The spareparts undying war between motorists and the insurance service providers over spareparts

Of late I have come to find well structured dialogue as the one good way to resolve sticky issues. Some conflicts theorists of the past like Karl Marx and lately Alan Sears and James Cairns in their novel ‘’A Good Book, in Theory’’ argued that the world is generally a place full of conflicts.

Conflicts not necessary violent ones seem to be part of human nature arising from malfunctioning in the society especially in inequitable distribution of resources and instability in the economic life.

Alan Sears and James Cairns saw the financial crisis in Western nations as a result of the structure of the global economic system that enabled large banks avoid government oversight that led to taking huge risks that only rewarded the select few.

I sought some views from some of the players in both industries; insurance and auto repairs, who inevitably include underwriters, brokers, agents, assessors; spare parts dealers and garage owners and I see numerous challenges ahead.

Not necessarily rhyming the same, I’m seeing an emerging ugly fight between repairers and the insurance companies over accident vehicle repairs in relation to matters spare parts. This is an emerging conflict with roots in the malfunctioning in the ecosystem that bind them together.

I have a personal experience and interest in this matter emanating from career life, networks and investments advisory. I grew my career for a significant period in the insurance industry.

I know quite many people including senior leaders in the insurance industry. I was nurtured in this industry and owe people who are either leaders or professionals in this industry a lot of respect and comrade relationship.

I also through family ties and friends have deep interest in matters auto industry. It is one of the industries I follow its trends on a global scale. I have mixed with many vehicle traders, buyers, spare parts dealers, brokers and repairers for a long time. Based on what I have read, seen and watched in the media there looms a problem in accident auto repairs.

First this is a bad dispute that may put the lives of the public into risk. The insurers have claimed that part of the problem within the auto claims lies within the fraud perpetrated by a chain that include service providers.

Of course fraud anywhere there is, have its tentacles in many places including in-house. I have seen numerous reports from the insurance industry especially through their lobby group Association of Kenya Insurers (AKI) which paints quite an adverse picture on the Motor insurance.

Indeed, the claims levels in this category as illustrated in their data paint a class that look troublesome or unprofitable in the same league as Medical Insurance.

The blame is put on factors that adversely affect those two categories. So where is the problem? Is it in underwriting, claims settlements, fraud or what is it? Certainly part of the measures being put in place by insurance companies in Motor Insurance is to control the costs of repairs as much as possible.

The challenge is how to go about it. That is what has prompted some of the underwriters (insurance companies) to supply parts directly to garages to cut on costs of parts. So the question is how efficient and how will it help in containing the numerous challenges also within the spare parts supply chains?

In a world where parts are manufactured virtually from almost anywhere in the globe for diverse models of vehicles and especially in several Asian countries issues of quality and authenticity emerge more so for new parts.

For second hand parts which are mostly sold from cannibalized vehicle parts as a result of scrapping vehicles especially in countries like Japan through vehicle auctions and in United Arab Emirates especially in Dubai and Sharjah, it is a rough area to venture into.

Add the numerous problems we have with stolen parts from vehicles or from full units that have been stolen locally and in the region. This area is a typical of businesses with high propensity of crime, cheating, fraud and carries huge risks.

 

There is also the issue of guaranteeing quality products besides the handling of stolen property. I would honestly venture to say this area has high potential to damage reputations and also endanger the public.

With our culture of brokerage of almost everything and many shrewd and shadowy characters getting into the picture I see trouble. How garages and repairers manage to navigate this nightmarish area is a skill out of the ordinary.

The danger it also poses to the public in terms of quality in repairs or servicing due to sourcing problems, certain shadowy characters smelling an opportunity and the troublesome dealings with diverse dealers in the globe, there are reasons to be wary.

 

I believe there is a way out of this. The insurers have reasons to worry so are the repairers. I think as a person who has dealt with both worlds, the way forward is dialogue. The two industries have a reason to sit down and sort out sticky issues in their relationships. They both need one another.

Just like many other industries in Kenya old, current and emergent issues can only resolved through genuine engagement. We need insurers to survive and we need to build a robust and professional repair industry and both to continue developing our country, support employment and create more.

I’m ever worried on what is best for this nation which I strongly feel is the best for us who are in it and one of the gems of the world. We can’t afford industries collapsing or in trouble and least of all the insurance and the auto repair. They both support our economy in a big way.

-The Writer is a Researcher and Consultant