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VACC says ACCC ruling denies car owners the ability to choose their smash repairer

General News logo26 Aug 2005

THE Victorian Automobile Chamber of Commerce (VACC) has condemned an Australian Competition and Consumer Commission (ACCC) decision it argues denies car owners the choice to select their own smash repairer.

The VACC claimed the ACCC’s finding in favour of the Insurance Australia Group (IAG) "was yet another example of big business given a green light to manoeuvre itself out of reach of the spirit of Trade Practices legislation relating to competitive practices".

Commission chairman Graeme Samuel said the IAG had notified the commission of arrangements relating to offering comprehensive motor vehicle insurance policies to consumers under its Standard Policies and Choice of Repairer Policies.

"Under the scheme, customers wanting to have the choice of repairer are required to pay a higher premium than those who choose a standard policy and allow the insurer to determine the repairer," he said. That higher premium was $70 a year.

The ACCC accepted IAG’s submission that the arrangement allowed it to more efficiently price its motor vehicle insurance products, a point disputed by the VACC.

The VACC’s executive director, David Purchase, said by structuring premiums to punish consumers who wished to exercise choice of repairer for smash repairs to their vehicle, the IAG had found a "get out" for its business practice of denying choice.

In its January response to a draft report into the relationship between the smash repair and car insurance industry, the VACC suggested that if the IAG was serious about offering choice "it would charge for the choice option after the accident and not before".

"To charge the consumer $70 a year knowing full-well that statistically the average consumer has an accident every 7-9 years, is purely a mechanism to deter consumers from taking that option and needlessly generating increased revenue from those who are more particular about who repairs their motor vehicle," the VACC said.

Consumers could read a lot into higher premium policies for those consumers wishing to exercise choice of repairer, he said.

"It shows them – beyond doubt – that insurers are cutting corners to drive costs down when choice is denied," he said.

The IAG is one of the country’s leading general insurance groups. It owns brands like NRMA Insurance, SGIO, SGIC, CGU and Swann Insurance and has a strategic alliance with the RACV in Victoria.

In the past, the VACC has criticised the IAG’s disproportionately large market share and influence over the car insurance sector, particularly in Victoria and NSW.

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