Independent car repairers in NSW have again called on regulators to take action against preferential deals between insurers and repairers, claiming the practice threatens the viability of small firms.  

National Federation of Independent Business (NFIB) President John Farrell says major insurers are “making big money” at the expense of independent car repairers, who are often excluded from preferential repair arrangements.

“The market is controlled by a little cartel made up of insurance groups,” he told insuranceNEWS.com.au. “The insurance companies make a bucketload of money.”

Preferred repairer deals have been a contentious issue for more than a decade. In 2005, the Productivity Commission recommended a code of conduct due to ongoing friction between repairers and insurers. The code was established in 2006, but repair industry representatives say it hasn’t resolved problems.

Mr Farrell says the supply deals prevent most motor insurance policyholders from using a neighbourhood repairer.

“It is a misuse of market power,” he said. “It’s a classic case of the guy with market power using serf labour to achieve what they want.”

Mr Farrell wants the Australian Competition and Consumer Commission to resolve the issue under the terms of the Trade Practices Act.

NFIB representatives in Victoria have also briefed state government politicians on the issue.

Australian Bureau of Statistics figures reveal car repairers make an average margin of 8.8%. It’s understood insurers in Victoria deal only with 20% of the local smash repair industry.

But Suncorp Personal Insurance spokesman Rob Whelan disputes the NFIB claims.

Citing a 2005 Productivity Commission report that ruled preferred repairer schemes are good for consumers, he says the issue is “an emotive argument that is not backed by the facts”.
 
Mr Whelan says many motor insurance policyholders are in fact given a choice over who repairs their car.

“The key concern for the repair industry is an oversupply of repairers,” he said. “If you look at the difficult economic times, perhaps that has exacerbated the issue.”