a review of the motor vehicle insurance and repair ... - code of conduct... · the review of the...

A Review of the Motor Vehicle Insurance and

Repair Industry Code of Conduct

PREPARED FOR THE

Code�

Administration

Committee

BY

E X E C U T I V E C O U N S E L A U S T R A L I A

DECEMBER 2013

2013 Review of the Motor Vehicle Insurance and Repair Industry Code of Conduct

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Table of Contents

Introduction.............................................................................................................................4

Acknowledgements...............................................................................................................4

ExecutiveSummary...............................................................................................................5

Thecontext–codehistory..................................................................................................6

Thehistoricrelationshipbetweenthesmashrepairindustry&theinsuranceindustry......................................................................................................................................7

GovernmentInterventionintheIndustry.....................................................................7TheIndustryCommissionReport..............................................................................................7TheACCCInquiry.............................................................................................................................8AustralianProductivityCommissionInquiry(2005)........................................................8

TheCodeToday.......................................................................................................................9

CodeReviews...........................................................................................................................9

2013ReportFindings–theOverview..........................................................................10HowTheCodeisWorking–AnIndustryPerspective......................................................10CodeEnforceability.......................................................................................................................11DisputeResolutionProcesses...................................................................................................12NationalRepairerOrganisations‐WhyIDR’s&EDR’sNeedtobeBinding..............13BullyingandIntimidation–ThereareNoCleanHands..................................................14

Recommendations..............................................................................................................17Non‐compliance........................................................................................................................................18Industryombudsman.............................................................................................................................18Reportconsideration–coregulation..............................................................................................18Disputeresolutionprocess–theinsurer’sperspective...........................................................21Non‐specificrepairerclaims–somesolutions............................................................................23Disputeswhereclaimantpaysrepairer..........................................................................................24Disputeresolution–theroleofeducation....................................................................................25IDR’s–Theneedforalevelplayingfield.......................................................................................26CAC–Theneedforamorecommitteemembers........................................................................26Assessors–costestimates&quotes................................................................................................28Insurerrepairerrelations‐estimates.............................................................................................30Repairersofferinginducementstotheinsuredtocircumventtheinsurer‐insurerandrepairerrelations............................................................................................................................31Thirdpartypractices–theneedforchange.................................................................................32“Genuine”v“non‐genuine‐parts”–theindustryconundrum................................................33“Genuine”v“non‐genuine”parts–therelationshipwithtradepracticeslaw...............37Choiceofrepairer–claimsofconsumerconfusion...................................................................37NSR’s&anti‐competitivebehavior...................................................................................................38Steering–Intheeyeofthebeholder?.............................................................................................38NSR’s–anti‐competitiveorboththefuture&thecustomers’friend?..............................39Anewreviewpanel.................................................................................................................................41ContractsofferedbysignatoryinsurersmustbecompliantwiththetermsoftheCode...............................................................................................................................................................42“Funnymoney”&“funnytime”–notfunnynotefficient........................................................46

Appendix1theMVIRICodeofConduct.................................................................................48Appendix2ExecutiveCounselAustralia...............................................................................48Appendix2BiosofExecutiveCounselPrincipals..............................................................48


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GlennMilne......................................................................................................................................48Principal............................................................................................................................................48JannetteCotterell...........................................................................................................................50ManagingDirector.ExecutiveCounselAustralia.........................................................................50


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Introduction

The Review of the Motor Vehicle Insurance and Repair Industry Code of Conduct (hereafter referred to as the Code) was undertaken in October 2013 to December 2013. The Review was based on written submissions received from interested stakeholder parties and organizations accompanied by follow up interviews and follow up written questions and answers. Those responding from the industry operate under the Code.

The Review was undertaken to assess the performance of the Code, particularly in relation to whether it was operating in accordance with its Preamble and Principles, and whether the parties to the Code were meeting their obligations to it.

Acknowledgements

The Review and accompanying report was undertaken and prepared by Executive Counsel Australia (Glenn Milne, Kim Watkins and Jannette Cotterell www.executivecounsel.com.au )

The authors would like to acknowledge the businesses, organizations and individuals that made submissions to the Review, and participated in the follow-up interviews in Melbourne and responded to subsequent written questions.

The authors would also like to thank the Chairman and members of the Code Administration Committee (CAC) for their assistance through the course of the Review.


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Executive Summary

The 2013 Code Review has taken a different approach to its predecessors which have, in large respects, confined their scope and recommendations to what might best be called prescriptive changes to Code clauses.

This might best be termed a “black letter law” methodology.

The 2013 Review has adopted a more thematic principle of organization. The thinking behind this approach has been to give the Code Administration Committee (CAC) more flexibility in its response to the Review recommendations.

This recognizes one of the potential strengths of the CAC when it is working cohesively; its consensus-based system of decision making. In developing the Review the Report authors, Executive Counsel Australia, concluded that this strength could be leveraged by framing recommendations more broadly in order to allow the CAC to develop policy responses based on the Review findings but not limited by them.

The Review, however, does acknowledge that there are limits to the effectiveness of the consensus based CAC model. Many of the submissions and much of the oral testimony taken by the Review reflected on the need for the industry “balance” on the current six member Committee to be overturned by the presence of an independent mediator and/or other manufacturing representatives.

There was a clearly stated belief on the part of many industry players who made submissions to the Review for the need for the decision making “Gordian Knot” on the CAC to be cut in order to advance the effectiveness of the Code.

Having said that there was also general agreement that within the confines of the Code Preamble and Principles the document had advanced the interests of the industry, notwithstanding the need for areas of specific improvement.

It is appropriate at this juncture to thank the many industry participants who made detailed and considered written submissions to the Review, a number of whom followed up with one on one interviews. Again thank you.

Another area of broad concern raised was the issue of enforceability - notably its absence. This embraced both breaches of the Code itself and the issue of decisions arising from Internal Dispute Resolutions (IDR’s) and External Dispute Resolutions (EDR’s).

The prevailing view, according to the Report, came down on the side of the need for greater enforceability. This was reinforced by mediators active in the industry who judged that the decline in usage of IDR’s and EDR’s reflected a lack of confidence in their effectiveness.

One potential solution proffered by the Report authors, and endorsed by a number of submission writers, was the idea of the appointment by the relevant Federal Government Minister of an industry Ombudsman to oversee the enforcement of dispute resolution processes and related Code matters.

But having proposed the idea, the Report authors also concede that this would not be a decision for the CAC to make as part of its direct Code deliberations but rather an


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issue to be taken up with the Government on behalf of the industry. This goes to the thematic nature of the 2013 Review going forward.

There were many issues thrown up by the Review, assessor repairer relations, industry bullying, insurer “steering’, “genuine” versus “non-genuine” parts and “funny money funny time”. But by far the most challenging question was the rapid – and seemingly inexorable development – of Network Smash Repairers (NSR’s). All sides of the debate see these networks and their logical end points - insurer owned mega smash repair shops – as shaping the future of the industry. What is a matter of furious disagreement, though, is whether this industry rationalization represents the undeniable and transformative rule of market forces or the rampage of cost driven uncompetitive practices compelled by fundamentally unequal market power. No Code clause can necessarily address such issues conclusively. But it is one that might properly concern the CAC in some form of debate about the developing culture of the industry. “Report Recommendations” in this Review represent the considered findings of the Report based on submissions received. “Industry Recommendations” in this Review represent the views of individual industry participants as reflected in submissions made to the Review.

The context – code history

ECA would like to acknowledge that it has drawn heavily on party submissions and one-on-one interviews to present this section.

The Australian Motor Vehicle Insurance and Repair Industry (MVIRI) Code is a voluntary code designed to improve the effectiveness of relationships between insurance companies and smash repair businesses, with the ultimate aim of delivering quality insurance and vehicle repair outcomes for Australian consumers.

First released in 2006, it followed the completion of a comprehensive investigation of the Australian Smash Repair Industry by the Australian Productivity Commission (APC) in March 2005. The APC investigation followed a period of significant tension between insurance companies and smash repairers. This centred on smash repair industry concerns about the procedural fairness and overall transparency of preferred smash repairer schemes.

The operation of the MVIRI Code is overseen by the Code Administration Committee (CAC), which comprises six industry representatives – three from the Insurance industry and three representatives of the smash repair industry. The CAC is required to monitor compliance with the Code and manage the conduct of a review of the Code every three years.

The most recent review of the Code was undertaken in December 2009 and January 2010. Again, The Review was primarily organised on the basis of written submissions received from interested stakeholder parties who operate under the Code.


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This report constitutes the next three year review of the Code.

The six years of Code operation provides a sound basis for assessing the effectiveness of the Code in addressing the significant issues and competitive risks previously identified by the 2005 APC Inquiry and other related government investigations.

The historic relationship between the smash repair industry & the insurance industry

The relationship between the smash repair industry and the motor vehicle insurance industry first rose to prominence in the mid 1960’s. Post-war growth in the motor vehicle fleet outstripped the rate of improvement in Australia’s road infrastructure. The result; a dramatic increase in motor vehicle accident rates in the late 1960’s and 1970’s.

This was accompanied by significant growth in both comprehensive motor vehicle insurance and demand for smash repair services. It saw both industries becoming dependent on each other for the effective delivery of services to their consumers.

Despite this inter-dependence, each industry operates with competing goals.

Insurance companies seek to reduce claims costs to maintain competitive insurance premiums and provide good economic returns to shareholders. Smash repairers aim to secure profit from the repair of vehicles that are insured by insurance companies.

These competing goals, in the context of inter-dependence, historically resulted in the progressive deterioration the commercial relationship between insurers and smash repairers. Each accused the other of inefficient and/or anti- competitive practices.

The advent of Preferred Smash Repair Schemes and centralised assessing centres in the 1990’s resulted in large-scale protests and media campaigns by the smash repair industry against insurers. This resulted in government concern about the market operation of the industry and community concern about the quality of insurance and smash repair offerings.

It is worth reflecting the history of this relationship between insurers and smash repairers and the attempts by governments to improve both relations and outcomes for consumers.

Government Intervention in the Industry

The Industry Commission Report

Growing government and community concern about the continued deterioration in the relationship between insurers and smash repairers resulted in several government inquiries.

