A look behind the scenes of Australia's car insurers

Special report

A look behind the scenes of Australia's car insurers

Repairers are going to need a better understanding of Australia's motor insurers as they go forward into a rapidly changing environment of motor accidents and repairs. Paint & Panel asked our leading insurers some key questions about their operations.
With motor vehicle insurance in Australia running at around $5 billion income annually, the insurance companies dominate as work providers for repairers. But what insurers want and what repairers are prepared to give is the source of continuing unrest, sometimes erupting into open conflict.
Without exception, motor vehicle insurers are part of big public companies and as such exhibit a reluctance to disclose any more about their internal operations than they absolutely have to. The answers to many of our questions were deflected on the grounds that they were commercially sensitive. However, enough information emerged to give a One of the most interesting outcomes of our survey was identifying which insurers operate which brands. The insurance industry in Australia has been built by mergers and takeovers to the point where four public companies dominate the market. But most of them still operate their sub-brands which, to the general public, look like independent companies. In many cases these sub-brands operate differently to other sub-brands under the one company umbrella, sometimes because they have gone after a specific market segment that requires different service (eg pensioners' insurance) or the traditional way the brand has done business has been retained because it was successful.
According to the Productivity Commission, four insurance companies account for 99 per cent of the market share nationally. IAG leads the field with 50 per cent, followed by Suncorp with 22 per cent, Promina with 20 per cent and Allianz with seven per cent. The percentages vary substantially by state and it has been suggested that IAG may have lost some share in NSW during its dispute with repairers. It is also thought that Allianz has increased its market share in recent times.
The Commission's inquiry actually found less to criticise in the way insurers did business than many repairers had anticipated.

ABOUT THE INSURERS

IAG is Australia's biggest motor insurer with upwards of 50 per cent of the total market. It has around three million comprehensive motor vehicle policies nationally across its brands. Those include NRMA, SGIO, SGIG, Swann, and CGU. It has what is termed a 'strategic alliance' with RACV in Victoria and is dominant in New Zealand through the State and NZI brands.
As with other big insurers, IAG operates differently under its various brands but appears to be moving towards a common procedure nationally.

NRMA Insurance in NSW
Web-based Repair Management (WRM) is the main repair allocation process used by NRMA Insurance in the Sydney metropolitan area. WRM was introduced to NSW in July 2005 and currently has a total of eight "Care & Repair" centres operating across Sydney and Newcastle. WRM involves repairers within a designated area tendering for work via the internet.
Repairs are also directly allocated in NSW for NRMA Insurance customers who, for example, either live in a regional area of the state or who have vehicles with substantial damage or require a specialist repairer.
Where work is directly allocated to a repairer in the network, the repairer uses an on-line system to submit quotes (including digital images) to NRMA Insurance assessors. The quotes are reviewed and authorisation to commence repairs is delivered electronically, ensuring repairs can begin without delay.

NRMA Insurance in Queensland
Web-based Repair Management (WRM) is also the main repair allocation process used by NRMA Insurance in the Brisbane metropolitan, Gold Coast and Sunshine Coast areas. NRMA Insurance introduced the WRM process to QLD in November 2002 and has a total of four Care & Repair centres operating, along with three satellite assessment locations.
It processes claims in exactly the same way it does in NSW.
SGIC
SCIG is the dominant IAG insurance brand operating in South Australia. Web-based Repair Management (WRM) is the main repair process used by SGIC in the Adelaide metropolitan area. SGIC introduced the WRM process to SA in August 2003, and has a total of three
Care & Repair centres operating. It processes claims and repairs in exactly the same way NRMA Insurance does in NSW and Queensland.
SGIO
Web-based Repair Management (WRM) is also the main repair process used by SGIO in the Perth metropolitan area. SGIO introduced the WRM process to WA in August 2003 and has a total of three Care & Repair centres operating.
It processes claims and repairs in exactly the same way NRMA Insurance does in NSW and Queensland.
CGU
IAG refers to CGU as a 'national' brand and operates a little differently to other IAG brands.
Where a CGU customer has a repairer they would normally deal with, the insurer directly allocates the work to that repairer. However, CGU customers can also use the Care & Repair service in the event that they need assistance in arranging repairs for their vehicle. Where work is directly allocated to a repairer in the CGU network repairers use an on-line system to submit quotes (including digital images) to CGU assessors. The quotes are reviewed and authorisation to commence repairs is delivered electronically, ensuring repairs can begin without delay.
Swann
Swann Insurance is one of Australia's largest niche insurers, working in partnership with financial institutions, motor vehicle and motor cycle manufacturers, dealers and financiers, Swann stands behind many insurance products on the Australasian market.
The Company has over half a million policyholders, generates gross written premiums of over $200 million a year, and has a network of over 1,000 representatives and business partners.
Swann Insurance customers are able to select any repairer of their choice provided they are licensed and have the capability to perform the required repairs.
Customers who ask for the name of a repairer are directed to the motor vehicle dealer who sold them the vehicle. On receipt of the claim form and quote from the repairer an assessor is appointed to inspect the vehicle before authorisation to commence repairs is given.

