AM Online

THE BIG PICTURE: A fair wage for a fair job

'When you buy a product, you expect to pay a fair price. It's not unreasonable to expect the seller to make cover their costs and make a small profit. Why then do some insurers insist on selling motor products at below cost? The practice dates back to Direct Line's entry into motor insurance in 1985, which fuelled a fierce price war that the industry is still fighting.

Consumers, lured by the offer of ever-lower quotes, shop around until the find the cheapest (though not necessarily the best) deals. But if insurers are happy to give away all their profits – the losses are generally underwritten by returns in the home insurance market – should anyone care?

The knock-on effect is devastating the body repair sector. Insurance premiums that are too low force insurance engineers to clamp down on cost, and that means the labour rate paid to bodyshops. Rates have stalled, and bodyshops are going out of business. The most alarming example so far was the announcement made by David Shepherd that he was making 24 of his 129 staff redundant – 18 per cent of the workforce – in a bid to keep his DeeJay business afloat. Shepherd is admired by many in the industry. He is a figurehead and a spokesman and his peers were shocked at the news. Fortunately DeeJay's creditors have a sympathetic ear, although in fairness that's due to the fact that the company is being supported by its work providers, including insurers.

As a result of AM's recent bodyshop supplement, Eddie Burke, managing director at Gateway Autos in Manchester, issued an open challenge to Allianz Cornhill motor damage supply manager Phil Brailey to visit his business and find areas where improvements could be made. Brailey had commented in AM that there was “still a great deal of inefficiency” and that “opportunities exist” for bodyshops to improve their bottom line.

The meeting will take place in the New Year. Brailey's views created some anger – top bodyshops have been cutting out waste for years, resulting in some fantastic levels of efficiency of 120 per cent and above. While he is on record as saying Allianz Cornhill would never compromise on quality of repair, some insurers are less scrupulous and will approach poorer quality bodyshops if it means saving a few precious pounds.

All insurers must commit, like Cornhill, to using the best bodyshops. Sadly the argument is not helped by those repairers eager to offer an undercut rate with little regard to the long-term consequences on their business and the industry as a whole. 'Busy fools' is the apt description.

Insurers should expect a fair price for their car products, and bodyshops should receive a fair price for a fair job. And consumers should learn that cheapest does not mean best.'

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