Three of these inquiries are particularly relevant in assessing the performance of the MVIRI Code to date, namely: Industry Commission Inquiry (1995), Australian Competition and Consumer Commission Inquiry (2003) and Australian Productivity Commission Inquiry (2005)

The Industry Commission Inquiry’s terms of reference included relationships between


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smash repairers and insurers with a specific focus on:

the nature of conflict between the parties,

repair times and rates,

the need for a code of conduct between insurers and repairers

The Commission’s report was delivered in March 1995. It noted that: “… the level of animosity that exists between insurers and repairers impairs the effectiveness of communications between industries and adversely affects performance and consumer outcomes” (p3, Industry Commission 1995).

The Commission suggested there were grounds for government involvement in two principal areas – namely, repair times and a Code of Conduct.

The Commission noted the general reluctance of the insurance industry to participate in the development and operation of a new Code of Conduct. It therefore suggested the existing Insurance Industry Code of Conduct was sufficient and noted the Insurance Council of Australia (ICA) had established the Claims Review Panel (CRP) in 1991.

But it cautioned that while mechanisms such as the CRP were a positive step, the scope of an Insurance Industry Code of Conduct failed to address the material issues between insurers and repairers. It was recommended that insurers and repairers should convene a forum to establish a “code of conduct covering matters which impinge on relationships between the two industries and a process for resolving disputes between insurers and repairers” (pp4, Industry Commission 1995).

The ACCC Inquiry

Following complaints from the smash repair industry in 2002, the Australian Competition & Consumer Commission (ACCC) ordered an inquiry into the relationships between insurers and repairers.

At issue, were complaints by the smash repair industry that insurers were breaching provisions of the Australian Trade Practices Act as a result of changes to the operation of contracted repairer schemes and the introduction of policies limiting the consumer’s choice of repairer.

The ACCC determined that: “...there is scope for greater transparency in dealing between insurers, smash repairs and consumers including dispute resolution procedures and the entitlement of consumers to a reasonable level of choice in repairer without being penalized.”(ACCC 2003)

Significantly the ACCC went on to highlight that no progress of note had been made in respect of developing an industry Code of Conduct. It said a Code was necessary. The ACCC went further; if the parties were unwilling to agree on a Code, the Federal Government should intervene through legislation or regulation.

Australian Productivity Commission Inquiry (2005)

Ten years later ,and despite the Industry Commission’s 1995 call for the development of an industry Code of Practice, such a code had still not been agreed.


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In light of the recommendations of the 2003 ACCC Report and subsequent similar deliberations by the Small Business Ministerial Council in 2004, the then Federal Treasurer, Peter Costello, directed the Productivity Commission to report.

In handing down its’ report in March 2005, the Australian Productivity Commission concluded that: “the Australian Government should facilitate and promote the development and implementation of an industry-wide code of conduct as soon as practically possible….if a voluntary agreement between insurers and repairers is not reached within this time, a Code should be mandated under the provisions of the Trade Practices Act.”

More than a decade after it was first recommended by an official government inquiry, the Australian Insurance Industry and the Australian Smash Repair Industry agreed on the production of an industry code of conduct governing the relationship between both industries – the Motor Vehicle Insurance and Repair Industry (MVIRI) Code.

The Code Today

First published in June 2006, the stated objective of the Code is to “.promote transparent, informed, effective and co-operative relationships between smash repairers and insurance companies based on mutual respect and open communication” (pp 7 MVIRI Code).

The Code seeks to “provide efficient, accessible and transparent dispute resolution processes for issues arising between individual Repairers and individual Insurers” (pp7 MVIRI Code).

The Code is a voluntary mechanism only, with all signatories agreeing to be bound by the Code in their day to day dealings.

The scope of the Code, however, is limited in that the operation of the Code does not give rise to any legal relationship/obligations between Code signatories.

The Code outlines dispute resolution processes, as recommended by past Commission investigations, but does not bind the parties to the outcomes of these processes

Both industry parties agree to participate in the Code dispute resolution processes. The only exception to the voluntary operation of the Code is in NSW, where adherence to the Code is legislated. But the structure of the Code means this still does not bind the parties to acting on the outcomes of Code dispute resolution outcomes.

Code Reviews

The operation of the Code makes provision for a formal review of the Code every three years. The first review was completed in 2009 but was ‘light’ in nature given the relative newness of the Code’s operation.

Having now been in operation for six years, this is the second scheduled Code Review. This review provides the first opportunity for a comprehensive review of the code and the conduct of meaningful assessment of the degree to which the voluntary Code has been effective in addressing significant and longstanding relationship issues.


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2013 Report Findings – the Overview

How The Code is Working – An Industry Perspective

There is broad industry support for the continued operation of the Code. It is regarded as an effective tool for regulating the relationship between repairers and insurers.

But within that consensus there is a wide spectrum of views, reflecting the ultimately conflicting positions of stakeholders (i.e repairers versus insurers) in the industry. In this respect, little has changed since the 2010 Code Review.

The consensus insurer view is that the objectives of the Code should not be undermined by attempts by either industry - party to the Code - to use it as a way of leveraging commercial advantage over the other.

Insurers say this is not the role of a self-regulatory code of this nature. Indeed some corporates go so far as to suggest that that overly-prescriptive aspects of the current Code have played a part in encouraging insurers to seek out and consider (and in some cases adopt) alternative repair and vehicle parts procurement arrangements in order to escape the commercial constraints imposed by the Code.

The addition to the Code of any further inappropriate prescription and restrictions that impinge on insurers’ commercial independence would only exacerbate these developments, they say.

Others say there has been a significant improvement in relationships between all insurers and the repair industry since the MVIRI Code’s inception.

Some benefits have included greater certainty of :

1. payment terms, minimum standards;

2. contractual certainty associated with Network Smash Repair (NSR) schemes; and

3. defined dispute resolution processes for all signatories.

These benefits have led to almost all insurers agreeing to be bound by the Code alongside thousands of repairer signatories. Insurers believe the Code has been a success, and helped provide better certainty for both industries while placing the customer at the core of the relationship.

In reviewing the Code, insurers state a key component should be to consider its underlying purpose to support the insurance customer. Through their choice of policy and insurer, each customer has made a decision on what the level of cover they want for their vehicle, including options for managing their claim.

It is vital the code review does not lose sight of this and supports the repairer and insurer in delivering on these obligations and an excellent customer experience.


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The MVIRI Code, say insurers, has assisted the development of NSR schemes which have been a crucial aspect in:

ensuring certainty of work volume for the repair industry; and

enhancing professionalism and improving the overall customer repair experience.

Importantly, the contractual certainty associated with an NSR scheme allows repairers to invest in their business by providing additional training to staff and purchasing new equipment.

The majority of organised and resourced repairers are now associated with insurers via an NSR scheme and have built their business model around being a part of an NSR scheme.

The minimum standards, established by the Code, are a key development in this process.

The underlying purpose of the Code, say insurers, is not to re-write the industry, but to assist the two parties better define their commercial relationship, and develop stronger mutual beneficial relationships that benefit the end customer. It provides cohesion, not separation.

According to the insurers the Code should not stray from its original 2006 objective of promoting “transparent, informed, effective and co-operative relationships between smash repairers and insurance companies, based on mutual respect and open communication.”

The Code is considered by the majority of the insurers to be operating effectively.

With all major insurance companies and smash repairer trade associations being signatories to the Code, it enjoys widespread support.

It is underpinned by an effective complaints handling system, it is administered by a Code Administration Committee, and it is regularly reviewed.

After seven years of operation, the Code continues to be supported by all sectors of the industry, says the insurers.

Many of those from the smash repairer sector have a different point of view.

Code Enforceability

Having reviewed the submissions of all industry participants, and interviewed many of the authors, this 2013 Code Review Report finds that the central concern of all stakeholders is the inability of the Code to be enforced.

The particular nature of the concerns - over what is most often expressed as the Code’s “lack of teeth” - varies from industry participant to participant according to their individual or corporate perspective.

But it is undeniable that there is a push from all sides for selective enforceability.

The Report finds that this lack of “teeth” is now undermining the Code’s credibility with industry stakeholders, particularly in the area of dispute


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resolution.

This does not mean that the Code needs to err from its original intent as expressed by an insurer in the 2009 Review: “From inception, the Code was intended to be developed as a principle base Code rather than being overly descriptive or regulatory in its nature”.

That remains the case. The concern more is, that where the Code’s practices do result in concrete outcomes, those outcomes should be enforceable.

Dispute Resolution Processes

Where repairers dispute an insurer’s compliance with Sections 4 to 9 of the Code, they are able to avail themselves of Internal Dispute Resolution (IDR) and External Dispute Resolution (EDR) provisions in an effort to resolve such disputes.

When it comes to disputes, it is important to recognize the original intent of the Code was a result of complex negotiation and compromise. While accepting the Code would not, and should not address all areas of dispute between the parties, it was agreed that the Code, in its final form, provided a road map for significant improvement in the relationship between the parties by introducing a framework for transparency and accountability.

The fact is, though, that the Internal Dispute Resolution and External Dispute Resolution processes are not currently meeting these objectives of “transparency and accountability” – for either section of the industry.

Both sides see room for improvement with spectrum views on enforceability.

Insurers cite the relatively low numbers of IDR’s and EDR’s as evidence the system is working.

Repairers cite the same numbers as evidence the system is open to bullying and intimidation: ”You have the smaller guy who’s the Mum and Dad repairer with three guys that are on the floor ,who, you know, wants to make sure that I get everything to keep my business flowing. Do I upset the insurer – probably not? Do I cop what they do? Sometimes. Probably.”

One smash repair organization conducted a survey of members which found in respect of Section 10 “a high proportion of participants had not used the Code’s dispute resolution process (or could not recall having used it). As a consequence, the result is somewhat distorted by the large number of neutral answers.”

“The results revealed that the overall perception of the smash repair industry was that compliance with Section 11 was poor. As with the preceding questions relating to the Code’s Repair Dispute Resolution processes, a significant proportion of respondents indicated that they had not used the Code’s General Dispute Resolution processes.”

“Of the respondents who indicated that they had used the Codes Dispute resolution processes (i.e. IDR or EDR): Approximately 30% of survey respondents agreed that it


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was more effective to commence court proceedings than to use the Code’s External Dispute Resolution (EDR) process.”

Repairers point to the underutilization of the process as evidence of lack of faith in its outcomes because of its lack of enforceability.

