Unfair Car Insurance Practices

After-sales market needs inspection

What share of business do independent after-sales services make up within a monopoly-orientated market? And how do insurers get involved in this market and with what effect? Automotive Aftersales Power Breakfast organized by The Diplomat - Bucharest brought to the same table the top players in the industry in order to highlight the current challenges and opportunities of the sector. The market of car parts and the after-sales segment in Romania face tough issues including protectionism, monopoly, fraud, greed, unfair competition and the unfair approach taken by insurance companies operating locally. However, as a market with large development potential, with the car aftermarket segment alone accounting for EUR 1 billion, these problems could find solutions if car importers, dealers, insurance companies and regulatory bodies worked together to the same economic rules. To facilitate such a result, top managers and key leaders in this segment representing both large companies and regulatory institutions sat around the same table at the Automotive After-sales Power Breakfast in order to engage in an open dialogue and outline development trends of this segment in Romania, aligned to other European markets. On a market disputed by independent services providers and car producers’ after-sales networks, the automotive aftermarket segment is marked by a certain protectionism that is visible both in Romania and other European countries. For instance, in Romania there is a monopoly involving Dacia and Renault which forbids the sales of aftermarket car products for their car models, as Renault, Citroen and Peugeot do also in France. In the Czech Republic, it is the same situation with Skoda. This protectionism leads to an unhealthy monopoly economic effect on a free market, as there should be in Romania. There are countries with no less than two servicing units belonging to a car dealer of the same brand located in cities with fewer than 100,000 inhabitants. It is natural for the Romanian consumer to choose to replace the different parts of the car in the neighborhood, and therefore to choose an independent service, rather than traveling hundreds of kilometers to the car producer’s official service unit. Before the economic turmoil, everyone on this car market enjoyed extremely high sales, especially of the branded spare parts sold in the official dealers service units. In the meantime, with the consumer becoming more aware of and attentive to expenses, but also looking for a fair price-quality ratio, the volume of clients who can afford those services has fallen. Most drivers are searching for independent car servicing units or even starting to improvise and to repair their cars themselves. What we’re seeing now is an adjustment of prices and increasing competition from independent car service networks. One of the biggest problems faced by car dealers, independent car service chains and spare parts suppliers is the policy of the insurance companies. Companies are unhappy that insurers are trying to impose certain rules and market policies, considering it unfair competition and interference. The representatives of service shops and spare parts suppliers claim that the insurance company will send the customer only to certain service stations to have their cars repaired, without giving the choice where to go. Even more, insurance companies will impose the type of car parts that will be used in the car, sometimes not of the best quality. In Romania, the situation is, unfortunately, different. The insurer forces the consumer to use a certain service station for vehicle inspections or repairs. The service station is also forced by the insurer to use a spare part with a certain brand for the consumer’s car. Ultimately, the losses are borne both by the service station and the consumer. Insurers, under Romanian legislation, are not allowed to get involved in the sale of parts, but indirectly they do. Various issues have been raised regarding insurance companies and how they try to impose some rules on the automotive market. We need to get a clear picture of the insurance market and see where it violates the law, because this has already happened in our opinion, and we therefore notified the Competition Council and the Insurance Supervisory Commission to start an investigation. Insurance companies, by their way of calculating the claim, give customers cash compensation paid in advance. I think this somehow eludes the law. In terms of smaller independent service units, there are many cases where no invoice is issued and therefore no tax is paid. We must be honest: it is an income and any income should be taxed. This competition, without the same base, can never be fair, I want to have competitors that are taxed and authorized by the Romanian Automobile Register (RAR). In addition, in Romania there are many service stations which, for example, say they have replaced the wing of a car and in fact they will only repair it, and the insurance company is defrauded. RAR should also inspect more often the small and independent service units, not only the large ones in order to make sure they function legally. Unfortunately we also have problems with insurance companies in the sense that sometimes customers have to pay from their own pocket the bill and claim the money from the insurance later. As sometimes the bill is in the range of thousands of euros, this is impossible to be covered by some customers. Still, they can choose the desired new auto part for their cars as we have implemented three levels of spare parts choices. In recent years, insurers paid large sums of money to car services companies but today, we can see on the market exactly the opposite approach, insurers not willing to pay any more for anything. The effect is directly linked to the current economic trend. It is also a problem of prices locally. For instance, an inspection carried out in a German after-sales unit can cost less than half as much as in Romania. I have paid EUR 400 for an inspection in Germany while, in Romania, it would have cost me more than EUR 1,000. Regarding the car parts sold on the black market, some statistics show that in Europe, the market is about 0.5 percent. In Romania, the market is no higher than this and I do not think that it is a big problem for us. What is interesting is that consumers are not informed about the level of quality of the car parts that they should put in their cars. Consumers should be informed that there are several types of quality parts that are differentiated by price and consumers have the option to choose. Aftermarket parts are very good and can be compared to the original parts. A free and competitive market is beneficial for the client, but we have here a slightly more delicate problem. Some spare parts represent a threat, some pieces are sold at car fairs, others come from outside the European space so are not taxed, leading to a big problem. For us, as dealers, we can’t compete on a market that is not healthy. This also affects the distributors of car parts because companies have to pay fees, salaries and taxes and this unfair competition is not good, neither for us, nor for them, as parts suppliers. Because there is no common position on the market, people who trade illegally have an advantage over the companies trading genuine parts. We believe that counterfeit car parts are not a problem for us. The black market in Germany for example makes up one percent of the total market. Car parts that come via illegal channels are not necessarily a problem. Our market problems relate to the protectionism of some car manufacturers as for example we are not allowed to sell Dacia and Renault parts. We also have a similar situation in France where we are not allowed to sell Renault and Peugeot and with Skoda in the Czech Republic.

Unfair Motor Insurance Practice ? - Helpful Tips and Advice That ...

Your door touched her car – you have admitted that and that is probably as far as the insurance company will look! Unfortunately, when you get into a situation like this it becomes an expensive and long-winded process to prove or disprove someones statement – the insurer would probably just pay up as it’s cheaper and quicker.

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