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RMI calls for bodyshops to benefit from premium rises

The Retail Motor Industry Federation (RMI) is calling for the predicted insurance premium price hikes to filter back into the labour market to improve labour rates for poorly-paid vehicle body repair specialists.

Research by independent market analyst Datamonitor has revealed that car insurance this year could rise by 25% as insurance companies strive to return to profitability after years of losses suffered in the scramble for market share.

RMI bodyshop services director, Bob Hood, said: “The body repair industry would welcome this move in premiums if it corresponds to an immediate improvement in accident damage repair remuneration.

“UK bodyshops are suffering because many insurers do not pay a rate that enables them to return a reasonable profit. The industry is starved of crucial investment income to fund training, equipment and premises.

“Many insurers choose to target cost-cutting on their repairer partners, while paying out enormous sums in personal injury claims to customers. There is no 'fat' left in the UK body repair industry. The result of continued depressed labour rates will have a severe and detrimental effect on customer service and bodyshops, many of which are small, family-run businesses. The loss of UK body repair businesses is alarming. Ultimately, customers will suffer as those bodyshops that remain will not be able to satisfy future demand.”

Datamonitor says that the motor insurance sector is attempting to recoup underwriting losses which in 1999 totalled £1.31 billion and in 1998 £1.47 billion.

“Industry experts have predicted premium rate increases of between 10% and 25% through 2001. The increases in average premiums are likely to be sufficient to return the sector to underwriting profitability in 2002,” Datamonitor says.

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