This view is shared by some CAC members: “Why is it underused? There 2,500,000 motor vehicle claims in this country every year. There’s probably 3,800 – 4,000 plus repairers. ICA (the Insurance Council of Australia) produce the annual report every year - there were 50 dispute resolutions in 12 months. You cannot tell me that is really what’s been going on. Because that’s the evidence.”

But repairers do not associate Code dispute process enforceability with Code prescription.

Repairers want the Code to have sufficient flexibility to recognize different repair business models but when it comes to dispute resolution: “If those decisions are in relation to a difference of opinion when it comes to repair safety integrity of the vehicle, absolutely it should be binding, absolutely.”

National Repairer Organisations - Why IDR’s & EDR’s Need to be Binding

National repair organisations believe that faith in the integrity of IDR’s and EDR’s has fallen to levels where the pursuit of court action is preferable to the use of the Code process.

This is due to what they describe as the time and cost demands on their businesses are roughly equivalent – and the outcomes are binding under a court process whereas those of an EDR process are not.

These organisations are broadly recommending:

all external disputes concerning repair estimates (i.e. times and costs) should first be subject to an IDR process as stipulated in the existing Code.

Where the dispute cannot be resolved by the existing IDR process, an independent assessor will be contracted to provide an assessment that is independent of both the insurer and the repairer (these assessors might form part of an independent assessor panel administered by the Code Administration Committee). The costs of the independent assessor will be initially shared by the insurer and the repairer.

Both parties agree to abide by the adjudication of the independent assessor and that the successful party will have their costs reimbursed by the unsuccessful party.

Failure to abide by the independent outcome will result in the insurer or repairer being removed as a Code signatory for a period of not less than 12 months.


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Bullying and Intimidation – There are No Clean Hands

Repairers broadly see also see their failure to engage with the dispute resolution process as fundamentally related to the issue of insurer bullying.

Says one player: “Many repairers are reluctant to use the Code for fear of retribution from insurance work providers who seem to have an uncanny knack of forgetting your business when it comes to work being supplied after a lodgment of an IDR.”

Another repairer on the same subject: “That’s the thing. I’ve got to keep sweet with these guys (the insurers) because I won’t get any work, you know.”

There are also related allegations of insurer manipulation of dispute process Sections 10 &11.

Says one repairer: “Unfortunately both sections in my experience are not correctly adhered to, with many insurers dismissing the right to lodge an IDR on sections 1 and 7. And in some cases assessors are threatening in the response to repairers who raise this issue. Many insurers do not provide in writing acknowledgement of IDR lodgment and conveniently delay responses so as to proceed with repairs on vehicles at other repairers particularly in the case of Section 6.1.”

But bullying and intimidation is a two way street according to insurers

“Our assessors have experienced intimidating and threatening behavior from repairers whilst attempting to complete an assessment on repairer premises.

We take these matters very seriously and believe this section of the Code should include a clause requiring repairers to act in a professional manner at all times, bearing in mind their safety and wellbeing obligations to insurance company staff, whilst on their premises.”

An Independent View of the EDR & IDR Process

This report also sought the views of those charged with mediating between the smash repairers and insurers.

The views of industry mediators on the inadequacy of the current dispute resolution process with particular reference to Sections 10-11 are instructive. Their conclusion is that it does not represent best business practice.

The overwhelming message from repairers and the mediators’ submission, concerns the need to lower the cost of mediation. They are also concerned by insurers not responding within the Code time frame to lodgment of complaints, mainly in relation to EDR’s.

The mediators report that it often takes days for an insurance company representative to call them back when they are seeking dates for mediation.

“The Internal Dispute Resolution (IDR) section of the code (11.3) does not specifically address whether the parties need to meet as part of the IDR process. In some cases a repairer may see this as essential but if the insurer does not want to meet, or a suitable


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venue cannot be decided upon, a repairer has no choice but to escalate the matter to an External Dispute Resolution (EDR),”

Mediators spoken to by the Review provided the following observation about - recommended code improvements:

The insurance companies that breach the Code should be penalised and a public log be kept of these breaches.

Heavier penalties for insurance companies that deliberately breach the Code and continue to do so. Insurance companies don’t admit fault and don’t seem to learn from EDRs.

Lack of accountability or retribution to insurers when in breach of the Code, there is no deterrent to prevent their expressed level of arrogance.

When assessors are threatened with a breach of the Code, they are disrespectful and challenging. With no fines or retributions they don’t have to mend their ways.

All insurance companies to be accountable for the actions of their staff.

All rectifications to be reported to MTA or Code Administration Committee (CAC) or equivalent.

The role of assessors – an area of conflict & controversy

The ongoing role of assessors is an area of conflict and controversy within the industry and one which the Code has seemingly been unable to adequately deal with. While the complaints about assessor behavior – that they are tools of margin squeezing insurers – is loudest from repairers, insurers, for their part are also vociferous in their complaints about repairers’ use of unqualified assessors.

Neither side of the industry is happy about assessors generally or about how the Code is dealing with the manifest problems.

What is clear is that assessors themselves are caught in the crossfire. Repairers acknowledge that that even while they allege assessors are “screwing” them, they are doing so only because unless they successfully squeeze margins on behalf of their employers – the insurers – their jobs, in turn, will be at risk. In other words, if an assessor does not successfully reduce costs through reduced quotes, say repairers, the insurers will simply find another assessor who will.

The insurers, for their part, say this is simply a response to cost pressures in a highly competitive business where their customers – policy holders – are demanding lower premiums.

For their part, repairers claim to be intimidated; they dare not protest for fear of work being directed away from them from the same assessors.

Assessor bonuses

This is a highly contentious issue among repairers where these bonuses take the form of overseas “training” courses. Repairers claim that they are nothing


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more than rewards for assessors who keep costs down.

Repairer: “Do I get my bonus holiday to Tahiti this year? There are stories and there are – there is no evidence to prove it but there are stories of the KPIs mean certain bonuses at the end of the year – look I get bonuses at the end of the year.

There were allegations made by repairers to the Review about the potential for corrupt behavior arising from such practices, at least in the context where supposed “training” was non-genuine. But such claims were anecdotal only and not supported by evidence. For their part insurers point out that rewards for achievement of KPIs is standard commercial practice across the economy.

Any measures the CAC could implement to restore good faith in this area would be welcome.


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Recommendations

Report Recommendation #1

That in the context of Code Sections 10 &11, CAC amend the Code to address the issues of bullying and intimidation insofar as they act as a disincentive for parties to use the IDR & EDR processes of the Code.


A new clause be inserted: “4.1 (d) At all times behave toward the Insurer’s staff and representatives in a professional and courteous manner.

This includes not engaging in or permitting behavior that is offensive, harassing, threatening, inappropriate, abusive, bullying or intimidating.”

Despite insurers having a relatively more benign view of the dispute resolution process, at least one major group is proposing the option of arbitration: “We believe that signatories to the Code should be able to enter into arbitration if necessary. While commercial parties may seek arbitration through the court system, specific reference to arbitration within the Code provides the opportunity to develop an improved dispute resolution process.”

“Arbitration will require further investigation and consideration by the CAC, but we propose a general allowance in the Code be made to assist the CAC to better define such a scheme in the future.”


a) The establishment of an arbitration process in relation to a dispute in circumstances related to this Code where an application by a repairer or insurer is received requesting an arbitration of a dispute.

b) The costs of the arbitration are, in the first instance, the responsibility of the complainant, with the arbitrator able to make a binding decision on the matter and in relation to the sharing of costs at the conclusion of the arbitration

Another major insurance group believes the Code should be mandatory in all states:

“In the spirit of the Code (we) will respond to disputes from repairers whether they are signatories to the Code or not…..A mandatory Code may be more effective in that it compels all parties to be involved, thereby laying a basic platform for continued relationship improvement.”

“Should the Code be updated to reflect recommendations that allow adequate and equal dispute resolution mechanisms for Insurers, (we) support making the Code mandatory in other states.”


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In a related move some insurers are promoting the idea of “naming and shaming” non-Code compliant parties.

In the words of one stakeholder: “I have a passion for it (the Code). I think it’s a good document. I don’t think it has the teeth. It doesn’t have any repercussions for you not adhering to it.”

This reports supports recommendations to make the code mandatory in all states. National uniformity is important.


Non-compliance

The CAC must identify instances of non-compliance with the Code by any signatory and should publicize that non-compliance and/or require the signatory to undertake reasonable rectification steps.

Industry ombudsman

Repairers were particularly supportive of the idea of an Industry Ombudsman to assist in the binding implementation of dispute resolution decisions.

Some stakeholders likened such a position to a Small Business Commissioner similar to the existing position in South Australia:

“A Small Business Commissioner goes; ‘Well, look, quite frankly, you the repairer have a case against these people, see you later. You the insurer well yeah I side with this guy; pay the man.’ But they would have the power to make sure that mediation is handled properly and correctly, so in theory if that’s put in place, then you would find then that the attitude to the Code is more respectful and would operate with (a view that) possibly we don’t want to get to that point.”


The Government needs to consider the value in appointing an Industry Ombudsman. Given the complexity and high level of disagreement between sectors, an Ombudsman would serve to ensure dispute resolutions are binding.

The Ombudsman needs to have powers defined by the CAC to act as a “court of industry appeal” with particular reference to the Code dispute resolution process. The Ombudsman must have the power to apply penalties for non-compliance with dispute resolution decisions. Ultimately, though, this is a matter for the CAC to pursue through political avenues with the Government of the day rather than through the Code itself.

Report consideration – co regulation

This report considered whether this industry needs co-regulation more than self-regulation. No one recommended it but there is obviously a need for greater attention to how the Code is adhered to.


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The question the CAC needs to ask is this: does the industry require the ACCC to oversight the Code.

We believe that right now this may be a step too far.

Co-regulation will require extra layers of bureaucracy and could lead to full regulation. It is also counter to the agenda of the Federal Government which is seeking to reduce red tape, not add it.

However, it should be discussed at an industry level especially if the fundamental issues and deadlocks within the Code cannot not be resolved.

Report Recommendation #5(a)

Code clarification on when parties need to meet as part of the IDR process and what venues are suitable for such meetings i.e. neutral space to avoid perceptions of intimidation or bullying. A specific deadline needs to be invoked.