IAG preferred repairers
IAG currently has 825 preferred smash repairers (PSRs) nationally and operates a selection process for PSRs which includes business product or service, location or serviceable area for supplier, skills, specialisation and equipment, quality and service performance.
Repairers are invited to apply to become PSRs. Each application is evaluated to identify a short list of applicants. These applicants are approached by IAG to discuss business plans and review staff, premises and facilities. Final evaluation and recommendations are made following probity approval.
The PSR agreement, which repairers are asked to sign, provides for IAG and the PSR to negotiate and enter into a performance plan which specifies the goals of the PSR, how the PSR?s performance against those goals will be measured, and details steps the PSR will take to achieve the goals.
IAG actively monitors the performance of its repairers regarding the quality of repair work, the cost of repair or the amount quoted and the standard of service provided to IAG customers.

Choice of repairer
IAG has a choice of repairer policy option for NRMA Insurance, SGIO and SGIC branded policies. However, according to the company, since the average frequency is one collision every seven years, many people don?t have a relationship with a local repairer and prefer their insurer to take the stress and uncertainty out of organising repairs.
The company maintains that its Care & Repair service means that is customers don?t have to run around getting quotes and visiting repair shops after an accident. It also offers peace of mind that a quality repairer is carrying out the repairs.
Customers that do have a relationship with a repairer are able to purchase the 'choice of repairer policy option'. Customers who take out the option receive a lifetime guarantee from the relevant IAG insurer on the workmanship of authorised repair work regardless of whether or not the repairs were undertaken by a repairer in IAG's network. Repairs are still carried out subject to the IAG insurer's approval. If a customer chooses not to take out the option, repairs are managed through the web-based repair management (WRM)or direct allocation process.
IAG says it will not allow any repair method that will compromise a vehicle?s warranty and does not use reusable mechanical parts.
However it points out that non-mechanical reusable parts have been used in repairs for many years. These parts are in the 'cosmetic' category and include bumper bars, mirrors and door handles. IAG sums up its policy here by saying: "Our aim is to return customers? cars to their pre-accident condition and we don?t support the misuse of reusable parts in delivering this promise."

Payment times
IAG regularly publishes the time it takes to pay its PSRs.
In relation to payments to PSRs and ASRs on ORM (Online Repair Management system), between 1 January 2005 and 30 June 2005 the average time to pay an invoice from the time of receipt of the invoice is 4.29 days.

Assessors
Minimum requirements to be an assessor are at least 5 years technical experience (post trade), trade qualifications in the motor vehicle repair industry, excellent customer focus and ability to perform collectively with peers in a team environment. They must be PC literate and the ability to compile reports on request. They must also have strong time management skills and the ability to work with minimal supervision.
Most successful applicants are panel beaters or spray painters by trade.
Once they begin employment all new assessors receive legislative training immediately in financial services reform, general insurance code of practice, privacy law and trade practices.
They then receive three weeks comprehensive induction training covering IAG processes and systems. On conclusion of this training an assessment is conducted with a pass mark of 80 per cent.
Once in the field there is ongoing internal training and coaching for all motor assessors. It includes customer service communication and negotiation, fraud awareness, severity and impact training, structural repair and estimating training
External training or development opportunities include software application and vehicle manufacture - held by vehicle manufacturers.
Specialist repair equipment demonstrations, paint products and refinishing techniques are provided by paint manufacturers.
In addition to these training programs assessors also have access to a library of technical information along with updates on new repair techniques, vehicle repairability, and known problems with vehicle design that may only become evident after an accident.
New vehicle releases are also available and they detail new vehicles information such as parts prices for fast moving parts, vehicle construction and material.

