With a tougher trading environment expected, fraud is on the rise! The short term insurance sector is especially vulnerable to unscrupulous policy holders and service providers. One such area of concern is the towing industry. Although the majority of Tow Truck operators manage legitimate businesses with fair business practices, there are some who does not hesitate to overcharge Insurance Companies. In some cases Insurance companies are actively defrauded as a result of a lack of control when dealing with questionable towing companies.
Most insurers believe they can control costs by entering into pricing agreements with towing companies and associations. This does not deliver the desired effect as pricing agreements do not address multiple unnecessary tows, inflated distances towed, vehicle parts disappearing and additional damages occurring at the panel beater but to name a few dodgy practices.
The Insurance industry has long since grappled with the management of accident vehicle towing. How do I control where the vehicle goes after it has been towed by a tow truck? When will I be notified where the vehicle is being stored? How do I verify that the invoice I receive for towing services is equitable? How much additional damage is the vehicle suffering whilst in storage? How do I cut down on claims turnaround times if the vehicle is inaccessible for days, sometimes weeks because of stalling tactics by storage yards?
Although this is recognised as a major problem for the insurance industry, managers are struggling to get to terms with unscrupulous tow operators. The industry spends upwards of R900m per year on towing. How much of this are over charges and exorbitant release fees? Not to mention the incalculable cost of employee down time when dealing with these frustrating issues.
Tow truck owners also have problems of their own. Long delays in receiving payment, lack of communication with insurance companies lead to misunderstanding and distrust. Many smaller operators are battling to get into the market space as bigger towing companies and associations hold contracts with insurance companies. The bigger towing companies in turn use these contracts to control the industry by subcontracting to smaller towing companies at reduced rates which stifles competition and a free market environment.
