So you think insurers are pushing for more and more control of the U.S. collision repair process? You should see what they're up to in Australia. 

Causey

Australian insurer, NRMA Insurance Company, is introducing its "Care and Repair" program, an online quoting system for repair jobs. It sounds like a shop owner's dream, but it turns out to be quite the opposite as the company is sending the work to - you guessed it - the lowest bidder. And it's throwing the Australian collision repair industry into turmoil.

Australian repairers, or "smash repairers" as they are known down under, are United, with a capital U, in their revolt against the hardball insurer tactics of NRMA Insurance Company.

In July, Hundreds of repairers Wednesday closed up shop and staged a demonstration march in front of the Insurance Australia Group (IAG) offices in Sydney to protest the insurers launch of NRMA's online bidding program for collision repair work. Under police escort the marchers walked from the town hall, through the busy streets of Sydney, to the steps of IAG.

Major television channels, radio stations and national newspapers covered the march, which included the owners of some of Sydney's biggest shops.

Is it working?

Most U.S. shop owners fear that taking on the insurance industry or any big insurance company is a lost cause at worst and an uphill battle at best. Recent news reports from Australia show that the repairer revolt against NRMA Insurance and its giant parent company Insurance Australia Group (IAG), is not completely uphill. Some say the protests may even be causing delays in the complete rollout of the program as fewer and fewer shops are signing on, forcing the insurer to extend its contract-signing deadline with repairers.

Some body shop owners and repairers in Australia believe that this latest move to "further cut repair costs" could be "the beginning of the end" for the insurance company's dominance in many parts of Australia. Shop owners and others are urging consumers to switch to other insurers and cancel their NRMA insurance policies.

A little perspective please

To more clearly see what's happening, understand that NRMA is huge in Australia, controlling about 60 percent of the auto insurance market (or 6 out of 10 vehicles) in some areas, giving the insurer near-monopoly status. By comparison, State Farm, the largest U.S. insurer, has less than a 20 percent market share. And that's quite a market share, representing approximately 1 in 5 insured private passenger vehicles in the United States.

Now imagine this giant insurer rolling out a direct-repair program that seems to favor the "low-baller" over the quality repair shop. (Sounds all too familiar, huh?)

NRMA Insurance is trying to get a limited number of "selected" or "ap-proved" DRP shops to sign exclusive contracts to perform all the NRMA work. This move will effectively eliminate the freedom of choice by the insured car owners to use the body shop of their choosing. Under the NRMA direct-repair program, a majority of body shops will not be able to compete for NRMA customers and many could face closure or bankruptcy.

Under the new NRMA auto insurance policy, car owners will have no say in where their cars are repaired. That is, unless the insured pays an additional premium of $69 to "upgrade" their automobile coverage to a policy that allows choice.

The body shop doing the repair work, under the regular NRMA auto insurance policy and NRMA "Direct-Repair Con-tract" will write an estimate without physically seeing the vehicle. Instead, the shops competing for repair work through NRMA's online bidding system will see photos of the damaged vehicle on the Internet and make a bid on the job. Naturally, the work goes to the lowest bidder. Already some cars are reportedly being sent to Melbourne and other far away destinations (over 600 miles), because most Sydney body shop owners have refused to sign up with the new direct-repair program and online bidding system.

"It is impossible to quote from an image on a computer," says James McCall, executive director of the Motor Traders Association (MTA). "This won't deliver good outcomes for consumers. It will result in extremely poor quality repairs."

And amid claims of intimidation and collusion from both sides, the losers could well be the consumers whose cars will be fixed by the repairer who submits the cheapest quote in this controversial online estimating system.

"Consumers will have no choice about who fixes their cars," says Gary Mamic, the president of the Country North Vehicle Repairers Association. "And as the NRMA drives costs down, how can you be sure about the quality of the work?" Mamic, from Mamic and Sons Smash Repairs (Body Shop) at Broadmeadow, near Newcastle in New South Wales, established the association to fight the NRMA's unfair trade practices.