The automotive industry and the insurance industry have always had a strained relationship, so it’s no big surprise that the auto industry has decided to challenge the insurance industry by opening a new insurance agency.

The Motor Traders’ Association of NSW (MTA) has created the agency – MTA Insurance Agency – in partnership with Shield Underwriting Agency-owned subsidiary 5-Star Underwriting.

The agency, which is being underwritten by Suncorp, has been created in a bid to offer smash repairers and other motor trade providers insurance alternatives.

A Productivity Commission inquiry – which has still not been finalised – was recently undertaken to determine the relationship between the insurance and motor industries, and whether insurers have the right to operate preferred smash repairer schemes (PSRSs).

While most insurers with PSRSs give their policyholders the opportunity to choose their own repairer, IAG charges policyholders an additional premium if they want to select their own repairer. IAG’s retail insurance subsidiary NRMA Insurance has been at the forefront of the debate.

MTA CEO James McCall describes the smash repairer dispute as a “David and Goliath battle”.

“We have taken this action with the aim of offering businesses in the motor trade a clear business insurance alternative to NRMA Insurance, and also personal insurance for employees,” he said.

Nicola Card, a journalist for our sister online publication Telstra eBusiness Services Auto Industry News, says smash repairers see the preferred smash repairer schemes as “the last straw” for their already struggling businesses.

“Smash repairers are generally small business people, and they feel insurers have deliberately steered business away from them in order to further benefit their big business counterparts,” she said. “This is why the industry is looking for alternatives.”  

MTA Insurance Agency MD Martin McAvenna says the decision to work in partnership with the auto industry will give the agency “a very competitive edge”. He says the agency’s products have been developed following extensive research and discussion with the motor industry.

But an NRMA Insurance spokesman told Sunrise Exchange News the local market is competitive, customers are satisfied, and there have been “several new entrants over the last year”. 

“We are confident with our position in the market, as the overall customer claims satisfaction for our motor and home customers is over 90%,” she said.