A new ‘code of conduct’ is set to impact car insurance in SA – these are the changes on the cards

On 1 August 2018, the Competition Commission called for final comments on its far-reaching Code of Conduct for Competition in the Automotive Industry.

According to Mark Griffiths, a director at Norton Rose Fulbright, the code will materially impact a range of stakeholders – including motor insurers.

“Although the code primarily targets original equipment manufacturers, it also places material obligations on insurers. The code is voluntary in nature but, once a party becomes a signatory, it will impose binding obligations that can be relied upon by third parties (including service providers and consumers),” he said.

Under the latest code, insurers must:

  • Fairly allocate work amongst service providers such as vehicle repairers;
  • Broaden the allocation of work to entities either owned or operated by historically disadvantaged individuals;
  • Publish a list of all approved service providers on their websites and/or other suitable media;
  • Offer consumers a choice of approved repairers within their geographic area;
  • Refrain from appointing any service provider for excessively long periods; and
  • Refrain from continuously renewing the appointment of the service provider.

Griffiths added that insurers must also submit annual reports to the commission to demonstrate compliance with the code. As part of these reports, insurers must confirm their aggregate annual spend and volume allocated to historically disadvantaged service providers.

“As part of its advocacy function under the Competition Act, the commission has been developing the code since early 2017,” he said.

“While the code is voluntary in nature, given the time and effort the commission has devoted to it as well as the commission’s view that these reforms are necessary, it is unclear what steps (if any) it will take if stakeholders decide not to sign up,” he added.

“Given that the code was positioned as an alternative to enforcement, it cannot be ruled out that the commission will be more inclined to investigate such stakeholders should they be the subject of ongoing or future complaints.”

Read: 8 ways to reduce your car insurance premiums

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A new ‘code of conduct’ is set to impact car insurance in SA – these are the changes on the cards