From the AJAG Website:

RSA repair firm fabricated charges – judge By tlavelle,

On September 21st, 2011 An RSA subsidiary company fabricated charges to boost profits, a High Court judge has ruled in a damning verdict on the insurer’s controversial subrogation arrangements.

Judge Platt, sitting at Romford County Court, said that if RSA’s subrogation model was adopted by the rest of the market, the cost of minor motor repair claims would be inflated by 25%.

Platt threw out a claim by RSA customer Kevin Fallows last week for £1825 repair bill, which he was seeking to recover from the defendant Hawker Transport via subrogation.

In non-fault accidents, RSA uses a subsidiary company RSA Accident Repairs Limited (RSAARL) to charge third party insurers for repair costs. RSAARL either carries out the repairs itself or uses a sub-contractor to do the work.

RSA was seeking to claim from the defendant’s insurer not only the costs charged by the vehicle’s sub contracted repairer DWS but RSAARL’s add on costs.

The amount claimed in RSAARL’s invoice was higher than the amount invoiced by the actual repairing garage.

RSAARL charged an hourly labour rate of £39.50, £3.50 more than the sum charged by its subcontractor even though it had not done any of the work itself.

RSAARL also charged a figure of £118.50 for sundry allowances, such as washing and cleaning.

He said: “These repairs were actually carried out by DWS and there is no evidence that the vehicle actually went through the hands of RSAARL for repair. Indeed the fact that RSAARL have charged exactly the same number of hours as DWS must lead to the conclusion that such items as environmental charge, washing cleaning, de-nibbing final inspection and road test cannot have been done or incurred by RSAARL and this item is simply a fiction invented by RSAARL.”

Ruling on RSA’s arrangement, Platt said : “There is no evidence put forward to explain why it is reasonable for RSA to impose an intermediary company into the chain of transactions.

“The effect of the arrangement which RSA has sought to implement is at best to pass on to the defendant’s insurers some part of the administration expenses incurred by RSA in dealing with the claim thereby inflating the total repair costs. Other and less innocent explanations are not necessarily to be rejected out of hand

“The effect of inserting RSAARL as an intermediary simply inflates the ultimate cost by increasing the hourly rate and adding extra charges, one of which I have disallowed in any event as a fabrication, and another as not reasonably incurred. If RSA chooses to carry on its business in that way it is entitled to do so but it is not entitled to allow RSAARL to add on what it pleases and then expect defendants to pay a sum which is not the true cost of repairs.

“Since RSAARL is wholly owned by RSA the effect of these extra charges if they are paid by defendants is simply to boost RSA Group’s profits beyond the actual cost of repair by the margins inserted by RSAARL”

Platt said RSA had no legal basis for taking such a course of action and that it’s subrogation arrangements were not in the public interest because they would inflate overall motor repair claim costs.