Major motor insurer RSA Insurance has been accused for falsely inflating the cost of repairing vehicles from motor insurance claims in an attempt to boost profits.
In a recent court case senior Judge John Platt found that a subsidiary company - which RSA owned and used to carry out repairs following claims - had increased labour costs without carrying out any of the work itself, according to BBC Radio 4’s Money Box.
RSA Insurance used a subsidiary firm, RSA Accident Repairs Limited, to carry out repairs on vehicles.
Judge Platt found that the subsidiary company made charges it was unable to account for before passing the cost on to the insurance company of the driver who caused the accident.
RSA Insurance, which insures more than 2 million vehicles, said it strongly denies any suggestion of inappropriate actions.
Insurers are not supposed to make a profit from repair work. After an accident, the victim’s insurer would normally arrange for the damaged vehicle to be repaired by a garage and then send the bill to the insurer of the driver at fault.
It is believed that several insurers are disputing the size of the bills they are receiving from RSA Insurance via its subsidiary repair company. RSA are in turn taking insurers to court to force payment of the claims.
More... Victory for motorists as 'referral fees' which push up car insurance premiums are banned Are car insurance comparison websites misleading? Probe launched into 'close relationship' with insurersThe case which Judge Platt commented on was from Romford Crown Court and was heard on 2 September.
According to MoneyBox, one district judge estimated that more than 100 such cases involving RSA Insurance are arriving at County Courts each week.
RSA Insurance, which also operates under the brand name More Than, said that the practice of recouping expenses for a claim which another insurer is responsible for - or subrogation - is an established practice in the industry.
A spokesman said: 'When a customer is involved in an accident, the insurance company can “stand in the shoes” of the customer to recover the retail cost of the repair from the person (their insurer) at fault.'
'However, to ensure that this remains the right approach and to avoid the need for further County Court litigation, we put in train a test case in the High Court in May of this year. In the meantime we have suspended any proceedings currently underway pending the outcome of that case. We reject completely any suggestion that RSA has behaved inappropriately.'