Suncorp GIO Motor Vehicle Insurance
The Suncorp Group is one of Australia?s leaders in banking, insurance, investment and superannuation. It is Australia?s fourth biggest general insurance group. Australia-wide, Suncorp?s insurance market share is 23 per cent home, 22 per cent motor, 20 per cent workers compensation and 21 per cent commercial. With over 1.4 million vehicles insured, Suncorp GIO is one of the largest motor vehicle insurers in Australia. Suncorp GIO operates on a national basis. The group markets its motor insurance policies under Suncorp in Queensland and GIO in all other states. Suncorp GIO general manager claims, Mark Milliner, says Suncorp is Queensland?s largest motor vehicle insurer with over 30 per cent market share in that state. Suncorp GIO has a national network of over 700 recommended repairers. When it comes to choosing its recommended repairers, the company says it conducts a rigorous and transparent selection process. Each repairer is scored against set criteria and given an overall rating and their performance is assessed on an ongoing basis.
?We?ve invested a lot of time and energy in building strong relationships with the motor repair industry and we have recommended repairers who we stand by,? says Milliner. "Suncorp GIO, voted best insurer to deal with by motor repairers for the past four years, is the prime provider of repairer choice for consumers in the Queensland and New South Wales markets. Customers are guaranteed quality motor repair work when making a claim through Suncorp GIO because we know the importance and value of choice for our customers. ?Suncorp GIO has a number of different repair management processes that are determined on a geographical basis. For example, we have a specific system for customers in metropolitan areas utilising our Motor Vehicle Assessment Centres (MVAC?s) and a different process for our regional customers where we have assessors on the ground. Each system is geared towards processing our customer?s claim and repairs in the
shortest possible time." Milliner says Suncorp GIO?s recommended repairers repair a customer?s vehicle to the condition it was in immediately before the insured event. ?Our policy also states we will use only manufacturer-approved parts if the vehicle is under warranty,? he says.
?Suncorp GIO is committed to ensuring best industry practice standards are adhered to in all repairs authorised. We also provide a timely repair service. Suncorp GIO?s recommended repairers provide an efficient service that guarantees repairs within seven days if the vehicle is driven to one our MVACs." Milliner says that Suncorp GIO pays its repairers the market rate for services, and well within normal commercial trading terms. Suncorp GIO offers three levels of cover so customers can take out motor vehicle insurance to suit them. They are: third party property ? cover for loss or damage to another person?s property caused by the customer?s vehicle; extra ? fire, theft and third party property damage cover; comprehensive ? for full vehicle protection.
Allianz Insurance
Allianz markets its policies under the Allianz brand direct to customers and through brokers and agents. It also underwrites polices written under the brand names of other parties such as motor vehicle manufacturers like BMW and Mercedes and financial institutions such as banks and credit unions.
Allianz offers customers an unrestricted choice of repairer at no extra cost. Customers can also use an Allianz network repairer is they wish. Thus, Allianz can potentially engage any of the approximately 5000 repairers in Australia. Currently, around 60 per cent of Allianz repairs are undertaken by non-network repairers.
Numbers of preferred repairers by state:

NSW = 37
QLD = 57
VIC / TAS = 35
SA = 13
WA = 13

In general, the criteria of how preferred repairers are chosen relate to repair capability, customer services, track record in terms of a relationship with Allianz and business need (which includes factors such as customer demand and geographical location). The criteria are reviewed to ensure that they are consistent with the recommendations of the Productivity Commission report. The need for network repairers is related the number and location of customers choosing to use an Allianz network repairer. The question of whether more are needed is subject to ongoing monitoring.
When undertaking a repair, Allianz uses its specially developed managed repair process (MRP). Essentially, the MRP incorporates the traditional method of assessing, which involves the assessor and repairer engaging in a one-on-one consultation to determine the most appropriate method of repair and a fair price for the job. Because Allianz offers choice of repairer, it does not use competitive quoting, and engages only with the repairer chosen by the customer.
Allianz is pro active when it comes to repairs in accordance with car companies' recommendations. It is currently working with numerous car companies to develop key training programs involving assessors and repairers, which focuses on the ever-changing vehicle technologies and repair requirements.
In terms of payment to its repairers, Allianz seeks to settle as soon as possible. Provided an invoice is complete and agreed, Allianz promises to pay repairers within 30 days. However, generally, around 85 per cent of invoices are paid within 15 days.

