Suncorp has warned small businesses and local trades people involved in disaster recovery could be sidelined by proposed claims-handling reforms.

Draft legislation currently suggests claims fulfilment providers such as repairers may have to become official representatives of insurance companies, creating cost and compliance burdens.

Suncorp says many claims fulfillers, especially small building businesses and smash repairers, would be unwilling to undergo the administration, training and accreditation expected as an authorised representative and therefore would be ineligible to work for an insurer.

People recovering from such catastrophes as the summer bushfires could face lengthier repair times and higher costs, it warns in a submission to Treasury.

“We also note that insurers already face supplier shortages in areas like smash repairers where the workforce is ageing and few apprentices are replacing retiring workers,” Suncorp says.

“Any further reduction in the availability of suppliers would significantly harm our customers and prevent us from being able to fulfil motor claims efficiently.”

Suncorp recommends the legislation should expressly exclude claims fulfillers who do not have authority to reject a claim from any licensing requirements, and says clarifying examples should be included in the legislation’s explanatory memorandum.

Submissions from IAG and the Insurance Council of Australia have also raised concerns over the way the legislation could affect fulfillment providers and experts used by the industry.

The proposed legislation, developed following Hayne royal commission recommendations, will make claims-handling a financial service, and therefore subject to obligations to act efficiently, honestly and fairly.

According to the Federal Government’s implementation roadmap, the legislation will be introduced into Parliament by the end of June.