Colliding interests
There is growing concern in the collision repair sector about the impacts that insurance-owned panel shops are having on their businesses
IAG, which opened its first Repairhub in late 2019, will have two more in operation within the next few months. Each is expected to process up to 3,000 vehicles per year.
Repairhubs concentrate on a fast turnaround of non-structural repairs using a streamlined, process-driven system. The first was opened in East Tamaki in late 2019, with Hornby and Onehunga starting operations shortly. Further facilities will come online in Te Rapa and in Wellington during 2022.
They join the five existing Gemini and Capital SMART repair workshops in Auckland and Christchurch, which are fed by AA and Vero. These two brands are owned by Australian-based corporation AMA, in which Suncorp holds a 10 percent shareholding.
IAG is “not ruling out” adding more to its network in major metropolitan areas.
The 2020 CRA/MTA survey of collision repairers showed most of the independent body shops operating near one of these insurance-fed facilities were feeling the impact with a drop-off in insurance referrals. In general, feedback from the sector showed worry over IAG setting up in direct competition.
IAG holds more than half of New Zealand’s motor vehicle insurance and has around 300 independent collision repairers signed up as Approved Repairers. Their three-yearly contracts are due for renewal/review on 1 July. However, in the lead up to this year’s review process, IAG has sent an alert to Approved Repairers in the new Repairhub catchments. It included this paragraph:
We will be implementing an additional review of each catchment area to select repairers that will best support our customers’ requirements in conjunction with a Repairhub facility. The projected timeframes of a Repairhub facility being fully operational will determine the priority of each catchment review and how contracts may be set up in the interim.
MTA Repairer Sector Manager, Graeme Swan, says, “This is being seen as advance warning that IAG will be reducing the number of Approved Repairers in the Hornby, Te Rapa and Onehunga areas where they are opening new Repairhubs. I expect Wellington repairers will get a similar letter in a few months.”
Graeme says “We have heard that in the catchment areas, some IAG Approved Repairers that have been sold have not been able to renew their ‘Approved’ status. In the past, if a workshop’s processes and staff remained largely the same after sale, IAG has transferred the status after a brief probationary period. This year, that doesn’t seem to be on offer. This is a blow to any business owner planning to sell up.”
This year, IAG requires all Approved Repairers to complete an IMPAC Prequal health and safety assessment, which includes providing all their relevant documentation and an explanation on their H&S processes.
An IAG spokesperson says “IAG has contracts with many different suppliers to fulfil its customer needs and, as a part of IAG’s vetting process, it’s important that suppliers meet IAG’s minimum health and safety compliance requirements.
“The principles for assessing supplier health and safety haven’t changed, but the process for capturing that information, pre-qualifying suppliers and monitoring them is moving to a single platform where all suppliers (motor, home and contents) are evaluated against a common set of criteria in a consistent way.
“If they fail to meet IAG’s minimum compliance requirements for health and safety, then they are given an opportunity to rectify the situation.”
Social responsibility
In addition, IAG has another questionnaire gathering information on repairers’ commitment to various social, environmental and governance ideals.
Graeme says “Along with questions about fraud and carbon emission reduction, there are several questions on modern slavery, which are a bit puzzling. There are examples of overseas legislation that require action on the part of employers, but nothing that sets out the New Zealand situation. I think many of our members may see this as a time-consuming tick box exercise for IAG to be able to say it is being socially responsible.”
He says there are many hours of work involved in both questionnaires. He has been told of one business owner who, with their staff, spent 40 hours compiling just the health and safety information.
One large South Island repairer reported that he and his staff took two to three hours to complete the social responsibility quiz.
“The amount of paperwork being required by IAG, along with all the processes associated with carrying out insurance repair work, is becoming increasingly onerous and expensive. For it to happen at the same time when IAG is introducing its own repair network is a bit on the nose. Independent operators are at the mercy of IAG, which can cherry-pick the jobs it sends to its own workshops and leave the less-profitable, more time-consuming work to the rest of the sector.”
Graeme says IAG’s role as both arbiter and competitor for insurance claim work is an issue of grave concern to MTA and the industry.
“IAG intends to operate 10-12 Repairhubs in the main metro areas within a few years. They would take over about 25 percent of the work currently being carried out by independents in those cities.”
Survey comments
We don’t like the idea of this as we have spent lot of money reinvesting in our company to meet our insurance companies’ contracts and make sure we are up with modern technology. We feel we would lose some work because of this.
Yes, I think the customers can be the only losers as the insurers will try to do things cheaper.
Not a level playing field. They take the profitable and easy work. They do not abide by what they mandate for others which is a huge double standard.
They should stick to selling insurance policies only, as most of the profits go overseas.
I believe because of them we will be losing most of the easy jobs.
I understand why they do it and can't really blame them. It's far from a level playing field though and I expect customer service will suffer at these new facilities.