Guidance on preferred repairer arrangements in the insurance sector
What are Preferred Repairer Agreements?
Preferred repairer arrangements involve insurance companies entering into agreements with service providers to repair, restore or replace a car or building when an insurance claim is made. For example, if you need to have a cracked windscreen repaired, your insurance company may have an arrangement in place with a particular company where you are directed to go in order to have it repaired under your policy.
Why are they in place?
Preferred Repairer Agreements help insurance companies control the cost of claims by using competition between repairers to their advantage. They can also yield benefits for all users of insurance.
From an insurer’s perspective
They allow insurance companies to get a good price from the repairer and to reduce administration costs.
From a policyholder’s perspective
They offer peace of mind and clarity regarding the cost of repairs. They can also save the consumer the time and hassle of searching for various quotes for repair. In addition, if the repairer is chosen by your insurance company, you have the protection of the Central Bank’s Consumer Protection Code 2012 in relation to the quality of the work done.
From a preferred repairer’s perspective
Being part of such an arrangement may guarantee a steady stream of business.
Do they raise competition law concerns?
Some policyholders may feel at a disadvantage that they are not in a position to choose their own repairer. In addition, repairers who are not on a panel of approved repairers for an insurance company may feel at a disadvantage and that they are losing out on business.
However, having looked at the type of preferred repairer arrangements that are currently in place in the insurance market in Ireland, the Competition Authority (predecessor of the CCPC) formed the view that these arrangements generally result in benefits for consumers and that they do not breach EU or Irish competition law. The purpose of competition law and policy is to protect competition, not firms who are having difficulty competing.
