The Insurance Council of Australia (ICA) says it has significant concerns about businesses that purport to offer a smooth and cost-free insurance claim experience for not-at-fault drivers. 

The council told insuranceNEWS.com.au there is growing evidence of “consumer detriment” associated with credit hire and accident management companies that promise the use of free hire cars and repairs after accidents. Consumers have been falsely led to think they are dealing with their insurer, resulting in claims handling confusion and delays, it says. 

Insurers have called for more support from regulators and have raised concerns with Google about the implementation of its financial services verification process for advertisers. 

Increasing involvement of such companies “could also have a detrimental impact on the entire insurance industry”, with inflated charges and related inefficiencies contributing to higher premiums, ICA says. 

While an insured can arrange for another party to manage a claim for them, it is deceptive tactics and the inflationary effect on payouts that insurers object to.  

ICA says customers have had legal proceedings started in their name without their knowledge to pursue recovery against at-fault parties, and uninsured drivers have faced bills for car hire and repairs “priced at an inflated rate”. Others have been pursued for charges and had legal fees awarded against them following unsuccessful recovery from the at-fault party. Vehicles are sometimes “held ransom” until payment. 

Last week, a woman told ABC Radio Perth she accidentally called a claim management company when she Googled Budget Direct after finding her parked car was scratched. 

The company brought her a hire car and took her car away. She then looked at her policy paperwork and saw the correct number for her insurer. When she contacted the claim management firm, she was told she would have to pay $2000.  

Budget Direct says it later paid for the car’s return, and the brand’s owner Auto & General says a cease and desist order had already been issued to have its logo and brand removed from the claim company’s website. 

Insurance leaders favour an industry-wide clampdown and enforcement of rules rather than tackling the issue with a case-by-case, “whack a mole” approach. 

Auto & General wants regulators to ensure entities involved in claim handling have the required financial services licence. It is also concerned companies with licences are appointing inappropriate entities as representatives to bypass Google’s verification process. 

An Auto & General spokesman told insuranceNEWS.com.au the practices are “very concerning” and “a significant and growing issue across the industry”. 

Insurers are working with ICA to get additional support from regulators, he says. And Google should more proactively block non-compliant adverts from “entities that are using them to capture customers under false pretenses”. 

The Australian Securities and Investments Commission told insuranceNEWS.com.au the watchdog is aware of allegations that accident management companies are intercepting insurance claims and driving up costs for consumers and insurers. 

“The conduct of these companies, which allegedly involves impersonating insurance companies and exploiting consumers who are already in emotionally vulnerable situations following car accidents, is highly concerning,” it said. 

“We are speaking with insurance companies about this problem and actively considering the legal and regulatory issues it raises.” 

In 2017, an Australian Competition and Consumer Commission investigation led to credit hire company Compass Claims changing its advertising and sales practices.  

Customers were told they would not be liable for hire car charges, but the regulator deemed that misrepresentation because the contracts waived charges only if Compass could recover them from the at-fault party or their insurer.