The 2014 Code of Motor Salvage document is a tome of a document which sets out to formalise a path forward on vehicle scrapping and accident damage repair. Devised by SAIA and largely replicating the United Kingdom’s legislation, it is a way to lose in many respects on damaged vehicle codes. Despite its length and intensity, nowhere is there a figure set out exactly what the percentage of values to this accident damage should actually be. Overseas it is anything between 40% to 60% of the vehicle value, so write-offs have jumped up from just 5% of crashed vehicles to over 40% of accident damaged units.
Given the fact that at no time has the insurance industry seemed to have consulted their largest co-partner in car and vehicle insurance – the body shop industry – this one-sided document and repair process has become the written word employed by SAIA members in dealing with their crashed vehicles.
One of its founding principles states that these endeavours must be carried out in a manner of good customer service. Well, right now it is quite apparent that salvage codes operate mainly in the interests of the insurer’s commercial benefit.
How it works
Vehicles are assessed and depending on the level of damage, generally those under 50% of commercial value levels become a salvage vehicle. Often the consumer is given an excessive claim demand and the vehicle – if it’s a code 2 – which goes unreported to local licensing authorities, moves along the commercial chain as a commodity to repair. A 6-8% yield for the auction houses or salvage contractor on sale, and a huge cash payment for the insurer, is the net result. The client is left to pay all outstanding debts such as hire purchase and end-of-term balloon payments. It is difficult to see how the insurance client benefits in this model for the driver is left out of pocket.
Technology, and the fact that less than 30% of our cars on the road have insurance, also plays a huge role in swaying the market for collision repairers. But if the trade is to have any meaningful long term prospects, we need to change the laws on code 2 repair to become defined and not only as uneconomical to repair. Clause 2.2 to code 4 assessed damage which is permanently demolished in status as in the Salvage Act 2.1.4 – when the chassis number cannot be reused as the vehicle is unroadworthy.
This will stop the problem of theft and carjacking in its tracks as these units cannot be rebuilt or recycled using poorly repaired crashed vehicles, which often include ringed or stolen car parts, to get them back on the road.
Discussions will be held about the practises of poor financial transformation which are currently alleged to become a normal way of doing business. Legislation will definitely counteract the way things are going right now. Please read what Andrew Marsh says on the business in Europe of insurer and client, on page 12 of the Automotive Refinisher magazine. Take a look at where we need to apply pressure as an industry with unwritten levels of agreed write-off and salvage without consultation or discussion.
SAIA members are instituting their salvage codes as they are way too loose and operate for insurance benefit and are not intending to service the well being of the insured driver. Common sense says we need a return of 65% salvage on value levels which the trade operated for over three decades.
As an industry we must speak with a very loud voice on the discriminatory salvage act which robs the trade of repairable vehicles and extends insurer cover profitability, but seemingly hurts the driver of the vehicle in his pocket almost every time, he claims.
In view of the ongoing government enquiry into both the trade practises that are questionable, regarding aftermarket access to data and systems that could be seen to operate against the consumer’s rights, perhaps we should table the following for discussion, which is also under review by the Competition Commission, what should the way forward be?
Insurers who declare an under 2.2 uneconomical-to-repair condition vehicle should be forced to notify E-natis as to the vehicles’ off-road situation and on this contentious clause it should be moved to 2.4.1 – a permanently demolished status as a full write-off on a vehicle accident to avoid all the ringing, hijacking, theft and dishonesty currently seen in the market place – which will also avoid recycling issues at salvage level.
Government must re-introduce a third party insurance disc cover, as the last two decades of the Act governing petrol levies is not a viable alternative. With over 70% of vehicles uninsured it is a squared market for the insurance trade for car policies. Like all grown-up nations across the world we should follow – if your car is on the road – it has to be insured in one form or another.
Insurance levels of value to write-off rates must be published and become visible at the time the consumer takes out cover at the purchase of a vehicle or by direct dial undertakings as a policy is taken out.