Allianz Cornhill said it would take a tough stance with the minority of bodyshops it alleges are avoiding compliance with environmental protection (EP) regulations.
The insurer said it would not allow its partner repairers to dodge the regulations just to save money.
Philip Brailey, manager of Allianz Cornhill's motor engineers unit, said: “Some bodyshops are alleging non-compliance with EP regulations in the name of economic survival.
“Low labour rates have been cited as a reason for repairers not sustaining a proper environmental policy.”
Brailey stressed that Allianz Cornhill would not sanction the use of non-compliant materials and warned any approved repairers found to be defying the law could be the subject of an investigation.
The Retail Motor Industry Federation said it was crucial that all repairers complied with environmental standards.
Bob Hood, RMI bodyshop services director, said its tougher inspection regime, to be introduced soon, would ensure no non-compliant materials were used.
He said: “This issue will not be left by the wayside and will be brought up at the next Allianz Cornhill consultative group meeting.
“I will also be contacting the new environment minister to ascertain what the government will do.”