Direct Line and X-Inefficiency

I was the recent victim (well last September) of a shunt in my car, when another driver undercut me going round a dual carriageway roundabout.

At the time, Direct Line said I could arrange a repair with my local garage, which I did for £375 plus VAT. Unfortunately, the other party, having originally accepted liability, gave backword, and so delayed my repair.
Direct Line rang today (Good Friday) to say that in fact I was not at fault mmm….and wanted to arrange my repair. This involves sending my vehicle to Barnsley (transport c.£100) and hiring me a car through Enterprise for the duration (£150+vat) for four days(!), then the cost of a repair at £250 per panel (£500+vat) and new alloy wheel fitted at £159+vat.

To arrange my own repair, they said, in addition to providing the receipt (which is what I would expect); they said I would have to meet their engineer next week at my garage in Lincoln, when I work in Spalding, 46 miles away.

So given the priority to me of personal convenience I’m going to let them sort the lot out!

Don't forget that x-inefficiency occurs where cost deviate from minimum due to uncompetitive behaviour.  So how is this X-efficiency? Well the minimum cost to Direct Line for me to arrange the repair conveniently in my own time is £375 plus VAT, the cost for them to do it is c. £1009+VAT, £634 more!

In this case bureaucratic rules, probably to deter moral hazard, effectively increase their costs of operation by 169%!

What are the additional issues? Direct Line are owned by RBS (Royal Bank of Scotland) and RBS are owned by… you guessed it us!