New automotive industry code gets cautious thumbs- up from insurance industry

The competition commission’s newly gazetted code of conduct for the South African Automative industry is set to usher in ground-breaking changes for car owners and the automative aftermarket industry – and it’s going to have a impact on the insurance industry as well, says short-term insurer King Price.

At the moment, car owners have to use a vehicle manufacturer’s official service centres and parts departments for their service plans, and generally have to use pre-approved panel beaters for repairs to their vehicles. The proposed code will give car owners the right to repair or service their vehicles at a provider of their own choice, without voiding their warranties.

Wynand van Vuuren, King Price’s partner of client experience, said the code aims to increase consumer choice and facilitate competition and competitive pricing in the market1. He believes that this will ultimately lower costs v the board by raising competition and bringing more service providers and repairers into the industry.

“The new code brings a lot of positives to the table. It has the potential to lower claim costs, which will result in lower premiums for the consumer. With more service providers being accredited to work on in warranty vehicles we also believe that claims can be finalised a lot quicker with better service delivery from these repairers” said Van Vuuren.

Insurers will need to put processes in place to guard against sub-standard repairs done by new repairers who may not have the enough experience and the correct expertise. The accreditation process is going to be of importance to ensure this.

“An insurer must still have a waterproof services level agreement in place with every services provider that will be approved to attend to repairs. This comes at a high cost and administrative burden and can surely not be put in place with every repairer. If insurers must approve any service provider to undertake service and maintenance work on a specific vehicle, then a service level agreement must be put in place with every single service provider. To avoid this, it is suggested that clients select a repairer or a body repairer who is already listed as a credible service provider that the insurer has a service level agreement in place with, but we are awaiting to see what the competition commission will determine in this regard” said Van Vuuren.