The company is one of the five founding members of the National Association of Credit Hire Operators, together with Car Crash Line, Motor Claims Direct, Drive Direct and Colegate Vehicle Hire.
Adrian Palmer, Auto Indemnity chief executive, claimed insurers “had a problem” with the BAFACH association founded by 3 Arrows – now owned by Avis Europe - in the early Nineties.
“We formed another association with credible businesses that set out to be compliant with ABI procedures,” he said. “It provides an opportunity for insurer-friendly accident management companies to come to the table and enjoy the benefits. In return, they must be prepared to go through audits to ensure their procedures are right.”
Nacho chairman Ken Bobbins added: “For too long the credit hire industry has set itself against insurers. By forming Nacho, we are recognising that both sides have mutual interests that can be exploited for the benefits of our members, insurers and the innocent victims of road traffic accidents.”
Richard Allen, Association of British Insurers (ABI) chairman, indicated that the new association would pave the way for smoother relations. “Nacho offers the insurance industry an opportunity to talk sensibly with important constituents within the credit hire industry,” he said.
Auto Indemnity, which last month obtained ABI approval, has been a driving force behind the softened approach towards insurers.
Mr Palmer said: “We never challenge insurers in court, we negotiate for payment.”
Historically, companies like 3 Arrows and Helphire have been more combative, leading to regular court cases to battle insurers for payment.
Helphire is reportedly preparing to fight more than 15,000 credit hire cases in court. Legal director Peter Holding has been quoted as saying the company would be “happy” to defend each case in court, believing its rates were “completely recoverable”.
However, Mr Palmer condemned the “huge inducements” paid by some rivals to bodyshops in a bid to attract more referrals. They were only recoverable by charging excessive car hire rates.
“You can't charge £50 a day for car hire,” he said. “All parties must have a margin that they can work with.“We don't pay huge commissions to repairers, but because of our relationship with insurers, we are getting more work to put into their bodyshops.”
Auto Indemnity processes 2,000 claims a month through 1,200 bodyshops, of which around one-third are linked to a franchised dealer.
The company, consisting of 12 franchises scattered around the UK, was acquired by Millennium group last December. The group saw an opportunity to change the way the accident management and credit hire/repair market operated.
Millennium sold a Rover dealership and Peugeot outlet prior to buying the Auto Indemnity franchises. It owns 11 - “but we are happy for the outstanding franchise to remain independent” - and centralised the business with a call centre in Blackpool.
“After acquiring the business we approached major insurance companies to discuss how we could expand our service to fulfil their needs,” said Mr Palmer.
Royal & SunAlliance recently agreed to use the Auto Indemnity network for its third party non-fault cases. “Insurers for the non-fault party are happy for us to control the repair because we are ABI approved,” said Mr Palmer, who has worked for Mazda, Renault, Seat and Lotus during some 30 years in the motor industry.
He expects other Nacho members to gain ABI approval. It removes uncertainty concerning daily car hire rates, which are agreed and fixed, and facilitates prompt claims settlement.
Auto Indemnity has also signed an agreement with 3 Arrows' parent Avis, which will double the size of its fleet. As a result, the group plans to condense its four vehicle depots, accommodating a 300-strong fleet, to two outlets, in Sussex and Blackpool.
“The deal gives us another 300 cars,” said Mr Palmer. “We intend to bring down the size of our own fleet to around 100 as we bring in more Avis vehicles.”
The venture will help protect Auto Indemnity against falling residual values while catering for its ambitious expansion plans. It also enables the company to diversify into supplying courtesy cars for clients, including bodyshops.
“We can hire out cars at a cheap rate - it is more cost effective and efficient for bodyshops than stocking lots of courtesy cars,” said Mr Palmer.