Costs for vehicle smash repairs could rise 25% if insurers are prevented from directly arranging work for policyholders, Suncorp Personal Insurance CEO Mark Milliner warns.

“Any changes that may drive up insurance premiums or otherwise disadvantage consumers should be made with great caution,” he said in a submission to a NSW parliamentary inquiry into the smash repair industry.

“For example, reducing or removing Suncorp’s ability to directly arrange repairs through its network of recommended repairers and joint ventures would increase costs by 15-25%.”

Premiums could rise 5-10%, he told the inquiry, which is examining links between insurers and the repair industry.

Suncorp has 1 million motor vehicle policyholders in NSW, with 88 vehicle assessors. Last year it carried out 126,000 smash repairs – 102,000 by independent repairers.

It has also vertically integrated with QPlus and Capital Smart Repairs, which together performed 24,000 repairs last year – 7% of all NSW repairs.

Suncorp has also partnered with LKQ Corporation to form ACM Parts, supplying non-original parts to repairers to cut costs.

The insurer recommends stronger minimum licensing requirements for repair shops, possibly through Standards Australia, and tougher enforcement on fraud, which adds up to 10% to premiums.

A recent IAG audit found more than 230 cases of direct repairer fraud since March 2011, 100 in the past year.

Suncorp says pockets of repairers – along with recovery agents, solicitors and credit hire companies – inflate repair costs, double average repair times and leave no-fault consumers liable.

In the past six months the Financial Ombudsman Service has received 57 repairer quality issues against Suncorp.

In a separate submission, Motor Traders’ Association (MTA) NSW CEO Greg Patten says insurers should not be allowed to vertically integrate with repair shops, because it reduces competition.

The MTA also calls for an online “name and shame” register to identify repairers, assessors and insurers that have committed offences. It wants the “two-quote” system used by insurers scrapped and a new licensing category set up for assessors that are independent of insurers and repairers.

Consumers referred 130 cases of inadequate repairs to the MTA in the last 18 months, Mr Patten said in an appendix to the submission. Some were carried out by repairers linked to insurers. The appendix was published on the parliamentary website but removed due to privacy concerns.

NRMA Insurance EGM Marketing, Reputation and Compulsory Third Party Roy Briggs says the insurer has identified 304 cases of fraud since 2011 totalling $205,915, with 226 cases in NSW.

One elderly customer was duped by a repairer and had his $42,000 Lexus returned in pieces, while a female customer was tricked into accepting a hire car and received an $18,000 bill.

NRMA Insurance wants the Motor Vehicle Insurance and Repair Industry Code of Conduct strengthened to combat unscrupulous repairers. It has also called for an insurer‐led motor repair taskforce to be formed with government agencies, to tackle fraud, credit hire scams and staged accidents.

It wants an industry-government working group to set safe minimum standards for repairs.

In its submission, Allianz says insurers procure about 2.5 million repairs annually, and there is no need for regulatory intervention.

NSW is the only state to have mandated the code of conduct, but there have been no penalties for breaches and the NSW Government should repeal this requirement, the insurer says.

GM Corporate Affairs Nicholas Scofield says the MTA is seeking to outlaw “just about every current approach used by different insurers in the industry and replace it with its own anti-competitive, high-cost approach”.

“The result of its approach would be an increase in repair prices and in the cost of motor insurance,” he told insuranceNEWS.com.au.

Allianz says there is little evidence to support the MTA’s claims of frequent defective workmanship among insurer-backed repairers. It says it carried out 31,000 repairs in NSW last year, but only 40 needed rectifying.