“If the parties have reached an agreed outcome as a result of an EDR there is nothing in the Code that requires the parties to specifically undertake the agreed outcomes. This is not to say that the parties have to agree as part of the EDR process but where they do agree, there are no sanctions or remedies for non-compliance.”

“Although repairers are advised that a representative of the MTA may attend as a support person and not as the primary negotiator, the Code does not seem to cover who may or may not attend an EDR apart from the parties. This may seem a trivial matter but it has severely affected whether a matter will be mediated.”

Mediators also report difficulty in obtaining its own payments: “(It is) not that easy to obtain payment for services. There needs to be a better mechanism (for example payment up front) to ensure that mediators do not have to chase people for fees.”

“The key is often related to the exclusion of the amount to be paid for repairs (quantum) or differences of opinion as to the preferred repair method. (Clause 10.1(c)). Failure to include them in the dispute resolution provisions result in significant lost opportunity.”

“Non-inclusion helps to establish a power imbalance in favor of the insurer who will be able to refuse to participate in mediation as the dispute relates, in some part, to these key issues. At the end of the day the repairer has most likely lodged a dispute due to being out of pocket which, almost by default, raises the currently excluded area of the amount paid for repairs.”

“The amount to be paid and/or differences of opinion as to preferred repair methods will be at the centre of most disputes brought to mediation and their inclusion can only be of benefit to the industry as a whole. However, this view will not be shared by insurers.”

Mediators acknowledge that insurance companies have legitimate complaints about repairers' misunderstandings about provisions of the Code and vice versa, particularly relying on particular provisions out of context.


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That the CAC institute, via the Code, the requirement for additional training for repairers and assessors with particular reference to dispute resolution processes.

Mediators also conclude that there is confusion over what authorization a repairer should have from an insurer before commencing work and then expecting the insurer to reimburse for the work done.

“There (also) seems to be inefficient systems in place to verify who is the owner of a vehicle. Seems to be phone calls made, which may or may not be answered by the insured and until they have verification from the insurer, they will not authorize repairs. Repairers could assist this process by obtaining full contact details from the insured and if there is an agreed form of authorization for the insurer to deal with the repairer, perhaps that would assist.”

Further there was comment that mediations “will vary markedly depending upon the personalities (involved)” and that they are “not necessarily highly commercially or legally sophisticated.”

Referrals to EDRs, after a slow start, peaked in 2011 and 2012 and have declined in 2013 as follows:

2007 3 referrals

2008 0

2009 5

2010 14

2011 15

2012 27

2013 to Oct 8

The mediators’ conclusion regarding this decline in process engagement is that it reflects a lack of confidence on the part of repairers that the process is working. The feedback includes:

Repairers and mediators say insurance representatives that attend mediations often don’t have the authority to “fix” the problem. Representatives can’t change the practices of their insurance companies.

Repairers say the assessor who has created the dispute is not confronted, and so repairers don’t see that anything is done to ensure it doesn’t happen to another repairer. Repairers say that they are paying an administration fee and the mediator’s fees and seeing nothing for it.


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Repairers say that, in NSW, if they refer disputes to the Department of Fair Trading they are passed around to person/department after person/department. They say that no one wants to help them.


The appointment of an independent Industry Ombudsman by the relevant Federal Government Minister with powers defined by the CAC to act as a “court of industry appeal” with particular reference to the Code dispute resolution process. The Ombudsman to have the power to apply penalties for non-compliance with dispute resolution decisions.

Dispute resolution process – the insurer’s perspective

It is not only repairers who have their complaints about the dispute resolution process. Insurers have their concerns as well.

One major insurer is advocating that repairer organizations be banned from any involvement citing the Principles of the Code which state that “the Code will provide efficient, accessible and transparent dispute resolution processes for issues arising between individual Repairers and individual Insurers”.

Thus, argues the insurer, it would seem reasonable that the dispute resolution provisions are only available to individual Repairers and Insurers. Given this, as Repairer Representative Organizsations and other parties are not included within this definition, it would follow that the dispute resolution process is not available to them.

“We have previously been petitioned by a Repairer Representative Organisation, which was attempting to avail itself of provisions under the IDR and EDR process. We are of the view that this practice of removing individual Repairer and Insurer negotiations is not conducive to fostering ongoing effective dispute resolution and goes against the Principles of the Code.”

Industry Recommendation #8

Clarification as to the availability of IDR and EDR processes with the insertion of the following: “11.1 (c) In keeping with the Principles of the Code, the IDR and EDR provisions detailed within sub-clauses 11.2 and 11.3 must remain between individual Repairers and individual Insurers.”

Another major industry player wants to tighten the Code language pertaining to Dispute Notification. This relates in particular to 10.2.



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Amending 10.2 to read (changes in bold italics)

10.2 Notification of Dispute

(a) Either an Insurer or a Repairer may raise a dispute under clause 10.

(b) In the event of a dispute under this clause 10, the Repairer or Insurer must notify the other party’s complaint contact, providing full details of the dispute and supporting evidence of the concern and the redress sought by the complainant.

(c) Notification of a dispute must contain a specific reference to the relevant clause of this code and why the other party is non-compliant with the provisions of this Code.

Insurers would also like to broaden the responsibility of repairers within the dispute resolution process under S10.3.


Amendments to 10.3 Dispute Resolution Procedure (changes in bold italics)

(a) Upon notification of a dispute by an insurer or repairer, the other party to the dispute will fully investigate the issue, and the supporting evidence provided by the complainant and will respond within two business days.

(b) As part of this process, the respondent will consider the relevant information, may inspect the motor vehicle or associated information and will discuss the dispute with the other party.

(c) If the Repairer disagrees with the determination of the Insurer the Repairer retains the right to refuse to carry out the repairs and in that case the Insurer may transfer the vehicle to another Repairer.

(d) The Insurer agrees to report to the CAC on an annual basis detailing the number, nature and outcome of disputes raised under clause 10.

(e) An insurer may deem an IDR or set of IDRs as vexatious in circumstances where numerous disputes are raised by the same repairer or a group of repairers in a short period without sufficient information to support the disputes. When an insurer considers a dispute vexatious they may refuse to proceed with the IDR process however, the repairers right to seek EDR remains.


Amendment to 11.2 Internal Dispute Resolution (change in bold italics)

(a) Each Insurer will establish an internal dispute resolution (IDR) mechanism that provides for the prompt, transparent and fair resolution of disputes.

(b) All repairer initiated disputes should in the first instance be directed through Insurers’ IDR mechanisms.


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(c) Insurers will provide to the Repairer a written acknowledgement of the complaint within five business days. Within a further 10 business days,

Repairers and Insurers will conclude the IDR process, unless otherwise agreed to by both parties.

(d) If the Repairer disagrees with the outcome of an IDR process, they can elevate the dispute to External Dispute Resolution (EDR).

Non-specific repairer claims – some solutions

There was considerable angst expressed by insurers about non-specific claims lodged by repairers under the dispute resolution process. The insurance industry was particularly vocal on this point:

“The Code provides for a comprehensive internal (IDR) and external (EDR) dispute resolution mechanism to support its provisions. Insurance company experience, since 2006 with regard to disputes raised by repairers under the Code, shows a significant level of confusion and misunderstanding as to what role, if any, the Code is able to play in resolving disputes arising with an insurer.”

“The Code was never intended to provide a solution to all areas of dispute between insurance companies and repairers. A better understanding of this reality will assist in ensuring the standing of the Code. It will also ensure that repairers’ views as to its effectiveness and relevance are not negatively impacted by its failure to address certain issues through the dispute resolution process that it was never intended to address.”


Amendments to 11.3 External Dispute Resolution (changes in bold italics)

(a) To commence an EDR action under the Code, the applicant must lodge a notice of dispute with the CAC or its nominee and the respondent, providing the following information:

(i) the nature of the dispute;

(ii) specific reference to the relevant clause of this code and reasons why the other party is non-compliant with the provisions of this Code;

(iii) what outcome the applicant wants; and

(iv) what action the applicant thinks will settle the dispute.

(b) The applicant and the respondent may then either agree on a mediator, or if the parties cannot agree on a mediator within 2 business days, they must request the CAC or its nominee to appoint a mediator. The mediator should be appointed within 2 business days.

(c) Subject to sub-clause 11.3(e), the Mediator may decide the time and place for the conduct of the mediation.


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(d) Any face-to-face mediation under this Code must be conducted in the state or territory in which the repairs took place and within a reasonable distance of the Repairer’s premises, unless otherwise agreed by the parties.

(e) The parties participating in the mediation should try to resolve the dispute within 15 business days of the notification of the dispute, unless otherwise agreed to by both parties.

(f) Those participating in the mediation must have the authority to enter into an agreement to settle the dispute.

(g) Advisers may attend a mediation as observers only, and may not represent a participant or comment while a mediation is in session.

(h) If the mediation does not result in an outcome acceptable to both the applicant and the respondent, or the dispute proves incapable of resolution by mediation, the Mediator will provide a written statement to the applicant and the respondent setting out:

(i) the parties to the dispute;

(ii) an outline of the dispute; and

(iii) a list of unresolved issues;

(i) The outcome of mediation and any statement issued under sub-clause 11.3(g), must remain confidential between the parties to the dispute, the Mediator and any observers present at the mediation.

(j) Disclosure of any statement under sub-clause 11.3(g) to a third party requires the consent of the applicant and the respondent except where disclosure is required by law.

(k) At the conclusion of the mediation the mediator should advise the CAC in writing whether the mediation was successful or unsuccessful.

Disputes where claimant pays repairer

Insurers say they have received a number of disputes relating to section 8.1 (i.e. pay within 30 days) where they have not authorised repairs but, instead, elected to cash settle the claimant.

In these circumstances they have no control over how the claimant may elect to manage and pay for repairs. In recognition of this the following recommended addition to 8.1 be made:

Report Recommendation #12(a)


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8.1 “An Insurer’s maximum payment terms for repair invoices should not exceed thirty (30) days from receipt of invoice by the Insurer or authorised assessor or agent. This sub-clause 8.1 only applies where the Insurer, not the Claimant, is authorizing the Repairer to carry out the repairs.”

Dispute resolution – the role of education

The insurers have thrown its weight behind a Code education campaign with particular focus on dispute resolution.

“To attempt to address such matters through changes to the Code would be highly damaging to the operation of an efficient and competitive marketplace and would undoubtedly lead to considerable consumer detriment,” says an insurance association.

