Panelbeaters v. Insurance Industry – David & Goliath?

Panelbeaters v. Insurance Industry - David & Goliath?

The recent Seven Sharp media coverage of the rocky relationship between the panelbeating and insurance industries has put the problem in the (very) public domain. The problem raging is the dominance of the ‘big name’ insurers and the perceived mis-use of that dominance in dictating harsh terms on the small owner-operated business that constitute the panelbeating sector. For instance, it has been revealed that the impossibly low hourly rate of between $45 – $50 is imposed by some insurers – seems implausible, you certainly can’t engage the services of a mechanic, plumber or electrician for less than $80 – $100/hr, so what’s going on?

The collision repair sector was well represented in the recent Seven Sharp expose by their trade association CRA (Collision Repair Association) who explained the high investment in facilities, equipment and training required to repair modern motor vehicles. No-one seems to be listening though.

The second Seven Sharp show ended with Craig Foss, Minister for Commerce and Minister for Consumer Affairs inviting unhappy panelbeaters to write to the Commerce Commission, and the CRA agrees that their members owe it to the industry to grasp the opportunity and act. They say that not to do so implies that the panelbeating industry is happy with the way its treated. They’ve provided the link below that will take you to the Commerce Commission website: http://www.comcom.govt.nz/the-commission/making-a-complaint/ . They also say that If you want it to be confidential, then mark it as such. In a recent email to members they also state that its important that members list the reasons why they believe the market is flawed and why free market is not working. The CRA believes this includes the following factors:

• Cars are now built differently – they are increasingly complex to repair

• Compliance is a minefield & costly

• We are paid at a set rate dictated by insurers

• It’s not inflation adjusted – in the last 9 years rates have increased by 7% vs the CPI at 27%

• Rates are well below what it actually costs to run businesses up to the required standard of repair

• It’s “take it or leave it”- rates are non-negotiable

• Parts margins are also controlled by insurance companies

• No real choice – many Insurers direct work to their network, so if you are not in and agree to their terms, you get none.

• The non insurance work is small and cannot sustain most businesses

• Yet ICNZ Figures show that Motor Vehicle Insurance has never been more profitable

• The free market no longer works – we are unable to pass on cost increases and rely on the generosity of the few remaining insurance companies. Repairers are captured & exploited

• As numbers of insurance companies have reduced, the remaining insurers are mimicking each other in terms of how claims are handled & paid.

• This issue affects not only business owners and their families but also employees and their families and dependants.

• Qualified staff are hard to get & retain

• As we are unable to pay staff what they are worth, they are leaving the industry for better paid jobs.

• It is increasingly difficult to attract apprentices to an industry unable to pay competitive wages.

The CRA has also suggested contacting local MPs, or even Craig Foss, and provided the following website which lists email addresses – http://www.parliament.nz/en-nz/mpp/mps/current/. CRA General Manager Neil Pritchard also invites contact on 021 663 459

4 Responses

  1. Justin Kane
    | Reply

    A picture says a thousand words! The panelbeting business is stuffed and we’ve let insurance companies do it to us and its still happening. You only have to look at the scramble going on now to ‘comply’ with NZI’s latest round of contract reviews – we’re expected to give more and more for less and less. Its time to try a different tactic. Maybe stop relying on NZI to shovel quantity in your direction and start attracting your own customers like the rest of the rest of the business world has to. Its the dumb approach the industry now takes to ‘winning’ insurance business that has given NZI the monopoly their now exploiting. Time to say STOP!

  2. ShaneM
    | Reply

    Yeah agree the picture is very illustrative, the collision repair industry is getting hammered. The CRA (for once) made a good stand on 7Sharp so the public learn about the problem. The MTAs been trying to win members from our trade too but I don’t see any help coming from them . How come MTA mechanics can charge $80+ an hour but MTA hasn’t done anything about the $45 an hour rate that’s dictated to the collision industry! The investment to set up a top quality panelshop is far higher than for a mechanics shop. Lets hear from the MTA?

    • Reg
      | Reply

      Agree! They want our subs but what are MTA doing to support the panelbeating trade?

  3. Suze
    | Reply

    News Flash! Not only are insurance companies crowing about their massive profits this year, the Commerce Commission in Australia have just come to the inexplicable conclusion that allowing IAG to buy out Lumley Insurance will NOT make insurance less competitive. Come on! IAG has 60% of the MV insurance market in NZ and they say Lumley has 10%, so the combined group would control 70% – seventy percent! Only another 30% to go for a total manopoly! Go for it NZI/State/AMI. Let’s hope the NZ Commerce Commision sees the stranglehold for what it is. Not only are they determined to crush the panelbeating industry but they now effectively control car insurance pricing too. The CRA’s right, everyone HAS TO make a submission so the trade has a voice with the Commerce Commission before its too late.

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