Numbers of assessors by state:

NSW = 18
QLD = 12
VIC / TAS = 13
SA = 7
WA = 5
Allianz says that it is critical that assessors keep up to date with changing technologies and necessary repair methods to ensure that the correct method of repairs are being performed. Allianz provides ongoing in-house training for all assessing staff. Assessors also receive additional training with paint companies, vehicle manufacturers, service providers and with Allianz network smash repairers.

Promina Group Limited
Promina is a leading insurance and financial services organisation which was listed as Promina on the Australian and New Zealand stock exchanges in 2003. Its operations trace back to 1833 in Australia and 1878 in New Zealand.
It is one of the top 50 companies in Australia and top 20 in New Zealand by market capitalisation.
The group consists of a portfolio of different insurance and investment companies. Each business has its own identity and is a specialist, focused on its own market segment and customer needs. The company believes that this specialist-focused strategic approach helps provide both high standards of customer service and consistent returns to shareholders.
Promina's Australian businesses include the brands AAMI, Australian Pensioners Insurance Agency (APIA), Shannons, Vero, Asteron and Tyndall. Promina employs some 5,000 people across Australia.

AAMI
AAMI has 558 repairers nationally, predominantly in the metropolitan areas, all of whom have subscribed to AAMI?s 'repair standards & code of practice'. The repair standards set out what AAMI expects from its repairers and in turn what its repairers can expect from AAMI. The code provides all repairers, not just AAMI repairers, with access to dispute resolution and rights of appeal through the code executive director. Underpinning these documents is AAMI?s performance management system, which sets clear performance targets for AAMI repairers and provides them with regular feedback on their performance. AAMI does not interfere with the way in which repairers run their business, preferring to simply measure their outputs to ensure they meet the required standards of competitiveness, quality and timeliness.
As at September 2005 numbers of preferred repairs by state were:
NSW ? 222
VIC ? 186
QLD - 83
SA ? 43
TAS ? 24
Currently AAMI does not set specific criteria for repairers wanting to become an AAMI repairer, although shop presentation, location and equipment levels are factors to be considered. Compliance with existing regulations and prior dealings with the repairer are taken into account in choosing a repairer. Applications to join the panel are considered on their merit and additions to the repairer panel are made when the volume of work available in a particular area cannot be handled by existing AAMI repairers.
When it comes to claims, policy holders can obtain two quotes (one from a repairer nominated by AAMI) and have their car assessed by AAMI. They will then arrange the repair with the authorised repairer.
The vast majority of repairs in the metropolitan area are managed through AAMI?s customer service centre (CSC) network on a two-quote basis. Policy holders drop their car at an AAMI CSC (seriously damaged cars are towed) and AAMI will arrange the quotes and carry out the assessment. AAMI will then manage the repair and inform the policyholder of progress.
AAMI repairers are invited in to the CSC to quote on work ? which is awarded to the most complete and competitive of the two quotes submitted. Should a customer wish to obtain a quote from their preferred repairer (including non-AAMI repairers), that repairer will be invited to quote and the work will be authorised to that repairer should they provide the most complete and competitive quote. AAMI provides a lifetime guarantee on repairs, irrespective of whether repairs are carried out by an AAMI repairer or not.
The repairer is expected to be aware of and to follow manufacturer?s directions on repairs that relate to the safety or structural integrity of the car. Only genuine OEM parts may be used in repairs authorised by AAMI.
AAMI is committed to paying repairers within 14 days, providing the authorisation and the invoice matches. This provision applies irrespective of whether the repairer is an AAMI repairer or not.
All assessors are qualified tradesmen (either panel beaters or spray painters with some specialist mechanical assessors who are qualified mechanics) and most were working in the industry owning or managing shops. Assessors, at the beginning of their employment, are put through an induction course which introduces them to AAMI, its various departments and provides such essential training as operation of the computer system.
Ongoing training in new techniques and up-to the-minute products is provided as required or where deemed necessary.
Australian Pensioners Insurance Agency (APIA)
Although APIA promotes itself as a narrow focus insurance specialist, its internal workings are managed by AAMI.
Motor claims management is outsourced to AAMI and repairs are part of AAMI standard processes
In the event of a claim policy holders may nominate a preferred repairer to submit a quote but another quote will be sought and the work will be awarded to the repairer who has provided the most complete and competitive quote.

