Managed Fleet Services, a claims management business launched 18 months ago, has fired a broadside at traditional credit hire and repair organisations which, it says, are responsible for increasing insurance premiums by as much as 10%.

The company believes the bills charged by credit hire/repair (CH/R) firms to insurers for non-fault third party accidents are vastly inflated.

It claims that its average claims cost is £1,400 compared to £2,500 for CH/R.

“Contract hire is a huge drain – around £40 per policyholder goes to fund those costs,” said MFS joint-founder and director Mike Covington. “We are an alternative.”

His partner, Ian Blackford, added: “We earn the same margin for fault as we do for non-fault – it’s not an uplifted rate.

“We still retain our gross margin, the customer protects their insurance premium and the third party insurer pays less.”

MFS has signed up 18 fleets so far, mostly sub-500 vehicles and is handling around 600 claims, of which 150 are non-fault.

Of these, 120 would’ve been CH/R, but MFS is converting 95% into standard uninsured loss recovery.

It is winning, it claims, because insurers are more willing to pay its bills quickly.

Credit hire companies commonly complain about delays in getting paid, which affects their cashflow.

“They are also constantly having to write off money to get paid and there are writing huge losses on their fleets,” said Covington.

“They have made phenomenal profits in the past, but now they are struggling.”

London bus operator London United’s has saved more than £120,000 on just 80 cases this year after signing up to the MFS service.

Average bills for repair have fallen from £1,500 to less than £700; average hire bills have been slashed from £1,000 to £350, although 44% of the cases did not need a hire car.

Last year London United’s faced 1,500 non-fault claims from third parties – the potential annual savings here could be worth £2.2 million.