THE NSW Government will nowadays launch a parliamentary inquiry into the romantic relationship in between insurance businesses and smash repairers — and the lucrative sector that repairs much more than half-a-million cars every single 12 months.
It follows complaints that some insurance businesses are striving to muscle-in on the crash repair industry — driving smaller sized repairers out of company — and are cutting corners by using largely non-genuine components, which vehicle makers say can compromise a vehicle’s security.
The inquiry is also believed to be investigating alleged hyperlinks amongst some modest independent smash repair retailers and organised crime, like motorcycle gangs and automobile-rebirthing rings.
In North America insurance coverage businesses are banned from owning smash repair firms simply because of worries that the target on value could lead to compromises in safety and the good quality of car repairs.
Australia’s biggest car insurer by industry share, Suncorp — which also operates beneath AAMI, GIO, Just Autos and Shannons — owns 23 smash repair stores across Australia, which includes 9 in NSW.
Suncorp started acquiring vast majority shareholdings across its stable of smash repair retailers 3 many years in the past.
Suncorp owns 60 per cent of ‘Q Plus’ at Riverwood, which is explained to be the most significant crash repair store in Australia and among the biggest in the world, with up to 120 vehicles repaired each week.
Suncorp also owns up to 90 per cent of the ‘Capital Sensible Repairs’ chain and has a 51 per cent share in the Australian division of US components supply giant, LKQ, that specialises in non-genuine substitute elements to the crash trade.
Australia’s 2nd-greatest insurer, NRMA, purchased into 2 crash fix stores in Melbourne in December 1999 but sold them in July 2013.
NRMA Insurance owned a handful of smash repair businesses in NSW in the 1980s and 1990s but sold them more than 10 years in the past.
“The US does not allow insurers to personal smash repair outlets because it is deemed there is a conflict of interest: value versus what’s best for the client,” said James McCall, the former CEO of the Motor Traders Association in NSW and who is now the Chairman of the Motor Sector Advisory Council established by the state government.
A spokesman for Suncorp, Chris Newlan, said: “We wouldn’t help the US model. The US has substantially larger (car insurance) premiums than we have in Australia. We wouldn’t want an inquiry having unintended consequences such as pushing up price-of-living pressures with dearer insurance premiums.”
Mr Newlan explained present day motor cars are “more complex” to repair than older cars “with up to 9 various types of steel and up to 70 pc systems”.
When asked why Suncorp predominantly utilized non-real elements in the restore of its cars, Mr Newlan explained “we’re transparent about it, it’s in the merchandise disclosure statement that we use real and non-genuine components, or a blend of both”.
NRMA Insurance coverage says it uses brand-new real elements on all cars that are significantly less than 3 many years previous, and genuine new or utilized components on older automobiles. Windscreens and radiators are the only non-genuine elements utilized, a spokesman said.
“The escalating complexity of all contemporary motor vehicles, in the metal materials and personal computer techniques, which guarantee crash security, make it definitely important that genuine components are utilized in crash repairs,” mentioned Mercedes-Benz Australia spokesman David McCarthy, who advised a vehicle repaired with non-real parts must be crash-tested to highlight the variations.
Each Suncorp and NRMA Insurance coverage say they supply lifetime ensures on their smash repairs. NRMA Insurance randomly audits about 10 per cent of repairs.
“Cars are getting to be much more complicated which is why we spouse with skilled little enterprise smash repairers to resolve cars to manufacturer specifications,” explained NRMA Insurance spokesman Mark Gold.
When asked about Suncorp’s investment in parts supplier LKQ, Mr Newlan mentioned: “This is a separate deal. We are not able to and do not force repairers to supply components from LKQ. We’re just introducing competitors into the industry.”
Mr Newlan mentioned real components had a “400 per cent mark up by the time it gets to us”, including that a $ 20,000 auto would value shut to $ 118,000 if produced from individually-bought spare components.
This reporter is on Twitter: @JoshuaDowling