RAC Insurance
RACI is the largest direct motor insurer in WA.
Approved repairers in the metropolitan area are on formal agreements. Current agreements have expired and are on an extension. A review of the approved repairer network will occur late in 2005.
There are 63 approved repairers in the metropolitan area on extended agreements. The company utilises a large number of non-approved repairers as required, based on volumes and customer preference. Customers who have a repairer preference obtain a quote from their preferred repairer and one from an RAC approved repairer and then the repair is awarded on it?s merits.
Preferred repairers are chosen on location, equipment, presentation, demonstrated performance and relationship, quality and timeliness. RACI continually trials new repairers through its 'Advantage' (valet) process to determine performance, timeliness, cost and quality.
Repairs are managed through a one quote process. All vehicles are assessed. Driveable vehicles are directed to an Advantage Centre for assessment and repair management. Non-drivers are towed to a preferred repairer for quote and assessment.
Policy holders are free to choose from any repairer in RACI's approved network. Customers who have a repairer preference obtain a quote from their preferred repairer and one from a RACI approved repairer and the repair is awarded on it?s merit. RACI has found that the majority of claiming customers have no preference and seek RACI approved repairers.
Regarding parts choice, where a vehicle is under new car warranty the company directs that new parts are used. Outside of warranty, second hand parts are used where available.
Repairers are generally paid within 14 days.
There are 19 assessors working in the metropolitan area and four in the country.

Vero Insurance Limited
Vero was formerly known as Royal & Sun Alliance Insurance Australia Limited. It currently operates specialist insurance divisions for commerce and industry, one of which is motor fleet. Its products and services are marketed through intermediaries including brokers, corporate partners, agents and risk managers.
Vero allocates work through its database of over 1000 recommended repairers throughout suburban country areas. Currently there no formal contracts or service level agreements in place with recommended repairers. Repairers attain recommended status because they have previously delivered a consistently high standard of workmanship and service.
Vero is in the process of reviewing the policy for recommended repairers in line with Productivity Commission recommendations.
Claims are notified to Vero's first response unit by telephone from the policy holder or broker. A dedicated claims specialist is then appointed to manage the claim. Quotes are sought in line with policy requirements and are assessed by Vero's motor assessing team.
Approval is given to a repairer based on the most complete and competitive quote.
Vero gives policy holders choice of repairer. For motor fleet policies, policy holders can operate on one quote and it is not compulsory that this be from Vero?s recommended repairer list. Many policy holders choose the repairer they would prefer to use at the inception of their policy and Vero accepts this as part of its claims management service.
For Vero enterprise and consumer products motor insurance policies, policyholders must obtain two quotes, one of which may be obtained from a repairer of the policyholder?s choice.
Vero decides on a repair method in conjunction with smash repairer, ensuring safety is the highest priority. Parts used in the repair of a vehicle will be new or consistent with the age and condition of the vehicle. All replacement parts used must comply with any relevant statutory requirement.
While Vero does not specify a guaranteed time for the payment of invoices to repairers, the company believes that it would not exceed 14 days on average from the date of receipt of the invoice in its offices.
Vero's dedicated motor assessors are trade certified in panel beating or spray painting. They will also have demonstrated experience in either managerial roles and/or possess extensive quoting experience at the time of appointment.

