The Smart repair shops in Auckland and Christchurch, was not one that was welcomed by New Zealand’s collision repair community.

The first of the Smart shops opened late last year while a ‘shop-front’ site is being set up on Auckland’s North Shore. Vero claims that these facilities will be sophisticated repair shops using state-of-the-art technology and workflow systems to repair vehicles quickly. They claim that there are 35 Smart shops in Australia and they have managed to reduce repair times by up to 75%.

They also claim that they will continue to support and refer customers to their approved repairer network. This claim has been ridiculed by repairers who were affected when AA Insurance opened their Capital Smart facility in Penrose a couple of years ago.

It would seem logical that Vero will now also use the Penrose facility for their repairs, and that AA Insurance will direct work to the two new facilities, again at the expense of Auckland’s North Shore and Christchurch repairers. For some repairers in those areas the impact could be as severe as business closure, as they have built their businesses up to service these insurers.

Lets look at Suncorp. It has tried to arrest their customer churn in Australia and they are hoping for a new strategy and restructure to turn the tide of almost      125 000 of its insurance and banking customers a month from leaving the company. The CEO, Michael Cameron, spoke of an “amazing level of churn across the industry, and that the company typically lost 125 000 customers a month: “Now that’s 1.5 million customers leaving us each year and that’s because we’re continuing to compete on price,” he said. “Competing just on price is not sustainable.”

Suncorp also outlined a technology platform that allows customers better digital interaction. Referring to motor claims, Cameron said: “For motor, the number of vehicles that are processed by Smart have increased to 3 225 a week, and the proportion of cars going through Smart have increased from 36% to 40%. We’ve got a lot more resources and, to further increase our capacity, we’ve opened more Smart centres this year and we’ve got another four to open.”

Half-year profits at Suncorp fell from $631 to $530 million, a significant drop in anyone’s language.

“I wonder if part of the reason for the customer losses is actually the Capital Smart idea. One hears stories of customer concerns around quality control and the lack of an independent repairer protecting the customer’s interests. Here in New Zealand, with a large part of Vero’s business being broker driven, attempting to steer their clients to their own repair shops could lead to policy losses.

“The lack of an independent party is the reason why in many countries an insurance company is not allowed to own a repair facility to repair their insured vehicles. Insurance company-owned repair facilities have also been unsuccessful in a number of countries, where their repair facilities have closed after a couple of years for various reasons.

“This is not the first time that an insurer has ventured into the collision repair space in this country. AMI forerunner SIMU had a large repair facility in Christchurch for a number of years and a small insurer in Auckland actually had their own repair shop in the early 70s before its whole operation folded.

“This is certainly a different direction for Vero, as previously they have been client and repairer friendly, not getting too heavily involved in steering their clients to a repairer. Now it seems that this is about to change and I question the logic behind such a move.

“On the other hand you are given a choice of a number of repairers in your locality, all who have been through a rigorous selection process, and who must provide proof that they have repaired the vehicle in accordance with manufacturer’s specifications.

“It seems like no content to me, and I would be surprised if insurance brokers did not see it the same way.

“If, in fact, the severe customers losses that Suncorp are incurring in Australia are due to the Capital Smart model, it stands to reason that Vero will suffer the same way over here, losing market share to the other insurers that operate in the New Zealand marketplace.

“This could mean that for better or worse, we may see our largest insurer gain an ever bigger market share of the automotive business,” said Cameron.