Panel beaters on the march

Anyone who had doubts about how serious the short-term insurers versus panel beaters battle was received their answer on Thursday, 15 November 2007. According to newspaper reports, thousands of panel beaters and tow truck drivers marched through the stree

The mass action follows a long standing dispute between Mutual & Federal and various vehicle repair associations. Reports circulated in the media early in July (when FAnews Online first commented on the matter) focussed on the South African Motor Body Repairers’ Association’s (Samra) dissatisfaction. Today the Guild of Independent Auto Body Repairers is having their say.

Abuse of bargaining powers

Thaba Mufamadi, chairperson of the Guild of Independent Auto Body Repairers, believes Mutual & Federal is abusing its power by forcing draconian repair policies on its members. He says Mutual & Federal is guilty of employing a “divide and rule” strategy, bypassing the guild and negotiating with panel beaters on an individual basis.

Apart from the mass action, Mufamadi claims that association members have not been repairing Mutual & Federal vehicles for the last six weeks. Nor will they repair them until the insurer addresses their concerns. We would love to hear from any policyholders who are experiencing problems with accident repairs. Simply complete the comment box directly after this article and click on the “submit” button.

The organisation’s actions seem rather unfair for policyholders. But the organisation has correctly identified them as the soft target most likely to illicit a response from Mutual & Federal. After all, if policyholders are unhappy the will voice their concerns with the insurer and not elsewhere.

The concept of fair profit

“The insurer wants to procure parts directly from the manufacturer, thus taking some of our functions,” said Mufamadi, confirming that as usual, the dispute centres on money. Vehicle repairers are unhappy with Mutual & Federal’s proposal to outsource various roles they traditionally fulfil, with parts procurement at the top of the list.

Mutual & Federal is trying to implement a business model where the panel beater performs the repairs only – with parts and other services being procured or supplied on an outsourced basis by the insurer. This would obviously cut deeply into the gross margins of the vehicle repairers, who have long used parts procurement to enhance profitability. This practice is at the centre of most disputes around the use of sub-standard or pirate parts in carrying out vehicle repairs.

It appears motor vehicle owners will suffer regardless of how this dispute is resolved. If Mutual & Federal refuse to back down, policyholders might experience unnecessary delays in repairs to accident damaged vehicles. And if the insurer does take a softer line, policyholders will have to accept the status quo and continue paying higher premiums as a result of exorbitantly priced spare parts.

Next step is a national strike

Panel beaters who partook in the march handed a memorandum to Keith Kennedy, a Mutual & Federal representative. Mufamadi is on record that should the insurer not respond to their list of demands within seven days, the organisation will call for a national strike.

FAnews Online notes that similar dire action was threatened in July – when tow truck drivers proposing refusing to tow Mutual & Federal policyholders’ vehicles from accident scenes in support of panel beaters. Of course nothing came of this at the time. We hope that common sense prevails in the latest dispute and that the parties manage to resolve their concerns in the boardroom, rather than taking it to the streets.

Editor’s thoughts:

The cost of repairing motor vehicles has soared of late. In their quest to keep motor vehicle premiums down, short-term insurers are justified in their concerned about service levels and costs at the country’s panel beaters. Do you think that short-term insurers should take a more proactive stance in managing vehicle repairs? Send your comments to gareth@fanews.co.za – or simply submit them online by completing the submission box below.