The Insurance Council of Australia (ICA) has called for an independent inquiry following a recent announcement that the Federal Government will introduce a voluntary code of practice covering the relationship between smash repairers and insurers.

Small smash repairers say the close relationship between insurers and larger smash repairers steals their business and disadvantages consumers. But ICA says the repairers should take note of a 2003 report by the Australian Competition and Consumer Commission (ACCC) stating that insurers are acting within their rights and are not exploiting policyholders. 

ICA Executive Director Alan Mason says the review should have terms of reference enabling a broad and transparent examination of the issues by an appropriate government agency such as the Productivity Commission.

He is sceptical of the repairers’ argument, saying ICA is still waiting for smash repairers to provide specific examples to illustrate their concerns.

Why do insurers insist on choosing repairers? Mr Mason says insurers now offer lifetime guarantees on repairs, and shoddy or dangerous work would not be in their interest.

“Insurers believe the code of conduct being proposed by some smash repairers to cover dealings with insurers is potentially anti-competitive and contrary to the interests of consumers,” he said. “The ACCC and consumer groups have acknowledged that policyholders have benefitted from the competitive environment in the car insurance market – including insurers’ preferred repairer schemes, which identify those who can do high-quality work.” 

The issue was also raised by Federal Treasurer Peter Costello at last week’s Canberra conference. He stood by the Government’s announcement two weeks ago that a code of practice should be introduced.

“Some smash repairers claim they are forced to use substandard parts or engage in cutting corners to try and compensate for being squeezed excessively over labour charges,” he said. “From the Government’s point of view obviously this would cause concern.”