“(we)therefore believe a greater level of education and awareness, especially for smash repairers, on the role of the Code, its purpose, objectives and principles would be highly beneficial in continuing to improve the relationship between the parties in accordance with the objectives of the Code.

An improved level of understanding and knowledge of the Code, and what it can, and cannot do, in resolving disputes between insurance companies and repairers will significantly improve confidence in the IDR and EDR processes for all parties.”

“The role of the Code Administration Committee in assessing the levels of understanding of the Code and facilitating appropriate training and education programs to address any shortcomings identified may warrant consideration.

More detailed disclosure of the nature of the issue of concern when lodging disputes, especially through the EDR process, would also ensure only matters that can be appropriately dealt with under the Code are raised through this process.”


A compulsory industry Code education campaign, targeting both insurers –particularly at an assessor level – and repairers – with reference to the code dispute resolution process in all its forms.

In line with this objective one major insurer is proposing a pre-dispute resolution step:

“We believe this (an education campaign) supports our view that the CAC has a role to play in providing opportunities to assist and educate repairers on matters relating to the Code to ensure it is working toward achieving the goal of promoting an open, honest and transparent relationship between Repairers and Insurers.”

“The CAC may also wish to consider the adoption of the following sub-clause as a means for encouraging “mutual respect and open communication” between individual Repairers and individual Insurers.”


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New clause in bold italics:

“11.1 (d) Repairers and Insurers are to firstly attempt to resolve any matters, amicably, prior to availing themselves of IDR and EDR dispute resolution processes. The applicant to the IDR or EDR process is to observe high standards of honesty, integrity and good faith in seeking to avail themselves of IDR or EDR. Repairers and Insurers will not attempt to hinder the other by submitting claims of dispute under the Code that are not specifically applicable to the Code or that are frivolous, trivial, vexatious or baseless.”

IDR’s – The need for a level playing field

Sub-clause 11.2 (a) of the Code details that “each Insurer will establish an IDR mechanism that provides for the prompt, transparent and fair resolution of disputes.”

However, the Code is silent in regard to having repairers establish a similar IDR mechanism. Considering that either party may believe that the other party is not complying with the Code, and therefore may initiate the dispute, there appears to be a need for Repairers to also establish a suitable IDR mechanism.

It is noted that the Motor Traders’ Association of NSW has already established such a requirement with its members, in accordance with section 43 (a) and (b) of its Code of Ethics. This states: “A member must have an internal complaints handling mechanism. This mechanism must be: a) available to all consumers; and b) free of charge to the complainant.”

It would seem reasonable that the existing mechanism may be tailored to allow for provisions under the Code and be made available for Insurer’s use


A replacement for sub-clause 11.2 (a) of the Code (change in bold italics):

“Each Insurer and Repairer will establish an IDR mechanism that provides for the prompt, transparent and fair resolution of disputes.”

It is noted that adoption of this amendment will also necessitate relevant changes to 10.2, 10.3 (a) (b)(c)(d), 11.2 (c) and (d)

CAC – The need for a more committee members

Along with the disputes resolution process the other area of overarching concern, most frequently raised by stakeholders expressed, is the inability of the Code Administrative Committee (CAC) to resolve important and complex issues due to the evenly balanced numbers on the Committee.


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This too is undermining the Committee’s credibility and workability in the minds of industry players.

Industry stakeholders believe the balanced numbers on the CAC is leading to difficult – but necessary – decisions being deferred. The result: “When (a) report finally lands on the Minister’s desk, it’s just an observation. It’s not a recommendation.”

A CAC Member on resolving Committee deadlocks: “At the moment we run along the lines of, you know its full agreement or its nothing, which is never going to happen. So to me the seventh person needs to be an independent person, out of the world of the small business – training officer – that firstly is what should happen.”

At least one major insurer favors the appointment of a mediator to resolve CAC impasses. This would be in the event that CAC could not agree on the appointment of a seventh member to the Committee.

However, it has been recommended before that a 7th committee member be appointed. This resulted in a deadlock between committee members.

One way to break the deadlock is to have 3 additional members appointed to the committee. One being a mediator and two from other related industries such as from the car manufacturing sectors. It is important these members are not drawn from repairer or insurer sectors.


New additional clause: 12.1 Code Administration Committee

(h) Where matters remain in significant disagreement, the CAC may utilize the services of a mediator to assist resolution.

The Report finds that many of the seemingly intractable issues facing the industry can be sourced back to the CAC’s inability to resolve deadlocks.


The appointment of three more CAC members. These are to be independent, non-industry (i.e. insurance/repair industry) aligned members of the Code Administrative Committee.

Three more members to be appointed to take the committee membership to nine.

We believe one should be from the mediator industry and two from the vehicle manufacturing areas. This will help provide a broader cross section of views and help break decision deadlocks.



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In the interests of Code transparency, we recommend setting up guidelines to govern Assessor “training” courses, with specific reference to such courses when they occur overseas.

Such guidelines to make clear that there is to be no linkage between participation in such courses and cost/price based assessor performance.

Such guidelines and industry adherence to same to be made available to all industry players upon request and to be monitored by the CAC or by an industry Ombudsman if so appointed.

Assessors – cost estimates & quotes

Consideration of Estimates (4.2 b)

Some insurers – but not all - consider all estimates in an effort to have claimants’ vehicles repaired. The criteria for consideration are based on the completeness of estimates. Completeness is determined by repairers including all costs, parts, labour and requirements in order to effectively carry out the required repairs.

Pay agreed amounts (4.2 c)

Insurers only pay agreed amounts for all authorized work. This authorised work includes any authorised original assessments and/or any subsequent variations. Insurers have expressed repeated concerns that in this context, assessors nominated by repairers are often not as well trained as assessors employed by insurance companies.

Ensure Assessors are trained and experienced (4.2 d)

To this end insurers argue it would be appropriate to extend the standards for assessor training and qualifications to assessors that aren’t appointed by an Insurer, in addition to repairer quoting/estimating staff.


An appropriate amendment to 4.2 (d) to incorporate assessors not engaged by Insurers whilst also considering the insertion of a similar clause within section 4.1.

Assessors & repairers – the relationship more broadly

Assessors are regarded by industry players with an equal measure of sympathy and distaste. This quote from a repairer is typical: “It’s not the fault of the assessor. That’s the management decision to go; ‘Right well we need to reduce, we’re paying too much for parts, we paying too much.’……so he gets it from both sides.”

And another: “So on top of all that stress they get from the management and the repairer; they’re not nice people some of them sometimes and it’s not their fault. If you sat down and have a beer with them, they’d be great. They also think they know everything. They also think the repairers are millionaires.”

In short the relationship between assessors and repairers is the effective


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lightning rod for the competitive tensions between insurers and repairers. As such that relationship is in a state of chronic dis-repair.

Industry mediators find that the atmospherics surrounding the role of assessors does not reflect the intent of the Preamble and Principles of the Code – at least from the perspective of repairers.

Says one quoting repairer feedback: “The assessor assesses the quote and not the car. This is forcing repairers to take short cuts, to make a profit. Insurance company “paper pushers” appreciate repairers’ high standards, safe manufacturer standards rather than trying constantly to lower the quotes. High standards come at a price.”

Another repairer submission to the Review: “On the subject of insurance work providers, the assessors representing insurers would seem to be only aware of the Code because it is a hindrance to their day to day functions. These frontline representatives of insurers have little or no respect, let alone recognition of the Code.”

“Even if assessors are aware of it (the Code) they know they have the market power to ignore its provisions,” says one repairer group. “In addition repairers are wary of using the Code at any level as they fear reprisals from their work providers.”

“There are only a small number of body repairers who are willing to risk the retribution of insurance companies if they make a stand. There are a number however, who have been able to use their basic knowledge of the Code or have threatened to invoke the Code and have therefore been able to resolve minor disputes internally.”

This discussion of repairer concerns leads inevitably to the oft cited issue of assessor bullying.

(See Report Recommendations #1 & #2).

Aside from the issue of overt bullying, dealt with earlier in this Report, the problem with assessor repairer relations is obvious; it goes to the stated aim of the Code; to recognize the right of both repairers and insurers to “freely structure their business arrangements”.

Critically, it would appear that any changes proposed to the Code in relation to the role of assessors would inevitably impede or restrict the commercial relationship between individual Insurers and repairers. Of equal importance, some network repairers would argue that any changes to the role of assessors would through the Code might remove the competitive advantage they have built through investment, innovation and collaboration with insurers.

Nevertheless this area is such a recurring issue the Review finds some action is necessary to restore good faith, particularly on the part of repairers. Therefore:


Under its revised nine person configuration an inquiry into the role of assessors with a view to making any changes to the Code that might restore good faith on the part of both repairers and insurers in the aforementioned role.


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Insurer repairer relations - estimates

Notwithstanding the difficulties of navigating and defining the role of assessors without impinging on the Code’s principles with regard to competitive business models insures have argued for some changes in relation to the issue of Estimates. They include:


(Code changes in bold italics)

4.1 Repairers

In their dealings with Insurers in relation to repairs, Repairers will:

(a) prepare estimates that provide for an appropriate scope of repairs, ensuring that all repairs are carried out in a safe, ethical, timely and professional manner and in accordance with the relevant insurance policy;

(b) not dismantle a vehicle for the purpose of preparing an estimate unless requested or authorised to do so by the Insurer;

(c) not engage in practices designed to hinder or prevent the Insurer or claimant seeking to obtain an alternative quotation;

(d) act in accordance with an insurer’s responsibilities towards customers under the relevant insurance policy. These amendments will encourage repairers to consider the terms of the applicable insurance policy where preparing estimates and conducting repairs.

4.2 Insurers

In their dealings with Repairers in relation to repair work, Insurers will:

(a) provide Repairers with relevant details relating to the claim that the Repairer requires in order to prepare an estimate or undertake the repair including details of sublet repairs and payments by customers including any excess and contributions;

(b) not refuse to consider an estimate on unreasonable or capricious grounds;

(c) pay the agreed amount for all work completed, that has been authorised or requested by the Insurer;

(d) ensure all assessors engaged by the Insurer are:

(i) appropriately trained and have appropriate technical experience; or

(ii) have successfully completed an approved assessors course; or

(iii) have not less than five years’ experience as an insurance (motor) assessor;

(e) not remove a motor vehicle from a Repairer’s premises without notifying the Repairer in advance and compensating the Repairer for any legitimate or reasonable towing or storage costs associated with the vehicle and in compliance with relevant legislation; and

(f) not knowingly ask claimants to drive unsafe motor vehicles for the purposes of obtaining alternative estimates.


