they intend to carry out further investigations and need to confirm that his solicitors are acting on his behalf before explaining all of the ways in which they will investigate and deal with fraudulent claims if he is not absolutely squeaky clean. It is a very heavy letter.

I am old enough to remember what Lord Justice Longmore said when handing down the judgement of the Court of Appeal in Copley v Lawn [2009] EWCA Civ508 (paragraph 9). Dealing with the approach of KGM Insurance and the basis on which they had sought to approach the Claimant and the tone and content of the letter that they sent, Lord Justice Longmore invited KGM, if the evidence demonstrated their common practice, to discontinue it forthwith because of the shocking impact it could have on a lay member of the public.

Perhaps the way our insurer approached Jim was just a little too zealous although how they feel that writing to him in what is a highly intimidating letter when he had already instructed someone to act, and when the insurer obtained Jim’s contact details from the solicitor, is not even debatable. But what happened with the same insurer with Bob was perverse in comparison.

For context, it is encouraging to recognise that Admiral (not the insurer in this case), have offered to refund £25 to their policyholders. This is said to be a response to the lower volume of motor claims combined with an unaltered level of motor insurance premiums which, no doubt, will improve their profitability during this year. I say that because there are some insurer behaving intelligently. They are, however, not as common as you would hope.

In the case of Bob, the same insurer that approached Jim wrote another heavy letter highlighting what they believe to be persuasive arguments quoting from regulations and government advice and other guidance about the Coronavirus epidemic. The only thing missing was they did not say they were acting on scientific advice.

First, and no doubt with absolute concern for Bob’s health and well-being they reported that “many taxi drivers have sadly contracted the Coronavirus and died”. I don’t know whether that is true, but they then went on to suggest that there is clear friction between the government’s advice that members of different households should not occupy the same vehicle and the continued availability of private hire for critical workers. They resolve that illusory friction by arbitrarily concluding that it is not proportionate and would represent a failure to mitigate losses for Bob to continue to hire a replacement plated taxi for the indefinite duration of lockdown at credit hire rates and to carry on working.

They go on to reference the usual advice to stay home, save the NHS and save lives, and then set out what the government and the Police regard as appropriate conduct before concluding that because of the mortality rate of taxi drivers and other guidance, not only should Bob not be working but he has no need to hire for social, domestic or pleasure purposes either. His claim, they say, is no more than a loss of use claim and, benevolently, they insist a loss of profit claim would be the obvious solution. For those not following the plot, the hypocrisy starts here.

To reduce their outlay, they suggest that Bob should not work anymore. Instead, he should make a claim under the government’s Self-employment Income Support Scheme so he can claim a taxable grant worth 80% of his trading profits up to a maximum of £2,500 per month for at least the next 3 months. They don’t suggest that he might be earning more than that or that he might want to work. Instead, they purport to justify this by claiming that taxi drivers all over the country are struggling financially because of the coronavirus. Quickly, they set out that it is not admitted that, but for the index collision, the Claimant would not have needed to claim the grant. Nor do they consider that his entitlement to the grant is not impacted by their view. But they seek to take the moral high ground by cynically claiming, that they are willing to make regular payments to Bob for the added 20% on top of the government’s grant upon receipt of a copy of the Claimant’s grant submission form.

They omit to reference that Bob is entitled to claim the grant if his earnings are sufficiently impacted as a result of the Coronavirus lockdown. They ignore the fact that he is also allowed to continue to work if that grant is not sufficient and if he is able to work. His access to the grant payment is not driven by the negligence of another motorist but, perversely, it seems the insurer has advocated that Bob abandons his existing customers and those others who still require his services and that he makes a claim that will be funded by taxpayers to give him up to 80% of his profits up to a maximum of £2,500. They also want him to stay home when he wants to and can carry on working. And why do they want to do this? Simples; they want to do it so that the taxpayer, you, me and everybody else, effectively allows them to short settle a claim arising from the negligence of their policyholders, or at least 80% of £2,500 of it (subject to Bob qualifying and being given the grant). They are happy to limit their outgo by paying the other 20%.

Here we have an insurer that is probably making super profits; an insurer with premiums already paid by motorists struggling on 80% of their salary (with a cap of £2,500); an insurer seeing fewer driven miles and having fewer claims to deal with. They may have even furloughed their employees because of the reduction in volume of business they have faced and be receiving help to fund those employees from taxpayer funding there as well. Not only does that not justify their suggestion that a working man should stop work, make a claim for a grant (which he is entitled to do even if he carries on working if his income has fallen because of Coronavirus) so that the taxpayer can satisfy the financial liability of their policyholder. But, that’s not the whole story.

Just for context, and because whoever advises these people is convinced that everything they see is stuffed with merit, the final paragraph of their letter plumbs rally does chart new depths. I suspect that with their tongue well embedded in their cheek, they have the gall to say that credit hire firms that supply replacement vehicles unnecessarily during lockdown are profiteering from the crisis. Those same credit hire firms risk driving up insurance premiums. Moreover, and this is the killer punch, they point out that, presumably when this claim litigates, “the courts will have added powers regarding profiteering”.

I have sent the copies of the correspondence that I have seen to my MP, to the Chancellor and to the BBC. The idea that insurers should be intervening between a solicitor and their client is one thing. The strategy that they should seek to persuade innocent motorists to ceases working and claim a taxpayer funded grant as a means to reduce the financial liability from their policyholder’s negligence is grotesque. It is certainly indicative of a need for some positive communication from CHOs (the trade body really) about the efforts they are going through to keep Britain moving, the people who are using their service, the attitude of insurers seeking to profiteer in order to build a coherent and persuasive logic for when this is all over. The Court of Public Opinion matters; allowing insurers to set the agenda without a positive response does none of us any benefit.

Note from the Editor: Bob and Jim are aliases.

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