RELATIONSHIPS between insurance companies and repairers has taken a new turn after an Australian insurance company became the first to be caught in breach of the smash-repair code of conduct.

This follows a small- business tribunal finding that has cleared up grey areas in the code under which car insurers and car repairers operate.

The insurance company, which would not be named by the Victorian Small Business Commission (VSBC), is alleged to have breached the code when dealing with a smash-repair operator in Victoria.

The Victorian Automobile Chamber of Commerce (VACC) said in a statement to GoAutoNews Premium: “On 10 October 2018, the VSBC determined that a car insurer had breached the Motor Vehicle Insurance and Repair Industry Code of Conduct (the Code) when it insisted that a car repairer be paid a flat hourly rate for repairs, without having assessed the real cost of repair.

“The VSBC’s determination suggests that the practice of dictating an hourly rate (known colloquially as ‘funny time, funny money’) breaches the Code.

“The determination is likely to have a significant impact on the car insurance-repair industries. The benefits for motorists are substantial, including transparency about the true cost of repairs and cash settlements.”

The VACC’s leader of industry divisions and policy, John Guest, told GoAutoNews Premium that the case before the business commission was a strong sign that insurers cannot breach the code of conduct.

“It is a precarious position because it opens the insurer to breaching not only the repairer code, but that of consumer law,” he said.

Mr Guest said the next move would be for the insurer to look closely at its actions and co-operate with the repairer code and move on.

“There are some grey areas in the code of conduct that could have been open to interpretation,” he said.

“The VSBC’s determination closes down those grey areas, and now we have a clearer understanding with the belief that the code will not be breached in the future.

“The repairer will be monitored by the VSBC to ensure there is no discrimination against that business in the future.”

Mr Guest said that the code has been around for 13 years, “but it is only in the past three years that it has moved onto the shop floor”.

“We have seen 700 internal dispute resolutions in the past three years in Victoria, and, of those, 60 have led to mediations,” he said.

“This case is the only one to move to the third stage of determination.”

VACC CEO Geoff Gwilym said: “This is a significant win for the body-repair industry in Victoria.

“On behalf of the many business owners for whom this is very welcome news, VACC thanks the Victorian Small Business Commission for this determination,” he said in a statement.

“This is a common-sense decision that changes the working dynamic in a positive way in terms of creating a fair environment for all stakeholders working in the body repair industry.

“It essentially means that repairers must have their fair and reasonable estimates assessed transparently by assessors to also determine the true cost of repairs.

“The onus is then on the parties to arrive at an agreed rate if there is a difference in the repair costs calculated by the repairer and the insurer.”

The revised voluntary Motor Vehicle Insurance & Repair Industry Code of Conduct started on May 1, 2017. It provides for the mediation and determination of smash repairer disputes by the VSBC.

By Neil Dowling