"We respect your right to be different," goes JCI's offer to consumers. It continues:
"that's why we cover different types of drivers, particularly young drivers and different types of cars such as modified, high-performance and privately imported cars."
In other words, JCI tackles the high risk end of the market that most insurers don't like. JCI does not indicate how successful it is in this small market, but it is obviously important to Promina to keep JCI functioning so that there is always insurance available for niche needs.
Because of the relatively small number of policies, arrangements with repairers are kept informal. There are about 30 preferred repairers in NSW and Victoria, with less in other states. Repairer numbers are currently considered sufficient.
Assessment is outsourced, using a two-quote model.
The policy-holder may nominate a preferred repairer to submit a quote but another quote will be sought by the company and the work will be awarded to the repairer who has provided the most complete and competitive quote. The repairer is expected to be aware of, and to follow, manufacturer?s directions on repairs that relate to the safety or structural integrity of the car. JCI is committed to paying repairers within 14 days, providing the authorisation and the invoice matches.
Australian Pensioners Insurance Agency (APIA)
APIA is an example of a brand that is not openly linked to its parent company, Promina. APIA seeks to target a specific market segment, that of the older, retired driver.
However, internally, APIA relies on AAMI to manage its repair process.
It differs from AAMI only in that policy holders may nominate a preferred repairer to submit a quote, but another quote will be sought by the company and the work will be awarded to the repairer who has provided the most complete and competitive quote.
Shannons Insurance
This is another example of a niche market being covered under the Promina umbrella. Shannons appeals principally to owners of vintage and collectable cars ? and offers lower premiums on them because of their low accident and theft rate.
There are no formal preferred repairer agreements in place with Shannons. Customer have complete freedom to choose their own repairer. Repairs are managed by the repairer. Shannons claims staff liaise with the repairer to keep customers fully informed throughout the repair process. Where there are directions from a car maker in regard to repair methods, Shannons allows repairers to follow them.
Payment is made to repairers on receipt of invoice ? usually within 10 business days.
Australian Insurance Holdings
Possibly the newest arrival on the motor insurance scene, Australian Insurance Holdings (AIH) officially fits into the one percent of the market after the big four are taken out. However,(AIH)is bound to increase market share through its competitive appeal to specific segments.
AIH entered the Australian car insurance market in 1999, through its wholly owned subsidiary Insurers Hotline Pty Ltd (IH), which sold its first Australian policy in September 2000.
AIH's three associated companies are part of an international insurance organisation, Budget Holdings Limited. The group has over 20 years experience in car insurance and operates successfully in South Africa and the United Kingdom. The Budget Group controls the largest direct personal motor vehicle insurer in South Africa and one of the largest personal lines insurance intermediaries in the United Kingdom.
All quotes given and policies sold by AIH are underwritten by a group insurer Auto & General Insurance Company Ltd (A & G). AIH has strong customer bases in New South Wales and Victoria.
AIH?s stable of specialist products includes Budget Direct, 1st for Women, Retirease Insurance, Cashback, Ozicare and Best Buy.
AIH policies attract low risk drivers by offering competitive premiums, made possible through comprehensive underwriting criteria. In 2003 AIH was the first to introduce 'Cashback' a policy that gives customers one year?s premium back after 4 consecutive claims-free years.
The company has developed an entirely paperless sales and claims system run by its two Sunshine Coast call centres based in the Kawana Waters Business Village.
Customers can get an insurance quote on-line in less than four minutes. All verbal transactions between customers and the call centre staff are recorded.
Internationally the group administers over 1.5 million customers with a premium income in excess of A$1 billion annually.
AIH employs a total of 331 staff in Queensland. In Brisbane, 76 employees are based at the Toowong Head Office with an extra 32 staff at the Newstead customer service centre. An additional 223 staff work in two call centres on the Sunshine Coast. The AIH chief executive is Michael Weston.
AIH claims to have several hundred thousand Australian customers, and their distribution is aligned with the population distribution in each state except the Northern Territory.
The company allows its customers the freedom to nominate their preferred repairer. In the event of a customer being unable to make a choice, AIH will recommend repairers who it knows do quality work or those with whom it has an established relationship.
AIH continually seeks repairers who provide quality work, timely repairs, at an acceptable cost.
In most cases the repairer chooses the method of repair however, from time to time, the company will request specific methods to be adopted ? but always ensure that the safest and best method of repair is utilised.
AIH has a combination of internal and external (outsourced) assessors who must meet the highest industry standards of training. Utilising a combination of internal and external assessors means that the brands can manage workloads according to seasonal influences.

