Here comes another code of practice. Small smash repairers are set to benefit from a Federal Government incentive to prevent motor vehicle insurers favouring larger repairers.

The Government says it will introduce a code to steer insurers away from implementing “preferred smash repairer” schemes. The decision was made at a recent national meeting of federal and state ministers in Hobart, during which the politicians agreed to work together to support small businesses.

Small smash repairers have never supported insurers’ smash repairer schemes because they say the practice steals potential business from them. Most leading domestic insurers use these compulsory and non-compulsory schemes to steer policyholders towards certain smash repairers.

However, not everyone is convinced that the practice is undesirable. An issues paper on concerns in the smash repair industry – released late last year by the Australian Competition and Consumer Commission (ACCC) – stated that such schemes lower insurance premiums and provide lifetime guarantees and repair work of a higher standard. 

ACCC Chairman Graeme Samuel said the ACCC “has not found any evidence supporting allegations of breaches of the Trade Practices Act. However, it has determined that there is conduct occurring in the industry which is perceived to be unfair and unreasonable.”

Small Business Minister Joe Hockey’s support for the initiative is further proof that an election isn’t too far away. He says consumers will benefit from a more transparent relationship between insurers and smash repairers. “(This) is a minimum step to tackling many of the difficulties faced by small business in the industry, particularly in their dealings with insurance companies.”

Insurance Council of Australia (ICA) Executive Manager Corporate Affairs Rod Frail says ICA will participate in the consultation period before the code is launched. But he says insurers are unlikely to welcome a code that would introduce further restrictions.

“Insurers have opposed previous proposals for a code put forward by smash repairers because they have been viewed as anti-competitive in nature,” he said.