Insurer to work with just four partners in bid to cut costs
Zurich has slashed the number of vehicle repair firms it works with from 170 to just four, in a radical bid to reduce complaints from policyholders and shave millions off its costs.
The move will significantly reduce the volume of business available to many repair shops and place more than 40 at risk of closure, the Motor Vehicle Repairers Association has warned.
Bill Payton, chief claims officer at Zurich, said the reduction would take place over the next few months, and would save tens of millions of pounds.
He added: “From a customer angle the biggest complaints we received were about the quality of repair, and we had to get that improved.”
Payton said Zurich believed that having a smaller number of more strategic partnerships with the four national chains would be better for business.
The decision to consolidate its panel also allowed Zurich to monitor its mechanic shops and ensure they were up to date with the latest technology necessary for repairing modern vehicles, which the company hoped would put a stop to customer complaints over quality, added Payton.
Mike Monaghan, chief executive of the Motor Vehicle Repairers Association, said at least one in four of the repair shops that had been in Zurich’s approved network relied on the insurer for a third of its overall business.
“Itâ€™s potentially something that will cause distress for bodyshops that have been faithful to Zurich all these years
Mike Monaghan, MVRA
He said: “It’s potentially something that will cause incredible distress for those bodyshops that have been faithful to Zurich for all these years.
“For some of these shops, 20% to 30% of their business comes from Zurich and, if they are not able to quickly find replacement business, it could mean financial loss and potential closures.”
But Monaghan stopped short of condeming the move, saying: “In 20 years of running the MVRA I know insurers are always having to try new models and sometimes they don’t get it right. It’s a precarious position, but it would be wrong for me to criticise the fact [Zurich] is trying something different.
“We just hope Zurich will provide a level of security to the exiting shops and give them time to seek out new business opportunities.”
Zurich has said it will respect its contractual obligations to the exiting companies.
Last year, Norwich Union made a similar consolidating move and reduced its network to seven national firms.