BMW April 2022

A landmark decision will likely have widespread consequences for the motor insurance and body repair industries, as the Victorian Small Business Commission (VSBC) found that a car insurer had breached the Motor Vehicle Insurance and Repair Industry Code of Conduct (the Code).

In October 2018, the VSBC determined that a car insurer had breached the Code when it insisted that a car repairer be paid a flat hourly rate for repairs, without having assessed the real cost of repair.

The VSBC’s determination suggests that the practice of dictating an hourly rate (known colloquially as ‘funny time, funny money’) breaches the Code. The determination is likely to have a significant impact on the car insurance-repair industries. The benefits for motorists are substantial including transparency about the true cost of repairs and cash settlements.

“This is a significant win for the body repair industry in Victoria,” said VACC Chief Executive Officer, Geoff Gwilym. “On behalf of the many business owners for whom this is very welcome news, VACC thanks the Victorian Small Business Commission for this determination.”

“This is a common-sense decision that changes the working dynamic in a positive way in terms of creating a fair environment for all stakeholders working in the body repair industry. It essentially means that repairers must have their fair and reasonable estimates assessed transparently by Assessors to also determine the true cost of repairs. The onus is then on the parties to arrive at an agreed rate if there is a difference in the repair costs calculated by the repairer and the Insurer,” added Gwilym.

The VSBC was established to create a level playing field for small businesses. Its functions include advocating on behalf of small business and acting as an independent dispute resolution service for resolving business-to-business and business-to-government disputes. The VSBC also has a new function to provide Determinations under the Code. This Determination is the first to be completed in Australia under the Code.

The VACC has called on the Victorian Government to regulate the Code in Victoria, Australia. This decision highlights the need for all insurers, repairers and assessors to comply with the Code and not be limited to signatories only. This is something that Government can achieve for consumers and small business operators.