Chris Ryan: Fly-by-night repairers forced out of business

COMMENT

Car owners in this country enjoy some of the lowest motor insurance rates in the Western world. We also have one of the most corruption-free of crash repair industries.

And we have a regulatory system that requires cars to be safe at all times. They must be regularly inspected and repaired to minimum standards.

All this ensures our motor fleet is kept at the safest possible level for drivers and passengers.

Vehicle owners have a wide range of insurance companies. They have an extensive industry of brokers to help them to get the best possible deals, and direct-selling insurance companies have offices all over the country where experienced staff help people with policy details.

Prices for insurance have increased over the past five years at almost exactly the same rate as the amount insurers have paid out as a result of insurance claims on those vehicles.

Insurance premiums last year were $968 million, a 42 per cent increase from five years ago. But insurers paid an increase of 41 per cent over the same five years, a total of $917 million.

Premiums and claims have risen at almost the same rate. This is a result of strong competition between motor insurers in both pricing and service.

A key issue for insurers is a trusting relationship with crash repair agents who work on their behalf for the customer. In recent years insurers have identified a number of panelbeaters and other repair companies that do not meet the standards they require.

Insurers no longer work with substandard companies. This ensures that cars are safely repaired at all times, and put back on the road with speed, efficiency and cost-effectiveness. The insurance industry, having removed many of the fly-by-nighters from the industry, has begun building trusted relationships with repairers and customers.

Insurers need to operate with recognised repair networks for both commercial and legal compliance reasons. They need to be confident that repairers are adequately equipped and skilled to do varying types of smash repairs. Three-dimensional chassis alignment equipment and paint bake ovens are important for structural repairs and modern paint systems.

There is simply no point in insurers putting unsafe cars back on the road, because within a short time many are likely to be involved in an accident again. Using recognised and trusted repairers provide insurers with the security that repairs are safe and will provide customer satisfaction.

Any dissatisfaction will affect the insurer as well as the crash repairer. Insurers stake their reputation on smash repairers. A good and effective regulatory regime ensures cars that are placed back on the road are safe. Simply put, vehicle repairs must be undertaken safely.

The land transport safety repair rule requires that all vehicle repairs must meet "safe tolerance" and, in practice, requires repairs to be carried out to either manufacturers' repair specifications or the international repair specifications advised by Icar or Thatchem. It is highly unlikely an insurer would ever risk its reputation on an unsafe repair.

In addition, an unsafe repair would be a breach of the transport law. This applies also to late-model and state-of-the-art expensive vehicles.

Once again, there is simply no benefit whatsoever in insurers putting unsafe cars back on the road. Of course, insurers will try to negotiate the best price for repairing a car on behalf of their customer. If premiums rise too high, people will no longer insure and, after all, it is the insurer who is paying for the repairs.

Vehicle owners enjoy some of the lowest insurance rates in the Western world, even when discounting the compulsory bodily injury premiums that motorists in Australia, Europe, Britain and the United States must additionally pay. This is because the insurance industry here has remained efficient and effective.

The industry will not compromise safety and standards on unsuspecting car owners. It believes the time is now right for repair companies that are not up to standard to either get up to scratch or move out of the industry.

Cars are becoming more complex, more technologically advanced and require not only state-of-the-art insurance knowledge of them but state-of-the-art repair companies able to restore them to a safe standard. Those putting their trust in vehicles must have the maximum standards of safety.

On an inflation-adjusted basis, the insurance industry is charging almost exactly the same as it was five years ago and paying out almost exactly the same as it was five years ago.

The industry, however, is now coping with far more advanced motor vehicles, far more advanced technology and greater regulations ensuring the safety of cars on our roads. This is the true measure of success which the insurance industry has had in removing inadequate crash repairers from the industry, and ensuring that when you are insured and your car is repaired, it is done to the best-possible safety level.

* Chris Ryan is the chief executive of the Insurance Council.