Nrma May Have To Scrap Repair System

Sydney Morning Herald

Thursday March 9, 2006

Jonathan Pearlman

NRMA Insurance may be forced to dump its controversial web-based smash repair system under a bill to allow motorists to choose their own repairer.

The bill, which affects all car insurers in NSW, imposes jail sentences and penalties of up to $165,000 on insurers which use preferred repairers or parts.

The insurance industry yesterday warned that the bill, to be introduced later this month by an independent MP, Richard Torbay, would increase their costs, reduce the quality of repairs and lead to higher premiums.

But Labor will be under pressure to support it after a bitter and vocal campaign by the smash repair industry against NRMA and its parent company, Insurance Australia Group.

The Minister for Fair Trading, Diane Beamer, told Parliament last October the Government was investigating a similar proposal, called "anti-steering legislation", to allow consumers to choose their repairers. About 35 states in the United States have such legislation.

Ms Beamer said yesterday the proposed bill could lead to premium increases of $80 a year and she would prefer a negotiated settlement between NRMA Insurance and repairers.

NRMA's care and repair system, introduced last July, requires customers to bring cars to a centre for assessment and allows preferred repairers to bid for work by examining online photos of the damage.

The repair industry, led by the Motor Traders Association, claims the system has caused job losses and unsafe repairs. Their claims were backed by a report in December by the Staysafe committee which found the system resulted in shoddy repairs and should be suspended.

A Labor MP, Tony Stewart, told the Herald he would push the party to adopt anti-steering legislation.

"There is a strong feeling in caucus that this matter has to be resolved," Mr Stewart said. "The IAG system has led to the total decimation of the industry in NSW and massive unemployment."

But another Labor MP, Paul Gibson, who chairs the Parliament's road safety committee and has criticised NRMA's system, accused Mr Torbay of "grandstanding" and said the Government would not consider the bill.

"Torbay does not run road safety in this state," he said. "There's no way in the world we'd discuss this bill at caucus."

Mr Gibson said the Staysafe committee would hold a hearing later this month before issuing final recommendations on anti-steering legislation.

Mr Torbay, the MP for the Northern Tablelands, said he wanted to "snooker" the major parties into adopting his private member's bill.

"This bill will force the Government and opposition to back their rhetoric," Mr Torbay said.

NRMA insures almost half the cars in NSW but the dispute with repairers has resulted in losses of tens of thousands of customers.

The head of claims and assessing at NRMA Insurance, David Brown, said the bill would reduce the quality of repairs. "Our preferred smash repairer program reassures our customers that only reputable repairers are fixing their vehicles," Mr Brown said.

The NSW manager of the Insurance Council of Australia, Allan Hansell, said insurers would be unable to cut costs by dealing with preferred repairers and the bill could lead to greater incidences of insurance fraud.

"If this costs more money for insurers, those costs would flow through to customers," he said.

© 2006 Sydney Morning Herald

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