Why dodgy claims companies are a car crash that needs tackling

There’s a very particular sound you hear when you’re in a car that gets hit by another vehicle. It’s a jarring, bone-rattling bang that goes right through you and that you may well hear in your nightmares. I do.

I’ve heard this too many times, most recently driving home on the M11 only to have to slam on the brakes when the car in front of mine suddenly stopped. I watched, terrified, as its rear loomed in front of me. No, no, no, I thought, I’m going to hit him. Mercifully, I stopped in time having correctly judged the distance. Unfortunately, the SUV behind me had not, so I had all of a split second to congratulate myself.

Strangely enough, this was not necessarily the worst thing about the event. That started after I had limped home, steadied myself with a consoling coffee, and started making the painful round of phone calls to my insurer, the courtesy car company, old Uncle Tom Cobley and all.

Barely a day later the calls started coming in. Do you need a car? Do you need repairs doing? We can help! The first of these gave the distinct impression that they were from the other side’s insurance company.

Having covered the insurance industry in the past, I at first wondered if this was not an attempt by the at-fault driver’s insurer to move things along and thus cut costs. But then a second call came in, this one intimating that they could get me cash. Not life-changing money, but a few grand. It’s been set aside by the Ministry of Justice, I was told. And that really was when the alarm bells started ringing. The MoJ doesn’t just willingly hand money over to anyone.

Who on earth were these people? And why were they plaguing me?

First I called AXA, the insurer of the driver who hit me. After all, some insurers prefer to outsource claims management to third parties. But AXA told me that no, it wasn’t their people pestering me. These callers had no connection with the company.

Still, they kept calling. Apparently, I even had a case number with one of them. So I contacted the Financial Conduct Authority, who informed me that these claims companies aren’t supposed to cold-call, which meant those harassing me were engaged in highly sharp practice.

Further investigation led me to Aviva, another insurer which has had things to say about claims management companies (CMCs), which I eventually discovered was the identity of my vexatious pair of callers. Not all of them are bad, the company stressed. But we’re unimpressed with those that employ sharp practice. And it can be quite sharp.

“We see instances of unscrupulous CMCs that operate by aggressively taking over a motor insurance claim with the intention of making a profit,” said Pete Ward, head of claims counter fraud at Aviva.

“It is highly likely that these CMCs will lack the economies of scale, expertise, guaranteed quality of work and customer care that insurers provide. By charging inflated prices back to the at-fault insurer, they add significant cost to a claim, which in turn can put pressure on motor insurance premiums. To confuse matters, some of these bad actors will not confirm their true identity to the customer, or that they are not the customer’s insurer.” The latter is what happened to me.

How did they get my number? Well, there were four drivers involved in the smash, and all exchanged numbers. If just one of them contacted a CMC, that would explain it. They mightn’t have even done this intentionally.

Here’s Pete again: “When a customer is on the side of the road, shaken up after an accident and searching online for their insurer’s phone number, the top results that come back on search engines are frequently generic-sounding names that could apply to any insurer. Believing these to be a link to their insurer, customers often click on the paid-for ad, which usually gives them just one option: to call the number, believing they are contacting their insurer. In fact, they are contacting a CMC who will take hold of the claim.”

This Google ad “spoofing” is when things can start to go wrong, as Ward explains it, because of the lack of economies of scale, expertise, guaranteed quality of work, customer care and so on.

Let’s say the insurer of the at-fault driver gets antsy at the claims company’s charges and refuses to cave in to what a CMC is trying to charge. This could clearly rebound on the accident victim, which could then put them in a world of financial (as well as physical) pain.

I’m not the insurance industry’s No 1 fan. I’ve tangled with it often enough. One reason why CMCs exist is the poor customer service some insurers offer. Dealing with them can cause a real headache. I’ve been there. CMCs, on the other hand, typically sound friendly and reasonable – they certainly did when they called me. You can see how people can get sucked in.

The whole experience left me highly uncomfortable. The way CMCs moved in on me and nearly hooked me when I was feeling beaten up and highly vulnerable after a horribly stressful experience was cynical and exploitative. It oughtn’t to have happened.

I was, however, distinctly unimpressed by the response of the FCA. There is clearly some very bad practice going on here. I was on the receiving end of it. A financial watchdog is there to protect consumers and ensure they can have confidence in dealing with the industry. It should be alive to problems like this.