A landmark ruling in a UK court is likely to have a major influence on the operations of insurance companies. The case, Fallows v Harkers Transport in Romford County Court, was brought after the defendant objected to inflated repair costs, after they had damaged a vehicle of an RSA insured driver.

RSA arranged for the repair to be carried out by a bodyshop through a subsidiary, RSA Accident Repairs Ltd. (RSAARL). The bodyshop invoiced RSAARL for the actual work, but RSAARL then invoiced RSA a grossly inflated figure, which they then tried to pass on to Harkers.

The judge said that this widespread practice was seen by many as a method of business which fall somewhere between very sharp practise and outright fraud. He added that the effect of inserting RSAARL as an intermediary, was simply to boost RSA Group's profits beyond the actual cost of repair

He went on to say that if RSA is correct in its argument, there is nothing to stop every insurer adopting the same procedures, which, if this case is a typical example, will lead to an overall increase of some 25% in the cost of minor motor repair claims. He added, this would seem to explain the quite extraordinary lengths to which RSA through its solicitors and RSAARL have been prepared to go in order to conceal the true position vis a vie RSAAL and its subcontractors, in answer to proper requests for disclosure from defendant insurers.  

The judge concluded that only the actual costs incurred by the repair were payable