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4.2 Insurers (Amended)

In their dealings with Repairers in relation to repair work, Insurers:

(a) will provide Repairers with relevant details relating to the claim that the Repairer requires in order to prepare an estimate or undertake the repair including details of sublet repairs and payments by customers including any excess and contributions;

(b) will not refuse to consider an estimate except in accordance with 6.3 of this code;

(c) will pay the agreed amount for all work completed, that has been authorised or requested by the Insurer;

(d) ensure all assessors engaged by the Insurer are:

(i) appropriately trained and have appropriate technical experience; or

(ii) have successfully completed an approved assessors course; or

(iii) have not less than five years’ experience as an insurance (motor) assessor;

(e) will not remove a motor vehicle from a Repairer’s premises without notifying the Repairer in advance, and where they do so must compensate the Repairer for legitimate towing costs and, the fair and reasonable storage costs associated with the vehicle, or in compliance with relevant legislation;

(f) will not knowingly ask claimants to drive unsafe motor vehicles for the purposes of obtaining alternative estimates; and

(g) may where a vehicle has been dismantled without authorisation remove that vehicle from a repairer’s premises without hindrance or limitation by the repairer and seek recovery against the repairer for associated costs.

Repairers offering inducements to the insured to circumvent the insurer - insurer and repairer relations

Clause 4.1 (a) of the Code requires repairers to prepare estimates that provide for an appropriate scope of repairs, ensuring that all repairs are carried out in a safe, ethical, timely and professional manner.

Insurers argue the above provision provides a series of assertions with no clarity as to what conduct falls within or outside these behaviors. Further, the provision suggests that those characteristics or qualities provided relate to the repairer engaging with insurers conducting repairs in accordance with the insurer’s instructions. If that is the case, it leaves open the times where repairers directly engage with insured’s.

Such conduct is also arguably in breach of clauses 4.1(c). However, again in that instance it is not clear whether such behavior is prohibited. To address this issue it is recommended Clause 4.1 (c) be amended to read:

Industry Recommendation #16(a)

4.1 Repairers


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In their dealings with Insurers in relation to repairs, Repairers will:

“not engage in practices designed to hinder or prevent the Insurer or claimant seeking to obtain an alternative quotation and not engage in practices such as waiving, contributing to, paying or discounting excesses as an inducement to Insured’s to attempt to assign their right to claim under a policy to a Repairer or to appoint a Repairer as the claimant’s representative.”

Third party practices – the need for change

The majority of repairers and insurers would appear to act with values such as honesty, integrity and good faith as a means for conducting day-to-day business. However, there remain instances where the conduct of some repairers (and related entities) falls short.

These instances include where a repairer maintains a relationship based on commissions, fees and rebates with towing, hire car and other service providers. Such relationships, where there isn’t complete transparency, potentially encourage business practices that lack honesty, integrity and good faith.

This lack of transparency has a negative impact on customers through increased exposure to undisclosed costs and litigation.

Insurers cite the example of a member of the public who is involved in an accident and is deemed to be not-at-fault but the vehicle is not able to be driven. The repairer, at this stage, may offer the claimant a hire vehicle and directs the individual to a third party hire car company that provides hire car services on credit. The credit is provided on the basis that the credit hire operator is able to recover the costs for the hire vehicle from the at-fault party’s insurer.

The repairer then schedules work on the vehicle to be repaired. In some instances the time required to repair the vehicle may require the claimant to be in possession of the hire car for an extended period. At the conclusion of the repair period, the repairer will submit a tax invoice to the at-fault Insurer for payment. The insurer may then question “fair and reasonable” expenses, including the time for the hire car and refuse to pay the full amount on the grounds of unfair and unreasonable time delays. This may result in the repairer or their recovery agent pursuing the claimant for any outstanding amounts owing, which generally ranges from several hundred to several thousand dollars.

Unsuspecting claimants in these circumstances are not fully informed of their obligations and exposure. Claimants are subsequently exposed to litigation through the court system as repairers or their recovery agents pursue debt recovery action either on their behalf or against the claimant. In many instances this behavior not only impacts the at-fault party but the not-at-fault party also, as the balance of any unpaid hire car fees are sought directly from the not-at-fault party or their insurer. Further, in some cases, depending on the type of vehicle on hire and the length of time hired, the hire car costs can far exceed the repair costs for a vehicle.

Insurers concede this behavior is not directly conducted by relevant repairers. But it begins with those repairers in that the referral to third party service providers comes


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from the repairers themselves. Commonly there is a mistaken belief that the repairer is providing an added customer service to the claimant. Often these referrals are provided by the repairer with an incentive fee provided by the hire firm. In many cases the fee disguised as an amount for either storing or detailing the vehicle upon its return.

One insurer told the Review they were exposed to around 3,500 claims of this nature in 2012-13. Mitigating commercial risk is embedded as part of the insurance industry’s day-to-day business. However under this scenario, say insurance companies, claimants are being needlessly exposed to litigation and excessive costs through dishonest practices. In turn, these costs place additional pressure on the cost of insurance premiums.


The insertion of an appropriate clause into the Code. Such a clause may be:

“Repairers will be transparent in all of their dealings and fully disclose, clearly and in plain language before the Claimant enters into any such dealing:

All costs and risks to Claimants related to the proposed dealing including commissions, discount, credits, allowances and rebates that the Repairer receives or may receive related to the proposed dealing from tow operators, hire car providers, courtesy car providers, debt recovery agents or other persons that the Claimant may ultimately be liable for.

Repairers must give Claimants a fair and reasonable opportunity to understand and consider the disclosure and consequences of the dealing (including obtaining advice if necessary) before committing to any such dealing.”

“Genuine” v “non-genuine-parts” – the industry conundrum

There does seem to be a very “genuine” debate going on within the industry over the use of “genuine” versus “so-called “non-genuine” parts, who uses them and why – and even what constitutes such things.

As well as legitimate considerations such as costs there is a very clear concern on both sides – repairers and insurers – about product integrity and consumer safety.

“Parts are very interesting and probably very interesting predominantly now because with all the change with what is happening with parts. I don’t think anybody should be able to dictate to repairers as to what part goes on the vehicle, where it is purchased as long as it does not jeopardize the safety or integrity of the occupants or the vehicle.” – a Smash Repair Network representative

Where the confusion – sometimes deliberate on the part of some industry participants –comes into play is in the case of so-called “parallel parts” – parts that are the equal of “genuine parts” but not sourced to the original manufacturer.

The Smash Repair Network representative again: “Well I think it’s wrong for the manufacturers to say it does affect the warranty. And this is this competitive advantage again. If an individual is able to have the balls and the mouth to go out and invest in genuine parts and bring them into the country and be able to have the


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distribution to get that out into the market at a competitive price, congratulations to the market for taking advantage of that. If it isn’t – if it is the same part – this is where there is some confusion talking parallel parts which are a genuine manufactured component.”

“It’s no different, it’s the same box, the same part number, it is one part produced after another out of the genuine OE (Original Equipment) factory. It is very different when we’re talking after-market against it jeopardizing the integrity or safety of the vehicle.”

At different stages of the argument, in submissions to the Review, both sides of the industry supported the use of parallel parts.

Ultimately it appears the argument is a cost-safety equation; it doesn’t matter to either the insurer or the repairer if the part is not OE provided it does not jeopardize customer safety or the warranty of the car.

With one caveat – each side of the industry wants to be in control when such parts are used. This appears to be the major point of conflict.

One major insurer says they are aware that some repairers and their representatives believe that sub-sections 9.1 and 9.2 of the Code do not go far enough in imposing obligations on insurers in respect of the matters covered.

They state: “It is our view that it would be inappropriate for the Code to dictate how insurers operate their business in respect of matters such as choice of repairer and use of parts.

To do so, would be an unwarranted intrusion into the commercial independence of an insurer and could quite easily result in unintended consequences, such as insurers being forced to adopt alternative business models and commercial strategies (e.g. in respect of ownership of repair shops and procurement of parts) in order to remain competitive.”

Another large insurer had a different take. Since March 2011, under a newly introduced internal quality audit system, it uncovered 304 cases of apparent fraud, totaling $205,915.84. In one repair example alone, it identified apparent repairer fraud totaling $10,120.07.

It was also found, during the course of an audit process that a number of Repairers would quote an Insurer for a new Original Equipment Manufacturer (OEM)/ Vehicle Manufacturer (VM) part, order that part from the Dealership and be invoiced for it.

However, upon receipt of the part, it would be returned to the Dealership, a credit received and the Repairer would repair the damaged part at a significantly reduced cost, whilst continuing to invoice the Insurer for the New OEM/VM part. Upon request by the Insurer for proof that the New OEM/VM part was procured and fitted, the Repairer provides a copy of the relevant Dealership invoice and claims that it was fitted, when in a number of cases it has not.

Anecdotally, say this insurer, dealers have advised that they currently experience a parts return rate of approximately 14 per cent, but believe the legitimate rate should be closer to approximately five per cent. This is consistent with the alleged fraudulent


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practices uncovered during the routine audits of repairer invoices. These are unlawful practices. They defraud the insurer and ultimately the public.

It appears the problems associated with the lack of transparency stem from the lack of disclosure of all relevant details and levels of financial interest that repairers might have with associated entities within a particular transaction.

Insofar as the clauses of the Code operate they do so in manner that detracts from the Principles of the Code. They do not require repairers to substantiate claims, and provide greater transparency. This could be addressed by the insertion of an appropriate clause:


A clause stating: “Repairers will be transparent to Insurers in all of their dealings and make available to Insurers sufficient evidence as may be required to substantiate claims for costs in relation to parts, materials and labour.

Repairers are required to provide full disclosure to Insurers of any arrangements for commissions, credits, allowances and rebates that they receive from vehicle manufacturers, dealerships, suppliers and customers.”

