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Insurer-Owned Repairer In NZ Said To Reduce Consumer Choice

An automotive industry association in New Zealand is warning the quality of vehicle repairs may drop as IAG opens its own panel beating shop under a new trial.

The new model proposed by the company, 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.

Neil Pritchard, General Manager of the Collision Repair Association (CRA), 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,” said Pritchard. “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.”

Pritchard says customers may also find their new vehicle warranties are voided if repairs are not made at an approved repairer, especially if genuine parts are not 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 says 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,” he says.

Pritchard says IAG’s claims that the new venture is necessary due to processing delays in the current repair network is only a smokescreen for the introduction of a purely profit-driven strategy.

“This 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 could then be expanded into their other markets through IAG Australia. We would like to see the insurer working more closely with existing repairers to help reduce repair times and communication with customers.”