Legislating Write-Offs

The last few weeks have seen two new initiatives focused at legislating written-off vehicles.
The Irish Government are consulting on proposed legislation and the government of New South Wales enacted legislation to stop all write-offs being re-registered.

I have already commented elsewhere on the Irish proposals so will concentrate on New South Wales.

The legislation is very specific; any vehicle under 4.5 tonnes gross weight that is written-off in NSW cannot be re-registered anywhere in Australia. This includes cars, Light Commercials, Trailers, Caravans and Motorbikes.
There are a few exemptions, for example vehicles that have suffered hail damage, but in all cases the owner must apply for authority to repair the vehicle prior to repairs commencing, and the repaired vehicle must go through two inspections before being allowed back into use – one focused on vehicle repair standards, the other on vehicle identity.
A vehicle is classed as a write-off when the assessed repair cost added to the salvage value exceeds the market value of the vehicle. On assessment by a qualified vehicle damage assessor reports must be filed within 7 days, the vehicle must have a very prominent sticker applied where it can be seen (there are penalties for tampering with these stickers) advising all that this is a statutory write-off and cannot be used on the road ever again, and all assessment records must be retained for 7 years. The NSW government have also put a rigorous audit process in place to ensure that standards are maintained to the appropriate level.

What does this mean for the Australian insurance and vehicle repair marketplace; I believe a number of things will change.
• Insurers will be focused more on reducing repair costs, ensuring that fewer vehicles reach total loss status – more ‘recycled’ parts, cheaper labour costs, repairing more parts rather than replacing, and driving lower parts costs from manufacturers.
• Hopefully this will not lower repair standards in the body repair centres.
• There is potential for loss of repair capacity as repair shops close due to lower volume of repairs from insurers and repairable salvage.
• There will also be downward pressure on parts and scrap prices as more vehicles are broken for spares and scrapped than previously.
• Will insurance premiums rise to compensate for the loss of repairable salvage returns? I will let you make your own judgement!

As the various marketplaces consolidate over the next few months the picture will get much clearer and I am sure that the global market will be watching with interest to valuate the impact of this legislation.

More details are available at http://www.rta.nsw.gov.au/registration/written_off_vehicles/index.html