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'Right to repair' regime has implications for insurers: law firm

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Insurers might need to review their risk evaluation and underwriting processes if proposed “right to repair” laws are introduced, Clyde & Co says.

The law firm made the assessment as the Productivity Commission prepares to hand its final report next month to the Federal Government after wrapping up its inquiry on consumers’ ability to fix faulty goods and access repair services at a competitive price.

“Given the possible implications of the right to repair movement across a broad range of industries, insurers providing property and liability cover to those sectors may be impacted as a consequence,” Clyde & Co Partner Dean Carrigan told insuranceNEWS.com.au.

“There are several potential issues that may affect the determination of policy coverage and liability in relation to goods repaired by third-parties.

“Insurers will need to consider these in their evaluation of risk and the overall underwriting analysis process.”

He says the proposed provision of repair information also raises concern and uncertainty for insurers.

“If products are required to, for example, come with repair manuals, it is unclear where the liability will lie in circumstances that a third-party repair is carried out poorly, leading to a more serious fault,” Mr Carrigan said.

“The fundamental premise that insurance is written on is risk. However, insurers always seek to have clarity with respect to the risk they are writing.”

Right to Repair is a consumer’s ability to repair faulty goods, or access repair services, at a competitive price. This can include repair by a manufacturer, a third-party, or self-repair.

Last year the Government released the terms of reference for the inquiry. The inquiry looked at a range of issues impacting the Australian repair market, including potential barriers and enablers of greater competition.

The Productivity Commission released its draft report in June, making a number of preliminary recommendations for further public consultation.

These include powers for regulators to enforce guarantees, establishing a “super complaints” system and additional mandatory warranty text stating that entitlements to consumer guarantees under the Australian Consumer Law do not require consumers to use authorised repair services or spare parts.

Click here to access the draft report.