The Australian government has recently announced the basis for a Code of conduct between smash repairers and the insurance industry.

Let’s take a look at the bee in the bonnet that the Aussies have to deal with.

Last year, the Australian government requested a Productivity report to improve the working relationships between the insurance and smash repair industries and that report was considerably damning – damning enough that the Government saw that an industry code was warranted.

Furthermore, the government delivered an ultimatum to both parties that if a code of conduct could not be determined amicably, it – the government – would step in as a regulatory body.

The Australian government gave both parties six months to get into the sandpit and play nicely with each other.

So far, that doesn’t seem to have worked. Tensions in Australia between insurers and repairers are running high with police intervention required in some cases.

As a result, Australian Small Business and Tourism Minister Fran Bailey announced that she is in the process of assembling a task force from smash repair and insurance industries to develop and agree to a voluntary code of conduct.

In a media release, the minister alluded to the Productivity Report from Australia and from this; we can surmise that at a bare minimum, the code will call for:

• A transparent and independent external dispute resolution mechanism,

• Full disclosure in preferred smash repairer arrangements,

• Retention of preferred smash repair status upon the sale of a business,

• Full disclosure in quoting for work and payment,

• A fairer system of guarantees for repairers,

• Up front disclosure on whether insurance policies provide choice of repairer.

Interestingly, and just before we look at those points in detail, the Australian report indicated that the insurance companies were in a greater position to manifest the requirements set out in the code.

So, what do the finer points of the code mean?

The dispute resolution system is intended to deal with issues of a contractual nature and code breaches.

The system will be based on a meditation system with costs shared by both parties.

As to full disclosure in preferred smash repairer (PSR) arrangements, repairers should know how to achieve PSR status and be given an equal opportunity to apply for it, and that there should be a ‘cooling off’ period for repairers to consider PSR contract offers.

The code should address the issue of transferral of business ownership without the risk of automatically losing PSR status. It also follows that a newly purchased business must demonstrate its ability to maintain PSR standards.

There is provision within the code to offer full disclosure in quoting for work and payment as well as a fairer system of guarantees for repairers. We take this to mean that repairers should not be expected to unrealistically guarantee a repair - i.e. beyond a manufacturer’s warranty on parts or paint.

The code should also carry provision for upfront disclosure on whether insurance policies provide a choice of repairer.

In Australia, under the new Code, consumers will have the option of selecting policies allowing a choice of repairer. It has to be explained to the consumer at the time however, the choice options open to them for selecting repairers.

In Australia, the government has said that it believes the Code should not attempt to specify or regulate this and a number of other issues such as minimum hourly rates, ‘standard’ hours for jobs, PSR selection criteria, compulsory choice of repairer, requirements to spread work among repairers and particular conditions of guarantees.

That being the case, smash repairers and the insurance companies are still going to have to slug out those issues themselves.

And that’s the situation in Aussie at present.

There is good news from our side of the ditch however - we are obviously considerably more enlightened than the ‘Koala kissers’ – and every attempt should be made to keep it that way.

Having spoken to the Insurance Council, Motor Equipment News has been told that the scenario in Aus is unlikely to be transplanted to here – for this relief, much thanks.

New Zealand actually has a better track record of minimal regulatory controls. Strict deregulation is a disaster, but with a few guidelines in place, we as a nation of predominantly small to medium businesses, seem to do OK looking after ourselves.

According to the Chief Executive of the Insurance Council, Chris Ryan, there is no real case for a code of conduct to be implemented in New Zealand at this time.

Whew!

He is of the opinion that the situation between the repair industry and the insurance companies here, is one of ‘healthy tension’, which is to say that while there is the occasional grumbling, that just serves to keep both parties honest with each other for the most part.

Each party is wary of the other but over the past 20 years, has developed better communications and a greater mutual respect.

The situation is not perfect, "but," says Chris Ryan, "I haven’t heard of a code of conduct such as the one in Australia, even discussed here."

Well, Motor Equipment News reckons that’s good news, but we were still a little concerned, given that most of the insurance companies are Australian-owned or at least parented, and as such, could those parent companies force the issue onto New Zealand?

"That’s always a possibility," says Chris, "but the insurance companies here are given a high degree of autonomy from their parent and as such, it’s unlikely that we will see anything come into force that will change that."

Motor Equipment News takes the line that not having to ask the government to step in and solve petty disputes, indicates a more mature approach to business on the part of New Zealand repairers. l