My gut instinct regarding my last post on Royal and Sun Alliance Insurance’s business structure increasing the costs of accident repair was that it was unlikely to be the end of the matter. Permission had been granted to appeal; I fully expected to see the matter be resolved there. But that would only determine the law as it applied to the factual matrix of the case in question. That approach would be unlikely to help other cases much — it would be open to argue that the factual matrix was sufficiently different that the appeal judgment did not apply. This clearly would not address the core question.
Provident Insurance has decided though to take a different approach: to seek determination from the Commercial Court — a specialist branch of the Queen’s Bench Division of the High Court — as to whether RSAI’s commercial model is legally correct. In the case I last wrote about, it was held (at County Court level) that it was not, but clearly there has been a difference of opinion between County Courts. RSAI has agreed that it’s desirable that its business practice in question be tested for legality.
So in Coles & Ors v Hetherton & Ors  EWCH 2405 (Comm) Provident and RSAI have both brought claims between themselves in the High Court itself (normally they are precluded from doing so because of the likely size of award), and transferred in cases from the County Courts. The next step will be the selection of lead cases in this matter.
This is all at a very early stage, but it has potentially far–reaching effects. The lead cases will determine the shape of the case as it will be heard, but there are more situations than just vehicle repair paid by an insurer where a corporation’s internal group structure can lead to additional costs being passed to the person who ultimately pays. In the case previously mentioned it was entirely unclear why additional costs were levied by the intermediate insurer–owned company, and this is why some County Courts have rejected such additional costs.
However, there could be potential situations where such additional charging was transparent, and also necessitated by a business structure chosen for legitimate other reasons, for example tax minimisation. Whether increasing the cost to the end consumer in order to achieve an unrelated advantageous financial outcome for the company as a whole is the ultimate question here, and one that is very interesting indeed.