NCR CRA NZ Neil Pritchard
Published on October 9th 2019 in

Insurer-owned repairer set to reduce consumer choice in NZ

An automotive industry association is warning the quality of vehicle repairs may drop as New Zealand’s largest insurer opens its own panel shop under a new trial. The new model proposed by insurance firm IAG (which in New Zealand includes Lumley, NZI, State and AMI) would see its customers required to have their vehicle repaired at an IAG owned repairer.

The general manager of the Collision Repair Association (CRA) Neil Pritchard has branded the move anti-competitive and says it signals the erosion of consumer choice and competition in the industry. “Our concern is that under a model where the insurer dictates the standard and scope of the repair, there will be no oversight in place to protect the consumer.”

“Even seemingly minor or cosmetic repairs to modern vehicles may have underlying damage to sensitive radar and sensors requiring specialist expertise and equipment to diagnose and effect suitable repairs, and it is important that motorists have a resolution structure in place which provides a degree of independence in the event of any issues,” he added.

Pritchard said customers may also find their new vehicle warranties are voided if repairs are not made at an approved repairer, particularly if non-genuine parts are used. “While the Consumer Guarantees Act will remain as a potential means of redress, the prospect of facing their insurer in a disputes tribunal hearing will be off-putting for many motorists. It is also unclear what happens if a customer has a poor service interaction with an IAG repair shop and whether they will be forced to use it again in the future if they remain with that insurer.”

Pritchard went on to say that there are also potential concerns around how this move will be communicated to customers. “Existing customers of IAG may see the fine print of their terms and conditions simply adjusted when it comes to their annual renewal. New customers may be required to ‘opt-out’ when applying for insurance for the first time or face higher premiums.” Pritchard said IAG’s claim that the new venture is necessary due to processing delays in the current repair network is merely a smokescreen for the introduction of a purely profit-driven strategy.

“This ownership model is rare overseas, and the move to become more vertically integrated here is purely profit-driven – and at the expense of consumer choice.

Our concern is that New Zealand consumers are being used as part of a trial which has the potential to be expanded into their other markets through IAG Australia, although the current model in Australia is based on joint venture arrangements. We would like to see the insurer working more closely with existing repairers to help reduce repair times and communication with customers,” he concluded.

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