A new agreement between insurers and credit hire companies could mean 100,000 fewer disputes going to the county court, its backers said today. Proposed reforms to the 25-year-old voluntary general terms of agreement (GTA) aim to cut costs and reduce friction between parties. 

Anthony Hughes, chair and chief executive of the Credit Hire Organisation, the trade body for the sector, and Pete Highfield of NFU Mutual, the insurance lead, said the new GTA includes four initiatives:

  • An annual independent vehicle hire rate review driven by market data
  • Compulsory arbitration where cases are not agreed and settled within a set number of days following submission of a clean payment pack
  • A new set of late payment penalties
  • Clearer rules on the areas of argument/dispute in the arbitration process

Hughes said: 'For the past 18 months we have been working with both insurers and the ABI to conclude significant revisions and improvements to the GTA. Our strategic objective has been clear from Day 1; reduce or ideally remove frictional costs and put consumers at the heart of the accident management process. 

One benefit from the agreement would be a reduction in credit hire cases ending up in court, Hughes said. 'We estimate that as many as 100,000 credit hire cases could be removed from the county court if the reforms work as planned, which would greatly benefit our hard pressed civil justice system.' 

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Highfield said: 'Our collective aim is to create a fair and efficient mobility solution for innocent accident victims, and to minimise friction by deploying a compulsory arbitration process which minimises points of dispute and where operational efficiency is rewarded by reduced claims cost.'

Hughes said that the Credit Hire Organisation has writting to the transport secretary 'outlining the work that has been and is still to be done on the GTA, setting out how, when it is fully adopted, it will create a claims process and environment with far less frictional cost, benefiting motor insurance policyholders generally'.