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Adressing the imbalance

05 September 2004 Angelo Coppola

On average the black economic empowerment (BEE) expenditure from short term insurance companies on damaged vehicle repairs has been less than desirable.

In the absence of a specific charter governing this multi-rand industry it will take a long time for meaningful transformation to take place, according to Gari Dombo, a senior executive at Alexander Forbes Personal Services.

Dombo said the shortage of black-owned or black empowered panelbeaters has presented insurers with a challenge particularly when it comes to meeting their procurement targets.

“The second challenge facing the insurers is that where black panelbeaters are found (particularly in townships) insurers would always want to assess the level of proficiency, the level of sophistication of machinery and equipment that the said panelbeaters use, to ensure that they meet certain preset minimum standards,” he said.

This poses a major challenge to the previously disadvantaged panelbeaters, he said.

“Especially given that in order for underwriters to be able to sign Service Level Agreements (SLA's) they have to meet certain criteria in terms of what work they are able to handle - be it structural, non-structural or major structural repairs.

While most insurers recognise the need to utilise BEE panelbeaters this has to be balanced with the need to satisfy clients,” said Dombo.

He said that most manufacturers have nominated certain panelbeaters for continuity of their warranties.

“In these instances, insurers hands are tied because they have to ensure that the warranties in place are upheld, that the client is satisfied with the level of workmanship and that there are few or no come-backs.

At the same time one also recognises the need on the part of the insurer to meet the BEE targets particularly in terms of procurement and correcting the injustices of the past.

Comebacks and repeat jobs always make the whole process more expensive, erodes the insurers bottom line and results in an unhappy client.” Dombo said.

The way forward
Dombo believes that a number of interventions are necessary to ensure that the previously disadvantaged panelbeaters also actively participate in this multi-million rand industry, namely:

o A partnership approach - the traditional panelbeater joining hands with the emerging panelbeaters, pooling their respective resources together and forming a joint venture. The main advantages are that each partner brings equity; there is also a sharing of ideas, and a transfer of skills.

The partnership approach can also be extended to previously disadvantaged private individuals who can contribute some agreed level of equity and just be shareholders.

o Insurers involvement - the need for insurers to be involved in order to accelerate change in this sector cannot be over-emphasised. This involvement would assist previously disadvantaged panelbeaters in terms of further training which should not only cover the technical aspects but managerial and financial skills as well.

Insurers can also support these panelbeaters with non-structural work as well as allow them to work on vehicles under warranty.

o SETA (Sectoral, Education and Training Authorities) – Dombo suggested that to accelerate change the government (through established SETA's) should look at empowering the existing panelbeaters through training and development, access to soft loans to enable them to expand their businesses as well as facilitate the link with the insurers to enhance communication and bridge the gap.

o Previously disadvantaged panelbeaters - the BEE panelbeaters could also look at joint ventures among themselves which should create economies of scale, encourage cross-sharing of ideas and ultimately ensure that the end product is competitive.

o Manufacturers - a top down approach (with the manufacturer's involvement) in driving the process of approval of BEE partners to support their warranties is critical. This should be done in conjunction with technical training, which will ensure that minimum quality standards and levels of delivery are maintained.

o Statistics - Proper statistics need to be collated in terms of the number of panelbeaters involved. There is certainly a lack of a proper database particularly for the previously disadvantaged panelbeaters.

"Clearly the challenge is bigger than meets the eye and approaching it on a company-by-company basis, whilst noble, is not adequate,” said Dombo.

“It is the bigger picture that matters and all stakeholders need to be involved to ensure a common understanding and approach.” He said it is like a puzzle - without the other pieces, the puzzle is meaningless.

Government, manufacturers, insurance assessors and the panelbeaters themselves all need to be involved.

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