A NSW parliamentary inquiry into the state’s smash repair industry says insurance assessors should be licensed, with a “three strikes and you’re out” policy for breaches of compliance requirements.

The final report of the Select Committee on the Motor Vehicle Repair Industry says insurers dominate the sector, supplying 90% of its work, and this has led to concerns about quality.

Stakeholders fear insurers “put profit ahead of safety, pressuring repairers to repair to a price, not a standard”, the report says.

The committee finds a “significant number” of vehicles are returned to the road poorly repaired, leading to safety fears.

There have been calls for assessors to be independent, because of a perception that those employed by insurers are more concerned with cost than quality.

The committee instead recommends assessors be licensed under the vehicle safety compliance certification scheme. Breaches would be punished with fines and the licence would be cancelled after three strikes.

It also recommends a “public ‘name and shame’ register for repairers and motor vehicle assessors who breach relevant legislation”.

Insurance companies’ ownership of repair shops is a “potential conflict of interest”, the report says. But despite repair rates being higher at insurer-owned shops, an outright ban is not deemed necessary.

The report says insurers can exert price pressure on repairers through fixed contracts, under which insurers supply guaranteed volumes to preferred repairers at a pre-determined price.

Warning this can have a detrimental effect on quality, the report recommends allowing repairers access to the Small Business Commissioner for help negotiating contract terms.

Four companies account for 73% of revenue in the NSW smash repair market: IAG (32.6%), Suncorp (29.6%), Allianz (5.6%) and QBE (5.2%).

The NSW Government has until early next year to respond to the report’s recommendations.