Australia’s leading motor industry body has reiterated the importance of a mandatory e Code of Conduct with insurers to ensure fairness in the repair industry.
It comes as part of a submission by the Motor Trades Association of Australia (MTAA) and its body repair committee, the Australian Motor Body Repairers Association (AMBRA), that wants the ACCC to reject two proposed mergers.
The ACCC is currently reviewing a proposed Allianz acquisition of RAA Insurance in South Australia and Insurance Australia Group’s acquisition of RACQ in Queensland.
The Australian Competition and Consumer Commission’s role is to evaluate the impact of mergers and acquisitions on the competition in the market.
Negative impact
MTAA has cited the potential for market power abuse and the negative impact on businesses, consumers, and the broader insurance industry in its submission opposing the acquisitions
It says a more consolidated insurance market will lead to higher costs, reduced choices, and lower service quality for motorists. While repairers will face immediate pressure, the long-term effects will include rising premiums and limited access to high-quality repairs.
The MTAA argues state-based regulations are inconsistent and inadequate with a maximum penalty in SA of $50,000 that remains too low to deter unfair practices by large insurers.
MTAA CEO Matt Hobbs says the ACCC need to reject the acquisitions and instead strengthen the Motor Vehicle Insurance and Repair Industry (MVIRI) Code of Conduct to protect the industry.
“Without stronger oversight, insurers will continue to dictate repair practices, creating an unfair playing field that hurts small businesses and limits consumer choice. The ACCC has a critical role to play in ensuring a fair, transparent, and competitive insurance and repair industry,”
“A nationally enforced Code of Conduct with real penalties is essential to holding insurers accountable and protecting the livelihoods of thousands of repairers across Australia.”
The MTAA wants the ACCC to expand its oversight of the insurance sector to improve transparency ensure adhesion to the Cod including implementing meaningful penalties and enforcement mechanisms.
Read the MTAA’s full submission here.
Repair Industry feedback needed
The draft code, which is due for public consultation this month, is the key governing document between insurers and collision repairers and has been in the process of being overhauled for several years. It remains mandatory in two states.
It was earlier found in 2022 independent review by Dr Schaper to be not sufficiently used or understood by both parties in the industry.
In a release made last year when RACQ signed a strategic partnership with IAG, the companies said it would help 1.7 million members adding to their resilience and giving them access to leading insurance products.
IAG CEO Nick Hawkins said the new alliance would help protect and serve RACQ’s members.
“RACQ will maintain brand and customer relationships, while leveraging IAG’s scale and financial strength, best-in-class technology for claims, policies and pricing, customer orientated claims experience and underwriting expertise.”
The Code journey
In December 2022, the Motor Vehicle Insurance and Repair Industry (MVIRI) Code Administration Committee (CAC) announced Dr Michael Schaper had been appointed to conduct an independent review of the MVIRI Code of Conduct (Code). In May 2023, the CAC formally received Dr Schaper’s final report.
The report provided 15 recommendations in response to the review’s terms of reference which focused on:
- The effectiveness of dispute resolution processes under the Code
- Awareness and accessibility of the Code
- Compliance with the Code
- Governance of the Code and the CAC
- Other issues pertinent to the effective governance and operation of the Code
Visit the MTAA website and the ICA website for more details.