As reported in Covernote Live in May, IAG is planning to open a trial panel beater of its own later this year, in East Tamaki, Auckland.
IAG, through brands like AMI, NZI and State, has roughly two thirds of the insurance market in New Zealand.
Neil Pritchard, General Manager of the Collision Repair Association spoke to TVNZ 1's Breakfast about the implications of IAG closing the circle and controlling the full process, from claims to repair.
“It’s the lack of choice to the consumer that concerns us,” Mr Pritchard says.
“Freedom of choice will be eroded in this new model because not only have IAG said they’re going to open their own shop which is due to open next month, they’ve said they’re going to change the wording of their policy to restrict choice.
“If you want choice of repairer, you will pay extra in your premium,” Mr Pritchard says.
IAG says they’ve made the move because customers have had to wait too long to get their car repaired.
But Mr Pritchard says it may amount to anti-competitive behaviour by controlling where policy-holders go.
He says the Commerce Commission has been approached about it and says they are “quite comfortable” with one shop as a trial.
“What if there’s then more and more (IAG) shops? Does it then become anti-competitive? I would say that it does,” he says.
This move comes as Suncorp Australia announces the sale of it's crash repair shops.
Suncorp has sold its Capital Smart business to AMA Group as the rise of more sophisticated automotive technologies drives changes in the crash repair and parts procurement sector.
The insurer expects an after-tax profit of about $275-$295 million on the deal, which values Capital Smart at $420 million.
Suncorp will retain a 10% interest in Capital Smart, the second-largest smash repair business in Australia, and will have a seat on the board. It has also entered into a 15-year motor services partnership agreement with two five-year options to extend.
“The divestment means Suncorp can focus on its core insurance and banking operations,” CEO Steve Johnston said.
“Importantly, the agreement maintains Suncorp’s competitive advantage and we look forward to working closely with AMA as an ongoing partner.”
AMA is rapidly expanding its vehicle repairs business, completing 21 acquisitions and opening four new sites in the past financial year.
Suncorp Insurance CEO Gary Dransfield says AMA has been the largest preferred partner in its repairer network, focusing on severely damaged cars that are not drivable, while Smart takes its name from the small and medium accident repairs that are its specialty.
“Cars are crashing less but when they do have a collision the nature of the damage is more complex,” he told insuranceNEWS.com.au. “We think a partner like AMA that is across the full spectrum of repairs is well placed to manage and deal with that.”
Suncorp also sold its ACM Parts recycling business to AMA for $20 million, broadly in line with book value.
The company expects the transactions will be completed by the end of the month. It will later update investors on plans for the sale proceeds.
