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From 25 June, members of the South African Motor Body Repairers’ Association (SAMBRA), a proud association of the Retail Motor Industry Organisation (RMI), received the green light to officially implement Pay Before Release (PBR). PBR has become necessary to effectively protect SAMBRA member businesses and their cash flow from insurer failure and poor payment administration, especially within the intermediary space of the insurance industry.
Richard Green, National Director of SAMBRA, an organisation representing almost 1,000 motor body repair businesses across South Africa and accounting for over 80% of all insured repair claims in the country, spoke out earlier this year saying motorists generally do not deal with a direct insurer but rather take out a policy through an ‘intermediary’, most commonly referred to as a broker. In these instances, brokers and other forms of intermediaries, act on behalf of the large insurers to authorise claims, provided they have a binder agreement in place with the underwriter/insurer. The motor body repair (MBR) industry accept these authorisations and complete the work before any payment is received, based on the historic trust-based relationships with Insurer business partners.
Green has regularly highlighted the pressure the MBR market is under as a result of increasing non-payment or delayed payment for work undertaken. He cited the provisional curatorship in November last year of Nzalo as a case in point as well as a number of other examples which resulted in SAMBRA members not being paid for work authorised in previous years.
Green says over the last couple of months SAMBRA has urgently engaged with SAIA and other organisations within the short term insurance industry to seek ways and means to mitigate the effects of this action, however to date there have been no effective suggestions and/or actions taken by the insurance sector and this has left the MBRs with no choice but to introduce Pay Before Release.
He says the practice is not uncommon. All other motor businesses in the sector exercise this right of lien or Pay Before Release. “Up until today the MBR sector has been the only sector which has not exercised its right of lien over the vehicles we have added value to.”
Green says hopefully the impact on consumers will be minimal as this will not apply to insurer agreements where SAMBRA has a signed SLA which stipulates payment terms.
“Consumers need to be aware of the situation and realise they could remain liable for their vehicle repairs if their insurer does not settle their claim. They will be required to sign a check-in document at vehicle hand-over which contractually binds the vehicle owner to the full outstanding invoice in the event that the insurer does not pay the SAMBRA member,” he says.
“It is important to first check both the credentials of the motor body repairer and insurer with SAMBRA or SAIA (South Africa Insurance Association) before exercising your right of choice,” concludes Green.