Research finds GTA credit hire rates are well below inflation

There has been a lot of “defendant-led noise” in the market about inflation in credit hire rates of late, according to the Credit Hire Organisation (CHO), the trade body for companies providing mobility to UK consumers while their vehicles are being repaired.

CHO Chair and CEO Anthony Hughes said that while a minority of providers may have pushed up their rates, the majority have not because most accident-related mobility claims start life in the GTA, where rates have been stable for years, even during the volatile period after the pandemic.

Maximum daily hire rates in the GTA (an industry protocol that seeks to reduce frictional costs in credit hire claims), have increased by just 5.78% on average during the last decade, according to research from the CHO.

That is the equivalent of only 0.56% per year.

By contrast the average rate of UK inflation during the same period was 2.6% per year, (ONS). Inflation was low and stable until significant increases occurred in 2022 and 2023, with rates peaking at 9.1% and 9.0% respectively, influenced by the Covid pandemic and global supply chain disruptions. By 2024, the rate had moderated to 3.7%.​

Anthony Hughes, CEO and Chair of the CHO, which commissioned the research, said it was important to check and respond to assertions from defendant law firms stating that [average] hire rates had increased from £69 in 2014 to £212 in 2024 (>300%).

Mr Hughes said: “Defendant firms love to grab a headline, but their broad-brush approach is disingenuous. Our research distinguishes credit hire companies (CHCs) which subscribe to the GTA and those who don’t, as well as cases which settle without lawyers (the majority) and those which involve litigation (the latter being the cases defendant firms will see).”

He added: “Even non-GTA subscribers often have protocol or bilateral agreements with insurer partners, and most credit hire claims are responsibly fulfilled as a result of supplier arrangements with insurers.”

“The low rate of increase in hire rates under the GTA not only underscores just how valuable it is as a means of keeping a lid on costs for insurers but it also deflates the mean average increases seen in other areas of the market. Our figures illustrate why a voluntary approach through the GTA makes so much sense for all stakeholders, including customers.”

The CHO estimates that a successful conclusion to the current work being done to revise the GTA could take as many as 100,000 credit hire cases out of the County Court, which would greatly benefit both the creaking civil justice system and consumers alike.

Mr Hughes noted: “The GTA clearly won’t benefit defendant firms who make their money from litigation; perhaps this explains why they seem determined to undermine our position, which is in favour of alternative dispute resolution mechanisms and keeping cases inside the GTA framework and away from the courts.”

Turning to hire rates, Mr Hughes said the cost of daily hire for an average family car, for example a Renault Megane (class S4), had risen from £41per day in 2014 to £50per day in 2024. For a typical ten-day repair, the total hire cost would have risen from £410 in 2014 to £500 in 2024.*

Under a revised GTA, insurers and CHCs have agreed to an annual review of maximum daily rates driven by market data. Mr Hughes said: “This is a key step forward in bringing certainty to what has historically been a contentious issue; it means rate increases (or decreases) will be far more responsive to prevailing market conditions.”

He went on: “Of course, there will be a few outlier cases each year that end before a judge, but the courts are there to deal with a few controversial cases. Let’s not fall into the trap of thinking these cases are normal. They are not.”

“We believe this information will be of value to the Motor Insurance Taskforce as it tackles affordability in motor insurance. Claims costs have driven up premiums, especially after the Pandemic, but that was primarily down to a squeeze in the global supply chain for parts (and Labour movement, post-Brexit). There’s no convincing evidence that hire rates drove up the cost of claims.”