Body Magazine Insurance and Work Provider News.

Here's the latest Insurance and Work Provider News from BODY Magazine.

Now is the Time to Act

Insurer steering of work into their (smaller) approved networks has really bitten hard this year. There are a number of reasons why insurers are going down this path now.

* Many established insurers have lost market share as competition from new insurance providers and aggregator sites woo policyholders

* A lack of control over the costs of personal injury claims and non-fault vehicle hires has skyrocketed claims costs

* Reserve funds have been relied upon for many years to cushion the ebb and flow of market share revenue battles; it’s increasingly difficult (impossible) to squeeze profits out of these funds. Indeed for most if not all insurers their profit margin if any has always been derived from the investment income on premiums collected, not on the underwriting result and we all know what has happened to investment returns recently

* The spectacular implosion of the financial markets last year has created an uneasy background economy generally and particularly for many of the big established players such as RBS. This unease trickles down through an organisation.

* insurer-approved networks are being downsized as insurers are able to negotiate tighter and more consistent terms when dealing with fewer suppliers across the UK

Entire Repair Sector Affected
Accident management companies and repairers are affected not only by the way the insurers are reacting to these adverse conditions but are also having to cope with a downturn in repair volumes. Weather exceptions aside, there’s less work about because vehicles are better designed to avoid and minimize crash damage; and mileages generally are down due to economic and environmental concerns.

VM Approval not the Panacea it Was
A recent disturbing trend sees the influence of vehicle manufacturers to direct work into approved bodyshops in freefall. More than one premier-marque approved bodyshop has seen their work fall off dramatically this year as insurers ‘grab the claim and stuff it into their approved shops before the dealer even gets wind of it’.

Another is incandescent because specialist aluminium repair work is being re-directed to the insurer approved BSI Kitemark shop that is not properly equipped to carry out such repairs. Despite telling the insurer this the work goes out … and then comes back!

New Market Conditions Have to be Faced
Like it or not repairers have to work hard to maintain their revenues. Even if you accept lower revenue you will probably have to work even harder to maintain that lower volume. As VBRA Director General Malcolm Tagg often says “Many forget the efforts they made to get their businesses up and running in the first place. It’s tempting once you grow a business to a comfortable level to feel that your work is done and the business then owes you a living. That’s just not reality’.
 

VBRA continues to working hard to influence the background climate for repairers – they maintain dialogue with work providers at all levels. They continue to be involved influencing legislators both at home and abroad - see the story on page 12. They have also thrown their weight behind the petition launched by Andrew Moody.
 

Sign the Petition
Andrew is a former panelbeater who now runs the Cambridgeshire-based legal firm Retail Motor Law (RML). He comments “The practice of vehicle insurers and fleet management companies 'steering' customers is widespread and it is bad for both the repair industry and consumers. I strongly urge those in the bodyshop trade and members of the public to pressure the PM to introduce anti-steering legislation by signing the petition on the Downing Street website.”

Anyone interested in signing the petition to the Prime Minister should visit http://petitions.number10.gov.uk/Anti-Steering/

The petition will stay online until January 2011, so don’t expect an overnight change however a large response will certainly elicit a response from the government.

OFT to Look at Consumer Contracts
Further positive news is the announcement by the OFT that they have launched a market study to examine when, how and why contracts may cause difficulties for consumers.

The OFT intends to look at how well consumers understand typical contracts and how this varies when contracts are, for example, presented online, over the phone, or during a face-to-face sales pitch. They will also look at how firms approach consumer contracts, and any practices that deliberately or unintentionally disadvantage consumers. The results should be of benefit to firms who are trying to make important terms and conditions clear to consumers buying their products and services.

Heather Clayton, Senior Director of OFT's Consumer Market Group said:
'Today consumers are offered a range of complex contractual arrangements, particularly for goods and services offered online. We often see situations in many different markets where people lose out as a result of not understanding contracts. We want to understand the cause of these problems and look for remedies that will not only protect consumers, but also help those businesses that are trying to provide clarity to their customers.'

Send Evidence to OFT
The OFT would welcome views and evidence on when and how contracts cause problems for consumers or firms. It will be contacting key parties directly, including Government departments and consumer bodies. Others who wish to make a submission should visit www.oft.gov.uk/consumer-contracts or email consumercontracts@oft.gsi.gov.uk. The study is expected to be completed in Winter 2010.

So speak up now. You are being asked for your opinion, use the opportunity.

* Sign Andrew Moody’s petition.

* Write to the OFT and tell them what your customers experience when they discover their excess is higher than they expected.

* Gather your own dossier of disgruntled policyholders.

* Even better, get them to write to the OFT themselves. Be persuasive.

But Act Now – you can make change happen!