A move by New Zealand's largest insurer to pay panel beaters more in Auckland and Queenstown is being welcomed by the industry body but they say it is unlikely to make a big difference to the four to six week wait times for consumers.

IAG, which operates under the State, NZI, AMI and Lumley brands, is to increase the labour rate it pays to panel beaters by an average of 5.3 per cent and painters by 3.1 per cent from July 1.

It will also introduce a payment differential for those operating in Auckland and Queenstown of $2 per hour for labour costs.

Dean MacGregor, IAG's general manager for claims services, said during the past three years, it had seen significant increases in the number of repair claims being made.

"Record immigration, a strong economy and booming tourism have all given rise to more vehicles on our roads and more kilometres travelled, which directly relates to the number of accidents occurring.

"These factors have been most significant in Auckland, resulting in increased demand for collision repair services and leading to increased wait times for customers."


The labour and paint increases are the first time the insurer has increased its rates in three years and were made as part of an annual review.

MacGregor said the review had also taken account of industry feedback that increasing labour and overhead costs were a significant challenge in Auckland and Queenstown.

"As a result, IAG will be introducing differentiated labour rates in these areas."

Neil Pritchard, chief executive of the Collision Repair Association, was positive about the increases.

"Anything extra the industry gets is great."

But he doubted it would make much of a different to wait times for consumers.

"Will that suddenly change? No."

Pritchard said New Zealand had a nationwide skills shortage and it was exacerbated in Auckland and Queenstown because of the cost of housing.


Pritchard said the $2 an hour increase was the unit rate paid for the job but only a portion would go to staff.

"The $2 won't necessarily flow all the way through to the pay packets of panel beaters. Staff will get a percentage of that."

Pritchard said the typical wait time in Auckland was four to six weeks and that was dependent on workload and the availability of courtesy cars for people.

He said there were also hotspots of demand across the country like Queenstown which was impacted by the number of rental cars in the area.

Pritchard also pointed to the growing number of cars on the road which increased congestion and resulted in more collisions.

Figures from the New Zealand Insurance Council show the value of vehicle insurance claims has jumped from $886 million in the year to September 2013 to $1.13 billion in the year to September 2017.

Pritchard said it was taking a two-pronged approach to address the shortage of workers in the industry.

In the last year, it had managed to get panel beaters back onto the skilled shortage list and that meant businesses were able to bring in more workers from overseas.

It was also trying to get more young people into training but he said one of the biggest drivers of attracting people to work in an industry was pay.

That was a challenge when a second year building apprentice could get $35 an hour while a second year panel beater would only be paid $20 to $22 an hour.

Pritchard said IAG had a huge responsibility to the industry because it was so large - he estimated the insurer had 60 to 65 per cent of the motor insurance book in New Zealand.

A spokeswoman for IAG said its repairer review would have no direct impact on insurance premiums but would be taken into account as part of IAG's premium review process.