RACV
The Royal Automobile Club of Victoria (RACV) is still a mutual organisation, unlike NRMA in NSW which has split its insurance from road service. RACV has 1.3 million members and offers motor cover as well as home and business insurance.
There is a complex relationship between IAG and NRMA in Victoria. They have shared ownership of Insurance Manufacturers of Australia (IMA) which handles claims for both RACV and CGU according to the designated repair procedures of each brand. IAG owns 70 per cent of IMA and RACV owns 30 per cent.
RACV only markets its policies under the RACV Insurance brand and has more than 900,000 motor policy holders.
Customers can choose any smash repairer when they make a claim, however, the company says that the majority ask for a recommendation. IMA maintains, on RACV's behalf, a network of preferred smash repairers (PSRs) which have demonstrated that they meet stringent quality, efficiency and customer service criteria to back the lifetime guarantee offered by RACV.
Preferred repairers are chosen on the basis of business need in a geographical region, and more repairers will be sought in a region if needed. Criteria used to choose repairers include location, skills, specialization, equipment, quality of repairs, service performance and cost efficiency.
Under RACV motor policies, customers can choose any repairer that is part of the PSR network and receive a lifetime guarantee on the work. They may also choose a repairer outside the PSR network. If the quote for the work is within a 'reasonable' range RACV will authorise the repairs through that repairer. However, if the quote is excessive the company may pay the customer either the amount quoted for the work by one of its PSRs or a 'fair and reasonable' cost of repair at the customer's nominated repairer. In these cases, a lifetime guarantee is not applicable but normal guarantees on repairs apply.
RACV does not condone any repair method that will compromise a vehicle?s warranty as issued by the manufacturer.
As part of being open and transparent about its relationships with suppliers ? and especially small and medium enterprises ? RACV regularly publishes the time it takes to pay its PSRs. Payments to PSRs and ASRs between 1 January 2005 and 30 June 2005 averaged 6.5 days from the time of receipt of the invoice. Payment to PSRs and ASRs equates to approximately 92 per cent of all repair work undertaken.
Minimum requirements to be considered for the position of assessor are identical to those quoted by NRMA in Sydney, as is ongoing training, both internal and external.

How much do assessors earn?
Without exception, the insurance companies refused to discuss the salaries they paid to their assessors. While you can find out how much the CEO of IAG earns, nobody will talk about the salaries of assessors.
After some investigation, we discovered that assessors' salaries vary considerably. They earn between $40,000 and $70,000 per annum ? adjusted by allowances made for the running of a car.
Insurers invariably want assessors with experience in the smash repair industry. While some companies reward assessors according how tough they are on quotes, most accept that assessors will shave 10 to 15 per cent off presented repairer estimates.
The difference between bad and good assessors is that a bad one will assess the quote and a good one will assess the damage and then compare it to the quote.

THE PRODUCTIVITY COMMISSION'S RECCOMENDATIONS
The Australian Government should facilitate and promote the development and implementation of an industry-wide code of conduct in respect of the relationship between insurers and repairers as soon as practicable. The industry-wide code of conduct should include:
Matters relating to preferred smash repairer (PSR) arrangements, including requirements to:
Notify opportunities to apply for PSR status.
Disclose selection criteria.
Provide a ?cooling off? period for repairers to consider PSR contract offers.
Provide that PSR tenure should not automatically cease on transfer of business provided probity and prudential concerns are met.
Specify that if an hourly rate is included in a PSR contract then it should be a mutually agreed realistic rate.

Matters relating to quoting for work and payment, specifying:
That times and rates, where used, should be realistic times and rates agreed to by insurer and repairer.
That paint, parts and significant consumables should be separately costed rather than included in hourly rates.
Where competitive quotes are sought, that the quotation process should be fair and transparent.
That insurers should fully disclose their terms of payment to repairers.
Minimum terms of payment where work is not in dispute (for example, 30 days or less).
Matters relating to quality and safety, and guarantees, including requirements:
Where an insurer specifies the repair method and/or the quality of parts to be used, the insurer accepts responsibility in writing for the quality and safety consequences of its specifications; and to restrict the guarantee liability of a repairer to work it actually carries out, and then only for an agreed reasonable period ? a repairer should not be required to guarantee parts or paint for a period longer than the manufacturer?s warranty.
Matters relating to consumer choice, including requirements for insurers:
Clearly explain repairer choice options to consumers when taking out policies and making claims.
Avoid making misleading, inaccurate or unjustified comments about the quality and timeliness of repair of non-preferred repairers; and clearly explain to consumers their policy provisions relating to the use of parts and to guarantees. The code should not attempt to specify or regulate, on an industry-wide basis, matters such as: minimum hourly rates or prices, ?standard? hours for repair jobs, types of parts to be used, industry-wide PSR selection criteria and/or weightings for PSR criteria, compulsory choice of repairer, requirements to spread work among repairers, and particular conditions of guarantees.
If voluntary agreement cannot be achieved between insurers and repairers ? that is, between at least the four major insurers and the national body representing repairers (the Motor Trades Association of Australia) ? within a period of six months from release of the Government?s decision on this report, the Australian Government should develop a code of conduct in accordance with the above findings and recommendations, and the code should be mandated under the Trade Practices Act.