Scaremongering is the biggest problem for insurers when it comes to promoting and using vehicle recycled parts or ‘green parts’. This is the viewpoint of David Williams, Managing Director, Underwriting and Technical Services at AXA Insurance UK when asked at the ATF Professional conference held in November 2019.
So what is stopping the insurer adopting green parts?
He believes ‘the biggest thing stopping the insurer’s adoption of green parts in this country (as they control the vast majority of repair costs), is because they, as insurers are scared to be pushing it forcibly, as there are many people saying that insurers are going to make vehicles unsafe’. Although he stated there is no proof of this, converting public opinion is key to its adoption.
Understanding the reason for this scaremongering is important. He mentioned that there is vested interest from people to stop the use of green parts. He pointed out how established deals between repairers and other individuals stop repairers wanting to endorse sustainable approaches. Also he wished to be honest and open and agreed that if the potential margins from parts were reduced for repairers then they should be able to make it up elsewhere.
However, he felt a tipping point for the public to adopt green parts is coming. The awareness of climate change is becoming paramount and is being embraced. The certification of green parts, tracing their identity and to be able to show that they have been checked and tested will only help to make the public feel more at ease. He said that the relationship between insurers and repairers are now changing to ‘labour only’ deals and one reason for this is that they could look after the supply chain. By taking control of the supply chain the insurers could help facilitate and guarantee the quality of green parts to the end consumer and take that responsibility from the repairer.
He also said, what is important to controlling the supply chain is the effect that Brexit may have. If there is a delay in a repair, then extra costs are incurred including providing courtesy vehicles. He felt that if the supply could be controlled, then insurers could work with partners to deliver reused certified parts.
When raising the issue of indemnity, he questioned suggestions that using a green part was in breach of this because the customer was not in the same financial position as they were prior to the loss of the original part if such a part was used. He refuted this and asked why this has never been tested in court. He suggested that in the past, if individuals raised the indemnity question, it was easier for the insurer just to readily agree to use a new part but he now believes insurers would be more prepared to ‘push back’ if challenged.
Finally, he mentioned legislation; if insurers get on board and recognise Brexit as a potential tipping point and realise that legislation is going to come through, then these factors, combined with environmental responsibility will help future generations and produce a massive business opportunity. The scaremongering from individuals with vested interests, the fear of a loss in a markup or whims from large companies is making items go to waste and missing opportunities for recycling.