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Norwich company fills credit hire void

Written by Lautaro Vargas
Wednesday, 01 October 2008
CEO Mike Srokowski A new Norwich company that appears to have uncovered that rare and wonderful business opportunity called a gap in the market is expanding fast as it builds a firm capable of exploiting a new space in the credit hire business. Validus-IVC has spent almost two years developing a software programme – V-CAS – capable of quickly and meticulously analysing thousands of credit hire claims at a time, which it says can save the UK insurance industry over £225 million per annum and has already being picked up by two of the top five insurers in the country. Credit hire operators provide accident courtesy cars to ‘not-at-fault’ drivers, giving them a period of credit to allow the rental charges to be recovered from the ‘at-fault’ party’. Validus estimates that over 500,000 credit hire claims are made each year, worth almost £1.5 billion. Specialising in credit hire and repair claims and estimates for motor insurers, solicitors and fleet operators, Validus uses V-CAS to monitor and identify when invoices require adjustment due to factors such as excessive car hire rates, prolonged periods of hire, improper charges and simple invoicing errors. The company says the in-depth analysis provided by V-CAS coupled with a team of high grade negotiators allows it to reach settlements with claimants much earlier in the process than normal, providing one party with a speedy pay out and the insurer with savings currently averaging at 15 per cent. “Credit hire has been the poor cousin of personal injury, a forgotten cost in insurance until now,” said chief technology officer, James Duez. “Insurers which have paid for pilots have saved in excess of 10 times our fees.” Results from one recent pilot with a top five insurer found that across 2,000 claims analysed and settled, the savings amounted to well over £1 million for the insurer. Levels of administration and litigation are also reduced, speeding successful negotiations and payments with each of the credit hire companies involved. “Our unique V-CAS system has taken almost two years to design and build and I can confidently say that it is the most technologically advanced credit hire claims analysis system available,” said Validus founder and chief executive officer, Mike Srokowski. “It’s a highly cost effective way of significantly reducing their exposure to invalid or inflated credit hire claims. Based on recent pilots, we can demonstrate potential savings totalling hundreds of millions of pounds across the industry and we’re already in discussion with five leading insurers.” Validus was incorporated in December 2007 and undertook its first pilot in April this year, launching without any external funding. The company model is to have insurance firms run a pilot for three months during which time they send a percentage of third party claims which are analysed and subsequently negotiated for a lower settlement. Validus believes the case presented by these pilots is sufficiently compelling to convince them to migrate to longer term contracts. Revenues are already coming in from the early pilots run and Validus is looking for larger premises in Norwich city centre as it tries to seal a deal with a third of the industry’s top five. It has now analysed over 6,000 claims but Duez says demand for pilots is outstripping the level of work its 35 staff can currently handle and would like to increase capacity from several thousand claims a month to several tens of thousands. “We are recruiting about one person a week and are looking to new premises in the new year with an option to grow it so we can house between 120 and 150 staff, which is how many we forecast we will need.” Duez says the firm expects to break-even in the next 10 months and is highly confident about the future, expecting to build the business to one with revenues stretching into the tens of millions of pounds. “We know we can save insurers several hundreds of millions of pounds per year and want to be a calming influence on what has been an incredibly litigious industry,” said Duez. “£1.5 billion of credit hire claims are being made every year and less than 40 per cent of the market is captured. We will save insurers 15 per cent in excess of the amount that is claimed; that’s 15 per cent of a £1.5bn market.”