9 Out of 10 Auto Repair Shops in Gyeonggi Province See Insurance Claims Reduced

[Suwon Ilbo=Reporter Park Nohun] A survey has revealed that insurance companies reduced repair cost claims in 9 out of 10 auto insurance repair cases at repair shops in Gyeonggi Province.

The finding indicates that when auto accidents occur, repair shops typically perform repairs without confirming the repair scope and amount with insurance companies first, and most repair shops do not receive full repair costs (insurance payments) after insurers later determine damages through loss assessment (the process of evaluating whether damages align with insurance purposes and calculating damage amounts).

Gyeonggi Province announced on the 7th the results of an 'investigation into unfair insurance company practices' related to auto insurance repairs, which surveyed 465 repair shops in the province from June to November.

In this investigation, conducted after the province received numerous complaints from repair shops and others regarding unfair practices by insurance companies early this year, the survey found that repair shops' claimed repair costs remained fully intact after insurers' loss assessment settlement in only 5.3% of cases, with 10% reductions accounting for 56.9%, 10-50% reductions for 29.8%, and over 50% reductions for 8.0%. Notably, 57.2% of repair shops did not receive notice of reasons for the cost reductions.

89.0% of respondents perceived the auto repair cost standards set by insurance companies as inadequate.

The reasons (multiple responses) were ▲failure to reflect wage increases and raw material costs at 79.5% ▲standards that do not match reality at 67.9% ▲incorrect standard setting itself at 55.8% and others in that order.

Regarding whether repair shops received loss assessment settlement details from insurers before auto repairs, 85.1% (occasionally provided 17.8%, not provided 67.3%) answered they did not receive them properly.

Other unfair practices included ▲being forced to use specific repair cost calculation programs at 30.3% ▲reduction of standard work hours at 37.9% ▲limitations on repair scope at 37.9% ▲provision of free pickup services at 31.6%, and 29.5% of shops experienced repair cost reductions when they raised objections to insurers or failed to follow instructions.

Accordingly, 74.4% of repair shops believe standard contracts between repair shops and insurers are necessary to establish fair trading practices.

They also submitted recommendations including reflection of wage increases and material cost increases, and establishment of mutually beneficial cooperation agreements with insurers.

Meanwhile, the province also surveyed opinions from 100 auto parts dealers and 1,000 residents in the same investigation.

Auto parts dealers, operating under a similar structure to repair shops in relation to auto insurance, unanimously approved the adoption of standard contracts at 100%.

Residents perceive that auto insurance premiums are increasing annually (60%), with 26.1% responding that they are increasing without any particular reason.

Gyeonggi Province plans to deliver the investigation results to the Ministry of SMEs and Startups to advance fair transactions between repair shops and insurers in consignment transactions.

The province also plans to discuss with industry experts the adoption of standard repair cost contract agreements for establishing fair trading practices and mutual cooperation, as well as measures for institutional improvement.

Kim Ji-ye, director of the Gyeonggi Province Fair Trade Bureau, stated, "Through this investigation, we have identified basic transaction conditions between small and medium-sized repair business operators and auto parts dealers in the province and insurance companies to establish fair trading relationships," and added, "We will continue to monitor unfair issues in this field and make our best efforts to protect the interests of small and medium-sized businesses in the province by recommending relevant institutional improvements and amendments to related laws."