Tensions between insurers and repair firms are surfacing over what policy-holders are told, Daniel Attwood reports
The country's independent crash repair centres are becoming increasingly angry about insurance companies' practices of directing policy-holders to specified repair shops despite motorists having the right to chose where they get their car repaired.
However, the insurance companies have hit back saying that the practices are an economic necessity aimed at reducing premiums.
As cars have become more advanced and labour rates have risen, so the cost of repair has become more expensive. Every year in Europe €38 billion, or €4.3 million every hour, is spent repairing damaged vehicles. As a result, insurance companies, who must foot most of the bills, are searching for ways to cut costs.
In Ireland, as across Europe, there is a growing trend of insurance companies directing policy-holders to specific repair centres after accidents. These so-called aligned or tied bodyshops have entered into an agreement with an insurance company whereby labour rates and other costs are fixed. In return the bodyshops expect an increase in business as accident victims are directed to them.
The agreements benefit customers and insurers, says Paul Moloney, spokesperson for Axa, the country's largest private car insurer. "It makes sense - we bulk buy services from the repairers such as reduced labour rates and we pass those savings onto our customers."
However, the repair industry claims that many accident victims automatically assume that they must get their cars repaired at these authorised centres in order to ensure that the insurance company will pay, despite the fact that they have the right to take their vehicles to repairers of their choice and to expect their insurers to meet all reasonable costs.
Hibernian Insurance says that, when a customer calls, it is made quite clear that policy-holders have the right to take their cars to whichever bodyshops they like. "We offer to have the damaged car taken to one of our aligned repairers," says a spokesperson, "but we don't insist."
Although customers have the choice, the insurance companies say that it is in their customers' best interests to go to one of their centres. "The insured is incentivised to go to an approved repairer in the sense that by doing so they get a seamless service," says Moloney. "They will get a replacement car and their car will be delivered back to them when repaired. It will even have been cleaned inside and out."
Information issued by the Society of the Irish Motor Industry (SIMI) states that, after an accident, motorists are free to have their cars repaired at garages of their choice - "no matter what your insurance company may advise." It goes on to say that motorists should not be unduly influenced by insurer's suggestions of undue delays and extra costs. "Such suggestions are not necessarily accurate. You are entitled to consider the benefits of dealing with the garage of your choice including the eventual trade-in value of your vehicle."
But the insurance industry points out that, although the customer has a choice of where to go for repairs, it should not be expected to pay extra for them. As Moloney explains, if a customer chooses not use one of its centres, Axa will only pay the amount that it would have paid to one of its own bodyshops.
The insurance industry also points out that, although many motorists would like to have damaged vehicles repaired at garages where they were bought, many dealers sub-contract the work out and add their margin to the final bill.
The practice of establishing a network of aligned repairers - a system that does not denote a quality standard but simply that an agreement has been reached between repairer and insurance company - has been underway in Europe for many years.
To encourage customers into their centres, some insurers in France demand that motorists pay and then reclaim costs if a non-authorised centre is used, but will pay directly if they use an authorised centre. In Germany, lower premiums are used as the incentive.
Relations between insurers and the repair industry reached breaking point in Ireland two years ago with the introduction of Glassmatix, an electronic repair cost estimating system. Questions were raised about its implementation and, as a result, the Competition Authority investigated.
The authority's report, published last summer, vindicated many of the concerns of the motor industry. As a result, the authority asked insurers to agree to signed assurances that lay down strict rules about how they can operate in the repair market place. These ban any level of co-ordination between insurers on repair costs and repair times, or on prices paid to repairers.
As part of those assurances, the insurers also agreed to the authority that there is no obligation on insured drivers to take vehicles to approved repair centres.
In order to raise awareness of the quality of their work, independent body repair shops across Europe are also in the process of establishing a network of approved centres. After independent inspection, these premises are awarded a Eurogarant Quality Programme for Bodyshops certificate and become quality-approved centres.
In Ireland, two centres have been awarded the certificates since the programme was launched late last year and several others are expected to be awarded certificates shortly.