The body which represents more than 50 independent car repair shops in Northern Ireland is calling on Stormont ministers to urgently investigate insurance industry practices after publishing details of an independent report which showed that many garages are being forced to take on repair work at below-cost rates.
The Northern Ireland Bodyshop Alliance (NIBA), which supports more than 200 jobs across the sector, said it had evidence that that many of its members were being asked by insurance companies to take on repair work at rates as low as £24 per hour – much lower than the £33 per hour required to cover its member’s basic running costs.
NIBA said the findings of its independent cost survey report showed that labour rates for repairing cars involved in accidents offered by certain insurance companies were now almost 30% below the breakeven point for garages.
It now wants repair rates to be set independently from insurers.
Sean Bradley, Chairman of NIBA, said: “This is a ground breaking report. For the first time, we have an independent report which highlights the actual costs of running a bodyshop here. The report puts this figure at £33.46 per hour. Insurance companies, which represent around 50% of an average bodyshops turnover, have kept the rates artificially suppressed year after year and some have even cut the rate to around £24 per hour. It is clear that this is not a sustainable rate.
“We feel that extremely unfair practices are rife in the industry and we are calling on Stormont to look into these issues. The insurance industry cannot continue to make large profits at the expense of keeping Northern Ireland repairers profitability low, or indeed non-existent. They use various tactics to threaten independent repairers that the work will be taken away if they don’t agree to work for these reduced rates.”
“There are clear parallels with the recent protests held by farmers against the supermarkets. The multinational companies are putting pressure on the small independent business to cut their prices. This means that repairers cannot invest in the equipment and staff training which is required to keep up with modern vehicle technology. It is paramount that vehicles are repaired to a high standard to ensure safety is not compromised”.
“Insurers say that any increase in repair costs will have to be passed onto policyholders. The reality is that only a very small proportion, around 10%, in premiums goes towards the labour cost of repairing the vehicle”.
The survey, which was commissioned by NIBA so that bodyshops could have a greater understanding of their running costs, was conducted by Keith Browne & Co, Chartered Accountants who had carried out a similar exercise for The Society of the Irish Motor Industry. The breakeven point for costs in that survey conducted in 2011 was €48 per hour. Insurers in the Republic pay in the region of €50 – €55 allowing a small margin of profit to the bodyshop.
NIBA intend to share the findings of this report with key stakeholders within the industry over the coming months. If you would like a copy of the full report, please email email@example.com