A survey found that more than 7 out of 10 automotive repair companies experienced unilateral reductions in repair costs from insurance companies. Unreasonable transaction practices, such as delayed payments and unpaid interest on delays, were also reported to persist.
The Korea Federation of Small and Medium Enterprises announced the results of the 'Survey on the current state of transactions between the automotive repair industry and insurance companies' on the 25th.
The survey was conducted from the 14th to the 30th of last month, targeting 307 automotive repair companies nationwide. It analyzed the contract contents between repair companies and the four largest insurance companies by market share, payment status, and experiences of unfair practices.
According to the survey results, responses indicating experiences of reduced repair costs from insurance companies exceeded 70%. Samsung Fire & Marine Insurance had the highest at 77.2%, followed by Hyundai Marine & Fire Insurance (73.9%), DB Insurance (76.2%), and KB Insurance (71.3%).
The main reasons for the reductions included ▲ non-recognition of metalwork and painting costs ▲ non-recognition of certain repair items ▲ excessive reduction of working hours ▲ non-recognition due to non-consultation on new models, among others. The average reduction rate over the past three years was recorded at 10.1% for Samsung, 10.0% for DB, 9.9% for Hyundai, and 9.6% for KB. This means more than 70 out of 100 repair cost claims were reduced by an average of 10%.
Payment practices were also pointed out as problematic. More than 60% of respondents indicated that the settlement period after completion of repairs was 'within 10 days', but often no delayed interest was paid even after the payment deadline in contracts was exceeded. In fact, over the past three years, the number of cases where repair payments were not received from insurance companies amounted to 1,049 for DB, 729 for Samsung, 696 for Hyundai, and 228 for KB. The unpaid amount was highest for Hyundai at 750 million won.
Among unfair practices experienced by repair companies, 66.1% cited delays in payment of over 30 days and unpaid delayed interest as the most prevalent. It was followed by non-recognition of working hours and processes (64.5%), unilateral cost reductions (62.9%), coercion of payment for the driver's out-of-pocket costs (50.2%), and coercion to use specific billing programs (41.4%).
To resolve these issues, 95% of respondents indicated that the introduction of a standard contract was necessary. Items that should be included were ▲ disclosure of repair cost reduction details (89.6%) ▲ clarification of repair cost claim and payment timing (87.3%) ▲ regulations for payment of interest on delayed payments (86.3%) ▲ guarantee of repair cost payment (84.7%), among others.
Choo Mun-gap, head of the economic policy department at KBIZ, said, "To ensure that repair companies are guaranteed fair compensation and that a transparent transaction order can be established, it is necessary to improve the system, including the introduction of a standard contract," adding that "the government needs to establish a standard for the calculation of repair costs."