Mediators, however point to the difficulty repairers’ face when it comes to the issue o “genuine” versus “non-genuine” parts. From the mediators perspective it is insurers who are driving down costs by forcing reluctant repairers to use non-genuine parts citing this example:

“The insurance company has pushed the repairer to use a non-genuine aftermarket part on a vehicle. The non-genuine bumper does not meet OEM standard and there is no specification that states it does meet OEM standard. Repairer: ‘When I refused to use this part and I was denied payment. I was subjected to bully tactics by the insurance company.’ The repairer had no choice but to take the matter further.”

The mediator goes on: “Aftermarket parts do not have any specifications that meet OEM standards, do not match the original presentation of the vehicle, are not manufactured by the manufacturer and thus don’t bring the vehicle back to pre-accident condition.”

“Clear definitions on what is accepted when it comes to the use of non-genuine parts are needed.”

Smash repairers’ organizations agree: “In recent years, the practice of using non-genuine (or parallel parts) has increased dramatically owing to the lower cost of these parts relative to genuine parts sourced from OEM recognized suppliers.

(It is worth noting that a significant cause of the higher cost of genuine parts relates to the fact that vehicle suppliers are required by Australian Consumer Law – Consumer Product Guarantees - to hold parts stock for significant periods of time after a new vehicle is sold).”

“While these parallel parts appear to be identical to genuine parts, these parts are generally not subject to the same testing regime as genuine parts. Further, the transient nature of many of the overseas suppliers of these parts gives rise to a risk


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that consumers may not have any recourse to recover damages from an international supplier in the event of a part proving faulty.”

“Discussions with the Federal Chamber of Automotive Industries (FCAI) revealed that this issue is also of growing concern to Australian vehicle manufacturers and suppliers. The concern of these stakeholders primarily relates to the need for consumers to be made aware that the use of such parts risks voiding new car warranties – some of which are now being offered for 8 to 10 years from date of first sale.”

“The Smash Repair Industry accepts that there may be an opportunity to reduce the cost of repairs through the use of non-genuine (or parallel) parts in the repair of motor vehicles.”

The smash repair Industry believes, however, that any such savings must not come at the cost of the future safe operation or durability of the repaired vehicle. Therefore:

“The Smash Repair Industry supports the view of the Federal Chamber of Automotive Industries in seeking specific amendments of a number of existing clauses to improve consumer awareness of this practice and protect against the consumer unwittingly putting their new vehicle warranty at risk.”

One individual smash repairer links disputes over “genuine” versus non-genuine” parts to industry bullying: “Insurance companies are now directing repairers to access parallel, non-genuine or second hand parts on vehicles they are repairing in order to reduce the insurers cost of claims.”

“The dealers that supply genuine parts for the OE manufacturers are increasingly being cut out of the market by this initiative whereby the repairer only purchases an insignificant number of parts from his total order from the dealer. This will ultimately lead to the OE suppliers withdrawing from the market as they will not be able to maintain a profit that can sustain the business.”

“In addition the consumer is generally not aware that his vehicle is being repaired with parts that maybe sub-standard or non-genuine. However, when faced with a choice, the repairer will accept the insurance assessor’s instructions relating to repairing the vehicle, or face losing the job. This opens the repairer to possible legal ramifications in the future; however the immediate concern is for the survival of his/her business.”


The insertion of a Code clause “requiring insurers to notify customers of the types of parts used in the repair of the vehicles (i.e. aftermarket, non- genuine, parallel and ‘grey’ parts). Ideally this notification should occur prior to the commencement of work – to allow the consumer to change the decision if desired – but should be communicated upon delivery of the repaired vehicle as a minimum requirement.”

Even one major insurer concedes the need to tighten Code language surrounding the use by insurers of “genuine” versus “non-genuine” parts suggesting the following:


9.2 “Insurers will clearly state, in plain language, in their Product Disclosure Statements their policy relating to the use of new, non-genuine and recycled parts, sub-let repairs


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and guarantees and warranties.”

“Genuine” v “non-genuine” parts – the relationship with trade practices law

In submissions to the Review, repairers quote the Australian Motor Industry Federation view that insurers have the right to take all reasonable steps to contain vehicle repair costs provided such steps do not breach relevant Trade Practices and Australian Consumer Affairs Legislation – and that such actions fully indemnify the consumer against their loss in terms of not reducing the safety and utility of the repaired vehicle.

Equally, repairers recognize that they too must operate within the confines of the same legislation.

For that reason repairers see the current Code as being relatively silent in respect of these issues, although adherence to some aspects of relevant legislation is implied.

Industry and Report Recommendation #24

A new Code section is introduced explicitly stating that both insurers and repairers will not breach relevant Australian Trade Practices and Australian Consumer Law.

Choice of repairer – claims of consumer confusion

The smash repair industry says its analysis of the performance of the Code reveals significant confusion amongst customers with respect to the Choice of Repairer policy of their insurer.

This confusion, it says, is particularly evident in those jurisdictions where allocated towing schemes exist, often resulting in customers having their vehicles moved to multiple locations.

The industry cites AMIF, which notes that the provision of reasonable Choice of Repairer has been asserted by the industry investigations completed by the Australian Industry Commission (1995), the Australian Competition and Consumer Commission (2003) and the Australian Productivity Commission (2005).

Despite the importance of this aspect in these previous deliberations, says the repair industry, the existing Code is largely silent on this issue.

The repair industry disputes any argument that the provision of choice of repairer will result in increased insurance premiums on the basis that effective competition – aided by good levels of transparency and dispute resolution – should actually place downward pressure on future vehicle repair costs.


The concept of Reasonable Choice of Repair be embraced as one of the major principles for the future operation of the Code.

Accordingly Section 1 of the Code be rewritten to embrace the concept of Choice of


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Repairer via the inclusion of a new clause in this section (i.e. Clause 1.5).

NSR’s & anti-competitive behavior

Steering – In the eye of the beholder?

According to submissions to the Review the majority of notices received refer to Clause 9.3 of this section of the Code, which reads:

“Insurers will not make misleading or deceptive statements about the quality, capability or timeliness of Repairers that are not members of an Insurer’s NSR scheme;”

Insurers defend their Partner Repairer Networks in the following sorts of terms: “(it) has been in operation since July 2012 and is built around Repairers who share our values for quality, safety, integrity and excellent customer service. When our customers make an insurance claim we proudly and unashamedly promote their services.”

“Our strategy to partner with smash repairers for the benefit of the customer, and for both our businesses, means we work more closely with some smash repairers than others. However the fact that one in four of our customer’s cars are repaired outside our network through our “choice of repairer” policy for customers means we work with most repairers on a regular basis.”

“Our standard scripts used to ensure our customers are informed about our NSR Partner repairers were developed in consultation with industry stakeholders.”

Some repairers view “steering” in relatively benign fashion, refusing to categorize it as a form of industry bullying, drawing an analogy with building insurance: “Now they (the insurance companies) send a tiler and a builder and somebody – a plumber to do the guttering. It’s a business relationship. They’ve already got trusted relationships to get the job done right. Why – because they want you to reinsure, so that when you had that unfortunate circumstance it was handled quickly, professionally and with quality. Steering – it’s not steering, that’s just good business.”

Industry mediators, however see a darker side: “When customers nominate their own repairer under “Choice of repairer policy”, insurers are delaying assessment process to discourage and steer business to their own preferred shops implying to customers that there is more convenience and quicker repair time involved than with their nominated repairers.”

“When customers nominate their own repairer under “Choice of repairer policy” insurers are engaging in words such as “they are not one of our recommended repairers or they are not on our approved list of repairers. However you can use them if you wish but there will be delays in processing your claim including assessment and authorizing repair times as they are not on line with us.’ “

The mediators ask: “Isn’t this discriminatory to customers wishing to use their own choice of repairers? Insurers appear to be engaged in intentionally creating doubts to manipulate the customer’s decision to the insurer’s benefit.”

The clear impression left by submissions to the Review is that insurer teleclaims officers seek to confuse the claimant to the point where they accept direction on where to go to get their car repaired.


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For example; the teleclaims operator will often overstep the mark and breach the Code by saying such things as "you do realise they are not one of our preferred repairers and if you do have your car repaired there you won't receive a lifetime warranty" (which they do).

They go on to state that it will take longer to get it repaired and that the insured will have to keep track of the repairs themselves and if there are any issues, they will have to resolve them themselves.

According to one Review submission from a repairer: “The teleclaims officers try to convince the insured to take it to their preferred repairer by making it sound so difficult and time consuming that it is very off putting and puts enough doubt in the insured’s mind. Most of the things they tell them are untruths, but no matter how many IDR's we put in and promises we receive that they are rectifying the problem, it still keeps happening on a regular basis.”


Expanding Section 9.3 to include examples of unacceptable practices by insurers’ teleclaims officers as a basis upon which repairers can base IDR & EDR actions.

NSR’s – anti-competitive or both the future & the customers’ friend?

NSR’s are one of the most vexed issues confronting the CAC and the Code generally. Depending on your perspective they represent either the inevitable rationalization of the industry – or the end of the individual smash repair business.

The difficulty for the Code and its administrators is that dealing with NSRs goes to the heart of the Code’s intentions – not to interfere with the business models or competitive advantage of either repairers or insurers.

In the case of insurers there seems little doubt that NSRs in some form or other represent their competitive future.

So much so that the debate in some quarters has already moved onto to whether the Code is equipped to deal with such issues at all. One major insurer argues that NSRs should be exempt from the Code:

“Section 5 of the Code imposes a number of obligations on insurers in relation to network smash repairer schemes. Section 5 is highly prescriptive in relation to some of the contractual aspects of the establishment and operation of repairer networks. The use of network repair schemes, or alternative commercial arrangements between insurers and repair facilities (eg direct ownership), has proven to be a quite dynamic feature of the motor insurance market and the commercial relations between insurers and repairers.”

“Experience has demonstrated that overly prescriptive and restrictive attempts by the Code to regulate ongoing contractual arrangements between insurers and repairers have been unsuccessful. Moreover, any attempt to further regulate such arrangements would be counterproductive and, indeed, would likely only produce added incentives for insurers to establish alternative vehicle repair arrangements that can operate


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outside commercially restrictive provisions within the Code.”


That Section 5 be removed from the Code. If that is not agreeable to the CAC there should be no further modification of Section 5 to further regulate the direct, ongoing contractual arrangements between insurers and repairers.

Repairers too acknowledge the dynamism of the market regarding the development of NSRs. But some see it in terms of galloping anti-competitive behavior by the insurers.

