Motorists represent the single largest group of consumer retail claimants in the Australian insurance industry. Each year, more than 1.7 million smash repairs are lodged in Australia.
The review, carried out by former ACCC chair Dr Michael Schaper, was called after problems increased despite the introduction of a voluntary code in 2006, called the Motor Vehicle Insurance and Repair Industry Code of Conduct (the code).
Dr Schaper proposes 15 recommendations including shorter dispute resolution times, increased consumer protection, faster dispute resolutions, and clearer language between parties.
The MTA NSW said it fully supports the findings of the review, calling it a “step in the right direction” and a “wake-up call” for the industry.
Problems that triggered the review included concerns that the existing code was being followed by a declining number of businesses.
This has led to extended delays in vehicle repairs that inconvenienced customers, and poor dispute resolution.
The proposed reforms have been outlined in Dr Schaper’s independent review as being vital to protect customers and to rectify problems.
The review said that “while the main aspects of the current system are operating satisfactorily, there is a need for change in some areas.”
“These responses suggest the need for a number of reforms.”
MTA NSW said it supports the recommendations “particularly around claims processes and wait times – which need to be simplified and shortened – and greater consumer protection.”
MTA NSW CEO Stavros Yallouridis said: “In an industry beleaguered by long wait times and insurers prioritising profits over people, insurers and the industry need to work together to make sure that Australians are at the heart of the code. Insurers and repairers should be compelled to resolve disputes quickly and fairly.”
Mr Yallouridis said that until now, “repairs have been a waiting game for motorists while insurers leverage their power imbalance over the repair industry and frustrate negotiations over important issues such as manufacturer repair methods.”
“If left unaddressed, the average motorist may be left with substandard repairs which compromise the resale value or worse the safety of their vehicle.”
He said that while premiums for policyholders keep increasing, the rate insurers are willing to pay body repairers remains stagnant.
“The code is designed to strengthen and enhance transparent and cooperative relationships between smash repairers and insurance companies,” he said.
“It is a vital instrument in overhauling the relationship between insurers and the industry, and ensuring the industry is just and fair for all parties.”
“On behalf of the MTA, we would like to thank Dr Schaper for delivering a thorough and balanced report.”
A copy of Dr Schaper’s report can be found on the MTA NSW website.
The 15 specific recommendations were:
Recommendation 1: Clarify and strengthen provisions relating to dispute resolution. Shorten timeframes for written acknowledgement of receipt of a dispute. Remove the mandatory requirement for a written report for all mediations. Educate more widely.
Recommendation 2: Update the code’s language, format and presentation. Make the code easier to read and follow. Update sequencing and presentation. Remove or rewrite outdated text. Ensure it is legally rigorous if contested in legal proceedings.
Recommendation 3: Undertake greater public promotion of the code. Educate stakeholders about the activities and achievements of the code. Compile a comprehensive list of key stakeholders. Publish update bulletins regularly. Consider also using social media.
Recommendation 4: Work more closely with regulators. Engage more proactively with Small Business commissioners, the ACCC, state governments and other bodies who have an interest in the code.
Recommendation 5: Update the code website URL and contents. Improve the accessibility and ease of use of online information. Consider adopting a more user friendly URL. Rewrite website content to make it easier to understand the scheme.
Recommendation 6: Introduce sanctions for breaches of the code. Empower the CAC to remove parties who do not comply with the code. Monitor compliance by member parties. Require all new membership applications to be approved by the CAC.
Recommendation 7: Appoint an independent CAC chair and deputy chair. Adopt contemporary best practice by creating two additional members of the CAC, who can provide an independent perspective, enhance governance, and drive external engagement.
Recommendation 8: Clarify CAC governance, membership, voting and training. Introduce three-year terms for CAC members, and maximum term limits. Offer training in corporate governance. Ensure more gender diversity.
Recommendation 9: Incorporate the CAC as a formal legal entity. Adopt an association, company or other corporate structure for the CAC. Ensure this entity holds the assets, intellectual property and finances of the CAC.
Recommendation 10: Better resource the CAC. Provide an annual operating budget for the work of the CAC, rather than continuing to rely on voluntary labour. Employ a part-time administrator. Remunerate independent members.
Recommendation 11: Codify practices relating to the use of artificial intelligence. Address the issues emerging from the growing use of AI. Begin an active education campaign to inform the industry of these.
Recommendation 12: Review educational requirements. Update the education and qualification-related provisions of the code. Actively examine if signatories are providing adequate education and training to their assessor and estimator staff.
Recommendation 13: A greater consumer focus. Explicitly recognise the importance of consumers within the preamble of the code.
Recommendation 14: Clarify the role of third party representatives. Define a “third party representative” and provide a mechanism for them to sign up to the code if they wish. Spell out their roles, rights and responsibilities within the code.
Recommendation 15: Change the frequency and focus of future code reviews. Reduce the frequency of code reviews; consider examining decarbonisation, artificial intelligence, training needs; data trends; and future legal status of the code in the next review.
By Neil Dowling
