Graeme Pope: Cheap repair work a threat to safety

COMMENT

A luxury car is normally the passion and pride of its owner. Most would expect that should something go wrong, workmanship will restore rather than devalue it.

Sadly, that is not always the case because in the world of automotive repair what a car owner pays in insurance premiums and the quality they receive are two completely different things.

The gap between the price to insure a car and what the insurance companies pay for repair claims is growing wider each year.

The insurance industry is trying to "commoditise" car policies, a one-size-fits-all approach that might suit the owners of mid-priced Japanese cars but has major limitations for expensive or exotic vehicles.

Nonetheless, last year insurers took a whopping $968 million in car premiums, an increase of 42 per cent over five years.

Most owners of luxury cars probably do not know the full limitations of their policies.

For example, some insurers have lists of preferred suppliers. A survey of insurance companies by Consumer magazine demonstrated this means that customers cannot choose where they go, or that if they opt for a non-preferred supplier, they will have to pay an extra amount.

This is designed to ensure that insurers can cut costs and commoditise car policies regardless of whether the quality of the work is substandard or from a repair shop not authorised by the carmaker.

The insurance industry does not benchmark the quality of repair work to anything but the need to ensure that the number and type of claims do not exceed the premiums. All that matters to it is that a car is repaired to a trade standard and the work is completed cheaply.

Late-model luxury cars are sophisticated in terms of technology and equipment. For example, the latest German cars are so advanced that unless taken to skilled repair shops they cannot be safely repaired.

The chassis on the new BMW 5 series requires specific machinery to straighten it properly if it is damaged. This cannot be done by a repair shop without the right equipment or trained staff. Similarly, some panels on late-model Mercedes contain magnesium and, therefore, must not have intense heat applied when repairing panel damage because of the danger of fire.

Accordingly, only highly-skilled and authorised repair shops can do the work to the standard required by leading manufacturers.

This means automotive businesses must invest considerable sums in training their staff to the carmakers' standards and buying the correct equipment to do repairs.

Yet if BMW or Mercedes owners tried telling their insurers what repair shops they wanted to use, their requests would often fall on deaf ears. Car owners have little say in the standard of repair work, and repair shops cannot speak to them directly to give them a choice. To do so could result in the insurers taking their business elsewhere.

It is commonplace for insurance assessors to apply pressure, and sometimes blatant coercion, to ensure a repair job is done cheaply. If a repairer is unwilling to compromise on quality standards to secure the job for the price demanded by the insurer, the work is taken elsewhere.

In a competitive market there is always someone who is willing to do a lesser, substandard job, even in some cases where this is potentially dangerous.

In most instances, the car owner remains oblivious to how far insurance assessors will go to save costs, even if the work is not of a standard that anyone would ordinarily accept.

Bogging and other ways to "patch" repair vehicles are still carried out, particularly when the imperative of the insurers is to save money wherever possible.

Insurance assessors often strive to save as much cost as they can - even if this means a second-hand part is used, which is probably not always what the owner and the manufacturer might reasonably have expected.

If car owners did have a say in the matter, it is likely their view on what was a sufficient standard of repair would be markedly different from that of the insurance assessor.

The insurers are, however, in the more powerful bargaining position and they use their dominance to dictate when, how, and by whom a car is repaired. Their prevailing attitude appears to be that what car owners do not see cannot hurt them.

The British experience is a good example of what this country needs to avoid. The extreme cost-cutting by insurance companies there meant many repair shops went out of business.

However, growing car ownership and the increasing number of accidents have left a shortage of repair shops. Effectively, the insurers have now ended up paying much more (which they pass onto their customers) than ever.

New Zealand needs to address the anomalies between the standards of repair, the premiums paid, and the lack of choice. More importantly, why should motorists finish up with a substandard repair that at best devalues their vehicle and at worst could cause loss of life because insurance assessors are unrealistically reducing costs to get a higher return for their shareholders?

Insurance assessors and companies should be accountable and provide car owners with choice of repairer, fair value and the highest standard of workmanship. This is only reasonable.

The time is overdue for insurers to stop foisting ongoing compromises of safety and standards on unsuspecting car owners in an effort to save costs.

* Graeme Pope is a panelbeater of 25 years' experience.