Insurance drive towards on-the-spot service

Date: 19/02/1998

By Leyla Linton

MOTOR insurance provides one of the most blatant examples of how the single market does not work.

Europeans who drive across borders to live and work and take advantage of the basic EU principle of free movement find they cannot take their car insurance with them for more than a few months. They may also find that their 'no-claims bonus' is not recognised by insurers in other European countries.

Insurance companies, it seems, are in no rush to change this state of affairs. Even Robbert Insinger, chairman of Centraal Beheer, a Dutch motor insurance firm proud of its innovative and customer-oriented services, dismisses the idea of cross-border insurance as impractical.

"Cross-border car insurance is not a serious issue," he says, adding that the legal framework is not sufficiently well-established.

He also believes that it would not be possible to give motorists an effective service across the Union. "You can sell cross-border, but in the service industry real fulfilment is in the post-sales period. On something like car insurance, you need on-the-spot service to do your job properly."

If, for example, one of Centraal Beheer's Dutch clients wants to be insured while living in Belgium, the company will refer him or her to its Brussels affiliate, CB Direct, with which it works closely.

As a result, motorists living outside the Netherlands cannot benefit from Centraal Beheer's ground-breaking system to drive down premium prices by controlling the costs of repairs, although it is trying to expand the service in Belgium through CB Direct.

The firm launched its innovative Repairer Project in 1989 in an effort to end situations where both insurers and clients were at the mercy of repairers - often main dealerships - and costs could not be controlled.

Insinger believes that some of these dealerships were, in any case, more geared towards selling cars than repairing them, and would occasionally pass the work on to a local garage and take a commission.

He also feels that the traditional route of intermediaries, brokers, survey and counter-survey was inefficient, expensive and not customer-oriented.

Under Centraal Beheer's system, clients in the Netherlands are referred to a network of more than 350 selected garages available 24 hours a day with which the company has clear agreements on rates and services. It promises that there will always be one such garage within 15 kilometres of a motorist insured by the company.

Insinger says this has helped to contain costs, and means that motorists enjoy the benefits of a prompt, friendly service, a free replacement vehicle, a two-year guarantee on repairs, no invoice and a lower premium.

Some repair shops even have technology which allows them to transmit pictures of the damage to the firm's help-desks, thus speeding up service.

Around 63% of the company's clients take advantage of the service, though it is not compulsory. Customers can always choose to have repairs done elsewhere.

Insinger is well aware that his firm's drive to push down insurance prices by directing clients to cheaper, independent car repairers antagonises the large dealerships, but he has no intention of changing tack.

This month he became president of an EU-wide campaign to ensure that independent garages are able to provide visible spare parts copied from the major car manufacturers as long as they compensate them for the original investment in design.

The European Campaign for the Freedom of Automotive Parts and the Repair Market (ECAR) has already persuaded the European Parliament to demand that this right be written into a proposed directive on industrial design, arguing this would protect independent garages and prevent a monopoly among car dealers. Governments have so far been opposed to the move, but there are signs that they may be prepared to compromise.

Success for ECAR in its campaign is essential for Centraal Beheer if its strategy to drive down costs by controlling who carries out repairs is to continue. But Insinger stresses that the campaign will also help all the uninsured who have no voice.

"The problem is that when you buy a car you take accident insurance for four years and then it becomes too expensive. Out of 180 million drivers,

90 million are without this insurance. Who is going to look after those people?" he asks.

Insinger is keen that car repairing should be demystified. "A car is not a highly engineered product, it is a box of Lego." He favours a more practical approach, as in the US, which he says has a "mature market" where universal repair shops thrive.