Allegations of insurer-driven rorts in the Victorian smash repair industry have been refuted by major local insurer CGU.

Panel beater Gerry Raleigh, a former chairman of the Victorian Automobile Chamber of Commerce (VACC) body repair division, told the Sunday Herald Sun defective vehicles are being resold with weakened structures, and that insurers consent to the sales. Mr Raleigh is a long-standing critic of motor insurers.

Mr Raleigh, who recently resigned as chairman to run for the ALP in the federal seat of Aston, has also previously accused insurers of purposefully classifying damaged cars as statutory write-offs.

This practice could save insurers tens of thousands of dollars per claim. An economic write-off can be sold after being repaired but a statutory write-off can only be stripped for parts.

CGU, which is affiliated with the VACC, says customer and public safety is paramount in its vehicle salvage process. “Vehicles that cannot be safely repaired are declared statutory wrecks and can only be used for spare parts,” a spokesman said.

But Mr Raleigh says cars that should be scrapped are finding their way back onto the market, placing drivers at risk if vehicles are involved in an accident.

“I’ve been campaigning on this for a long time,” he said.

VACC Executive Director David Purchase says some of Mr Raleigh’s comments “would be supported by many crash repairers”.  

“I would not want to create the impression that the crash repair members of the VACC do shoddy work or cut corners,” he said. “However, I would also be naive to think that we haven’t got some cars on the road that should have been written off.”

Mr Purchase plans to meet insurers and the National Motor Vehicle Theft Reduction Council to discuss a new classification system for write-offs. “At the moment there is not a clear definition of statutory and economic write-offs,” he said. “I’ve actually raised this with the RACV and VicRoads.

“But this will never totally address the issue because you will always have someone who thinks they can get around the system.”