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Repairers challenge labour-only plans

Disgruntled bodyshops are working together to fight for more openness from insurers initiating labour-only contracts with repairers.

Zurich, and more recently RSA, have begun trialling the new schemes, designed to cut their costs by stopping bodyshops from making profits on parts and paint. Instead the insurers pay a higher labour rate that is intended to compensate for this. The insurers also require an open accounts policy, that allows them to verify charges.

Now a new lobby group has been formed by a dozen bodyshops concerned about the initiatives. Named Bodyshops Against Lossmaking Labour Schemes (BALLS), it is calling for greater consultation.

Although the repairers involved in the group wish to remain anonymous at present because they fear recriminations from the insurance companies with which they do business, AM has been in contact with a BALLS spokesman.

“All we want is an open, honest public debate with work providers so that repairers can be made aware of all the details of these schemes before they are enforced on them,” he says. “Sadly, a climate exists where repairers are frightened to voice their concerns or object to parts of the schemes.

“We realise things have to change, but we are concerned labour-only schemes will allow insurers to control and suppress the repair market. Our fear is that in five years time we will have become nothing more than subsidiaries of the insurers.”

He claims work providers are operating a “divide and rule” strategy of pressuring bodyshops individually to accept labour-only deals if they hope to continue receiving work. The spokesman urges businesses involved in the trials to come forward and seek negotiating strength in numbers. The group’s stance is supported by BRIC, the Body Repair Industry Campaign. Insiders claim it is in the process of adding an ‘Ethics Watch’ section to its website, aimed at comparing insurers’ statements of corporate social responsibility with the experiences of bodyshops which work with them.

Shaun O’Reilly, BRIC research director, wouldn’t comment further, other than to say that BRIC would merely be continuing its role as a pressure group.

Norton Consulting last week published a report into labour only schemes, commissioned by insurance, body repair and manufacturer clients. It argues insurers will need a “wholesale shift” from the present culture of replacing parts to repairing whenever possible, although it warns that the labour requirement of the job could increase as a result.

Norton’s managing director, Eddie Longworth, believes there is merit in experimenting with labour- only initiatives, but cautions against moving too quickly: “It’s absolutely right for insurers to try to reduce their costs, but they must ensure that repairers can continue to make a profit,” says Longworth.

RSA denies “bulldozing” repairers, and says as its scheme is tailored to each individual bodyshop it is not prepared to meet with industry collectives. The company accused BALLS of being “ill-informed”.

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