High Court vindicates RSA on ‘in-house’ repair deals

An insurance company was entitled to set its own rates for vehicle repairs after claimants suffered accidents, a High Court judge has ruled.

In his preliminary judgment on the case of Coles v Hetherton released today, Mr Justice Cooke said RSA Insurance was entitled to use MRNM garages, a member of the RSA Group, and charge the bill to the insurer of the at-fault driver.

Two of those insurers, Allianz and Provident, last year launched actions to contest the principle related to 13 separate cases where RSA had been the claimant’s insurer.

The case comes as the industry is under scrutiny following the Office of Fair Trading’s decision to refer the motor insurance market to the Competition Commission. A report last month found evidence that some companies were taking advantage of the system to add inflated costs to claims and push premiums up for all motorists.

In defending the claim, RSA said its costs reflected what the policyholder would have to pay individually for such repairs, even if they were arranged and paid for by the insurer – an argument accepted by Mr Justice Cooke.

The company admitted that the model generated income for a company in the same group as itself, though it was not a subsidiary.

But RSA, which insures around two million vehicles in the UK, disputed the Allianz and Provident claim that charges were made even where no service at all had been provided by MRNM.

Mr Justice Cooke said that where a vehicle is damaged but can be repaired, the measure of the claimant’s loss could be taken as the ‘reasonable cost of repair’.

He added: ‘That reasonable cost is not necessarily the repair cost actually incurred, whether by the claimant or its insurer or indeed by anyone else who pays a repairer.’

Adrian Brown, chief executive for RSA in the UK and western Europe, said: ‘RSA’s motor repair practices have come in for a lot of criticism recently. I am pleased about the ruling on the legal principles and not surprised that RSA's approach has been vindicated.

‘If necessary we will continue to pursue our claims through the courts, however, given the clarity of the judgment, I hope this can now we brought to an agreed solution.

‘We remain keen to resolve the issues that exist within the motor market and are actively working with the government and OFT's efforts to find a solution.’