MPs in WA have called for an Australian Competition and Consumer Commission inquiry into claims of “market abuse” involving insurers in the smash repair industry.

Five small WA smash repairers gave evidence to the state’s Economics and Industry Standing Committee, which makes the call in a report issued last week.

“In closed sessions, anecdotes suggest there are instances of market abuse,” committee chairman Jessica Jane Shaw said. “The committee has limited ability to investigate the veracity of these claims and counter-claims. Only an appropriately convened and empowered Commonwealth-level inquiry can properly investigate.”

Smash repairers claimed financial hardship due to anti-competitive tactics and said they are afraid to speak out because insurers may stop giving them work.

One of the repairers says insurers have various ways to penalise his business, including declaring a damaged vehicle a total loss even it isn’t, thereby eliminating the need for repairs, or asking the client to go to another repairer.

The committee says the issue must be investigated at the national level.

“The apparent nationwide scope of the problem, and increased market concentration in other states, lends weight to the need for federal action,” the committee report says.

“Insurers’ market power and control continues and has changed the traditional workflow patterns that once filtered through the smash repair industry to now being directly under the control of insurers that dictate who, how, where and when repairs… take place.

“We have accordingly recommended the Treasurer write to the Commonwealth Treasurer, seeking their agreement to direct the Australian Competition and Consumer Commission to undertake an in-depth inquiry into possible anticompetitive conduct and misuse of power.”