The Productivity Commission inquiry into the troubled relationship between smash repairers and the insurance industry has found the ongoing rift between the industries is serious enough to warrant an industry code of practice. It has now given both parties an ultimatum: get it together in the next six months, or the Government will give them one.

The insurance industry has welcomed the concept of a voluntary code – a Government-imposed one would likely be awful – saying it’s particularly pleased with the commission’s finding that preferred smash repairer schemes can actually benefit many repairers, as well as consumers and, of course, insurers.

Among the commission’s recommendations: a transparent and independent external dispute resolution mechanism; full disclosure in preferred smash repairer arrangements; retention of preferred smash repairer status when a business is sold; full disclosure in quoting for work and payment; a fairer system of guarantees for repairs; and upfront disclosure on whether insurance policies provide choice of repairer schemes.

IAG CEO Personal Insurance Rick Jackson says the insurer has been “working as part of the industry toward developing a voluntary code”, and already has its own independently reviewed code.

“We’ve also facilitated a meeting between the national motoring peak body, the Motor Trades Association of Australia, and the Insurance Council of Australia, and we will do whatever we can to ensure a voluntary code is developed and adopted.  

“A mandatory code would impose increased regulation on all parties. A voluntary code provides an opportunity to ensure this doesn’t happen.”

Federal Treasury asked the Productivity Commission to examine the historically fiery relationship between smash repairers and insurers in August last year. Since then the commission has consulted members of both industries, and public hearings were also held in Melbourne and Sydney.

The draft report was released in November and the final results were presented to the Government in March.

Federal Small Business and Tourism Minister Fran Bailey – who hasn’t said much about the long-running dispute up to now – came out swinging yesterday, with the insurance industry the target.

“On close analysis… the main problem identified that the four main insurance companies wield strong negotiating strength in their dealings with mostly small, independent smash repairer businesses,” she said. “In short, insurance companies should at every opportunity ensure smash repairers receive a fair go.”