Tradex Insurance Company PLC · DRN-6061077

The complaint Ms S has complained that Tradex Insurance Company PLC (“Tradex”) unfairly paid out on a third-party claim, the costs of which were inflated, and that this has impacted her premiums. What happened Ms S’s insurer, Tradex, was notified of an incident by a third-party credit hire company. The company said Ms S’s vehicle had reversed into its client’s vehicle and caused damage. Tradex asked Ms S what happened and Ms S confirmed there had been no damage caused to either vehicle. Tradex nonetheless decided to pay the third-party claim, on a without prejudice basis. Ms S complained. She said Tradex had paid the claim without asking for any further evidence from either party, and that the claim had impacted her insurance premiums. In its response to her complaint, Tradex accepted that the service it had provided could’ve been better and offered Ms S £300 compensation. Ms S didn’t accept its response, so she referred her complaint to the Financial Ombudsman Service for an independent review. Our Investigator considered the complaint, but didn’t think it should be upheld, because Tradex had acted in line with its policy terms, and although it had not initially asked for further evidence of the damage caused, it had later done so. Our Investigator also considered that the compensation offered was fair and reasonable for the service failings. Ms S didn’t agree with our Investigator’s view. She said she hadn’t been provided with a breakdown of the costs that were paid, and that Tradex had been negligent in paying out thousands of pounds without undertaking a review. So the complaint has now come to me for an Ombudsman’s decision. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. As this is an informal service, I’m not going to respond here to every point raised or comment on every piece of evidence Ms S and Tradex have provided. Instead, I’ve focused on those I consider to be key or central to the issues in dispute. But I would like to reassure both parties that I have considered everything submitted. And having done so, I’m not upholding this complaint. I’ll explain why. The insurance industry regulator, the Financial Conduct Authority (FCA), has set out rules and guidance about how insurers should handle claims. These are contained in the ‘Insurance: Conduct of Business Sourcebook’ (ICOBS). ICOBS 8.1 says an insurer must handle claims promptly and fairly; provide reasonable guidance to help a policyholder make a claim and give appropriate information on its progress; and not unreasonably reject a claim. I’ve kept this in mind while considering this complaint together with what I consider to

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be fair and reasonable in all the circumstances. Ms S’s policy with Tradex says: “We shall be entitled to take over and conduct the defence or settlement of any claim or prosecute any claim in the name of any person covered by this insurance.” and: “We shall have discretion in the conduct of any proceedings or in the settlement of any claim.” So I don’t think it was unreasonable for Tradex to decide to pay the claim on a without prejudice basis, as ICOBS requires it to deal with claims promptly and fairly, and the policy allows it to take action regarding the settlement of any claim at its own discretion. But this doesn’t mean that I think it was fair for it to settle the claim without doing more to validate it. And I can understand Ms S’s concerns in that respect. She considered that when the incident occurred, there was no real damage to either vehicle, but was then advised that a large amount of money had been paid out. I’ve considered the reasons Tradex gave for settling the claim without asking for evidence of damage. These included that the third-party vehicle was a new Range Rover and that the third party had claimed through a credit hire company, which meant there were both hire and repair charges which had to be included in the settlement. To explain this further, the third party’s claim included a claim for the provision of a replacement car under a credit hire agreement. Credit hire is, as the name suggests, a contract whereby a party is provided with a hire car “on credit” and without having to pay for it in advance. Credit hire is normally provided to the party who isn’t at fault for the accident and who hopes to recover the cost of the hire from the at fault party, in this case Ms S. As the hire is provided on credit, it’s more expensive than normal hire. The Association of British Insurers (ABI) introduced the General Terms of Agreement (GTA), which set agreed service standards and charges for the credit hire industry on an opt-in basis, including maximum daily rates for different vehicle groups. The costs depend on the type, specification, and value of the hire car. We consider GTA rates to be a good guide for what reasonable rates are in a specific case. Unlike courtesy cars, credit hire cars are provided on a like for like basis whereas courtesy cars are normally smaller cars. So if a party has a large car with a big engine, then their credit hire car will be similar and so their credit hire “bill” will be higher compared to someone who owns a small car. And having looked at the breakdown of costs, including repair and hire charges, I find the reasons that Tradex gave to explain the settlement amount were reasonable. But I don’t think the claim was handled as fairly as it could’ve been. Whilst the policy does say claims can be settled at the insurer’s discretion, I think Tradex had a duty to carry out some investigation particularly as Ms S had concerns that she hadn’t caused any damage to the other vehicle. So I’ve considered the level of compensation Tradex has offered for its failings. It acknowledged that it could’ve done more to validate the claim, but I can see from correspondence that it has now done that – by asking for further evidence from the third party, in order to validate the claim, including the details of costs, images, and the engineer’s report. So I think its offer of £300 compensation is fair and reasonable for the delay in doing so, and for the poor communication. It also settled the claim on a without prejudice basis, which would’ve allowed for it to be revisited and challenged if necessary.

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Based on the evidence I’ve seen, I think Tradex has acted in line with its policy terms, and although it could’ve requested more evidence earlier on in the claim, it has compensated Ms S fairly for its service failings. And whilst I appreciate Ms S’s premiums would’ve increased as a result of the claim, this would’ve likely still been the case even if Tradex had paid a lower claim settlement amount, as the existence of a claim will usually have an impact on premiums going forward. So I won’t require Tradex to do anything differently here. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms S to accept or reject my decision before 13 May 2026. Ifrah Malik Ombudsman

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