Says one industry player: “While the principles as they are currently published are a true reflection of the Codes original objectives, it would seem to be out of date in reflection of the current state of the industry.”

The opening paragraph where the phrase reads, ‘...to promote the efficient operation of, and consumer confidence in, professional and competitive motor vehicle insurance and repair industries in Australia’ is no longer accurate, we see now insurers partnering in large volume based repair enterprises which effectively nullifies any such competition.”

Repairers say their surveys show that NSRs (also known as Contracted Repairer Schemes and Preferred Repairer Schemes) are not being operated in accordance with the Code. In particular, the industry is concerned about the lack of transparency with respect to scheme criteria.

Discussions with the smash repair industry reveal that these schemes are constantly evolving, giving rise to new issues with respect to trade practices. The inclusion of provisions specifying that elements of the repair process are outsourced to specific suppliers selected by the insurer, for instance, have given rise to questions about possible breaches of third line forcing provisions of the Trade Practices Act.

In addition, the direct participation of some insurers in the smash repair industry (e.g. Suncorp’s Smart Shops) in tandem with the operation of contracted smash repairer schemes and direct sourcing of smash repair services, raises serious questions about the potential for insurers to misuse their market power with respect to directing smash repair work in the future.

Repairers say this issue must be immediately be addressed to reduce the risk of future negative impacts on market competition within the smash repair industry.


That Section 5 of the Code should be rewritten to accommodate the following requirements with respect to the operation of network smash repair schemes:

Inclusion of a schedule detailing the minimum requirements of a network smash repair scheme.

Such a schedule should specify uniform national requirements in respect of

o (a) uniform criteria for scheme participation,


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o (b) specific requirements for publication and smash repair access to of scheme requirements,

o (c) minimum notification periods for scheme enlistment,

o (d) criteria for both scheme termination and continuation, and

o (e) explicit limits on practices that risk breaching trade practices legislation with specific reference to misuse of market power and third line forcing.

A new review panel

Repairers would also like to see the establishment of a new review panel for oversight of the operation of network smash repair schemes in accordance with the above requirements and resolution of scheme disputes.

The panel could be developed along similar lines to the Insurance Council of Australia’s Claims Review Panel.

On the other side of the ledger other major insurers are adamant that NSRs are the way of the future and are demanding that the Code be amended to hasten their development. One such insurer has submitted a raft of proposed Code amendments.


The following Code changes (in bold italics) to accommodate the development of NSRs:


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Contracts offered by signatory insurers must be compliant with the terms of the Code.

2.1 Signatories to the Code


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3. DEFINITIONS


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“Funny money” & “funny time” – not funny not efficient


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Appendix 1 the MVIRI Code of Conduct

» Download the Code

Appendix 2 Executive Counsel Australia

Executive Counsel Australia

1. The Mission Executive Counsel Australia’s mission is clear. To provide our clients with a highly polished, outcomes-focused, non-politically aligned Government Relations and Media Management consultancy. This platinum service provides a unique merger of:

1. highly focused strategic media and crisis communications campaigns 2. elite advocacy counsel for all tiers of Government, local state and national, as well as

organizations and individuals both inside and outside a crisis context 3. high-end value, strategic stakeholder communications crisis advice

Executive Counsel Australia is unique in its client-orientation. We are based in Canberra with a national and international reach. Clients receive a Washington-style tailored service, which will ensure a complete and value-added immersion in the experience of high stakes commercial, political and international policy development, including how it will affect your arm of government, business or organization in a crisis framework. Discreet media management and communications campaign skills are also applied to ensure a client’s issues, concerns, profile and reputation are all managed in a strategic way that results in the client being considered a thought leader who is media savvy and community-minded. Crisis management strategies and tools Executive Counsel Australia has a strong track record in assisting companies, associations, individuals and governments, local, state and national before, during and after an issue or an unexpected crisis that, if not managed well, could undermine their credibility and reputation. Appendix 2 Bios of Executive Counsel Principals

Glenn Milne

Principal

Executive Counsel Australia

Glenn Milne provides high level strategic political and commercial advice as well as media mentoring to CEOs and Chairpersons and their boards – from corporations to associations. In his role as Principal of non-politically aligned lobbying firm, Executive Counsel Australia (ECA), Glenn offers policy and political guidance to major corporates, industry groups and associations ensuring they engage with senior governmental, political and bureaucratic stakeholders at both a state and federal level to achieve their policy goals. This advice is based on 30 years immersion in the federal and state political spheres.


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He has most recently been assisting ECA client, Genworth Financial, Australia’s leading provider of Lenders Mortgage Insurance, by acting in the role of Government Relations Director. As well as Executive Counsel Australia (ECA) consulting staff, Glenn is in business partnership with Managing Director, Jannette Cotterell formerly of well-known lobbying firms, Crosby Textor and Gavin Anderson. The position of Principal at ECA is results based in a highly successful business. Glenn draws on his knowledge of Federal and State politics, which he has been covering as a member of the Canberra Press Gallery for more than three decades including six Prime Ministers. He is impeccably well connected on both sides of politics. He has provided high-level Government relations strategies, media training and awareness to many blue chip clients and is often engaged to MC, deliver ‘dinner’ speeches or provide organizations and their members with insights into the shifting political landscape. Glenn has worked as Political Editor for “The Australian”, The Seven Network and News Ltd’s Sunday newspapers. A Walkley Award, Logie and News Award winner he is acknowledged as one of the most informed political commentators in the country and broke the historic Howard-Costello “Walletgate” story that led to John Howard going to the 2007 election as Liberal Leader and losing. In his media career Glenn was most recently the Political Editor for News Limited’s Sunday publications across the country. He was a Political Contributor to “The Australian” and was a former regular panelist on “The Insiders” and has appeared on “Meet the Press” and “The Bolt Report”. Prior to joining News Limited’s Sunday mastheads, Glenn was Chief Political Correspondent for the Seven Network and Political Editor of “The Australian”. Glenn was also chosen as a contributor to the definitive book on John Howard’s Prime Ministership, “The Howard Factor”. He was included in the book “The Best Australian Political Writing of 2007” edited by Tony Jones. He has also been published in The Sydney Institute’s “Sydney Papers” and the Institute of Public Affairs collected papers. He most recently worked as Political Correspondent in Australia for the global Al Jazeera cable television network and wrote for the ABC’s The Drum website as well as appearing on the ABC News24 program of the same name. Glenn has also served as a Vice President and Director of the National Press Club and as a member of the National Parliamentary Press Gallery Committee. He was most recently asked to travel to the United States as a delegate to the US-Australian Leadership Dialogue, the leading private-public partnership in the bi-lateral relationship, and was chosen to be part of the “G’Day USA” program promoting Australia to America.


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Jannette Cotterell Managing Director. Executive Counsel Australia

As the founding Managing Director of Executive Counsel Australia, Jannette

Cotterell has 16 years’ experience as a lobbyist and communications consultant and 13 years as a journalist both in Australia and overseas. For five years, Jannette was engaged by Australia’s leading communications and research strategists, Crosby|Textor (as an apolitical Director and Head of its Canberra office). She was the Deputy Managing Director of Gavin Anderson and Company in Canberra prior to that. Jannette delivers to clients an outcomes-focused, platinum service Government Relations and Media Management consultancy. She is uniquely non-politically aligned and highly regarded by all sides of politics with extensive knowledge of Parliament (Federal and State),

the Senate and can leverage her networks with the Greens and other key Independents as well as the business and media communities.

She specialises in assisting major companies and organisations deal with a range of political, regulatory and media management issues as well providing her clients with effective risk analysis, stakeholder and crisis management strategies. Jannette is a regular panelist on the ABC TV 24 Hour’s half hour panel ‘On Capital Hill’, ABC TV’s The Drum, Sky News ‘Agenda’. She also appears weekly on Fairfax TV on a segment called Counter Spin – Breaking Politics. Jannette is often asked to write for the Australian’s online opinion site ‘The Punch’ and the ABC’s ‘The Drum’. Jannette has designed and spearheaded many sensitive media and grassroots communications campaigns for clients. These include:

Working closely with the CEO and executive team of a major international financial services company to develop and promote alternative housing and mortgage-related policies at a Federal and state level. This company went from having no presence with key influencers to now being regarded as a highly respected independent industry sounding board for Treasury Ministers and their Opposition counterparts.

Spearheading a complex media and advocacy campaign on behalf of cancer patients, doctors and community pharmacists that led to a $300 million budget cut being overturned by the Federal Government. Importantly, goodwill remains between stakeholders and the Government.

Designing and implementing a high-impact, media and stakeholder management campaign to overturn a tax in the Independent-controlled Senate

Developing an effective education campaign targeting regulators, bureaucrats and cabinet Ministers to ensure complex financial reinsurance products were not legislated out of existence.

Managing the media and stakeholder relations strategy over the two-year merger of two major Private Health Insurance funds. Developing and implementing a comprehensive government relations strategy for the merged entity.

Developing a long-term research and communications strategy to manage credit card reform for one of Australia’s leading banks.

Leading a research-driven, reputation enhancement project for one of Australia’s most dynamic financial services companies following sustained shareholder and media criticism of its performance;

Providing high-level advice (media, regulatory and political) to the CEO and board of an international organisation during a sensitive but full-scale closure and sell-off of its national chain of supermarkets.

Securing more than $40 million in one-off Government funding for a major international aviation company to enable it to build part of a new jetliner in Australia.

Building a successful beneath-the-radar campaign to oppose the foreign takeover of an Australian resources company and working with a private equity consortium in its bid for a major Australian blue-chip corporation.

Jannette also provides reputation protection and positive positioning advice for organisations, their CEOS and their boards. Jannette was an Executive Producer for the BBC World Service Television


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News in London and then later the Series Producer with the Seven Network’s current affairs program WITNESS in Sydney. She was a Walkley award finalist for a business story. Jannette was the series producer on Nine’s Money and Good Medicine programs. Jannette honed her political skills in Western Australia where she was chief state political correspondent for the Nine Network. Jannette is registered on the federal government’s lobbyist register and the political registers of relevant State Governments. She has been a full member of the Australian Market and Social Research Society (AMSRS). She has provided pro-bono advice to the Ambassador of Afghanistan and the cancer patient advocacy group, CanSpeak. [email protected]

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