The Jewellers Association of Australia (JAA) has begun a process to ensure jewellery retailers get a better deal from insurance companies.
The association is investigating numerous issues; including educating retailers about how best to deal with insurance claims from a customer, and the more serious issue of a possible breach of the Trade Practices Act by insurers.
JAA CEO Ian Hadassin has also begun consultation with individual insurance companies on a number of issues affecting jewellers and intends to make contact with the Insurance Council of Australia.
“By meeting with insurance companies I hope to gain a better understanding of how the industry works with jewellery claims, and also to establish a contact so that we could continue a dialogue to improve how we can work together for the benefit of the industry and the consumer,” he said.
Hadassin is particularly concerned about a practice by many insurance companies that involves a consumer dealing with the insurer’s panel members’ (businesses approved to replace stolen jewellery for the consumer).
Section 47 of the Trade Practices Act covers Exclusive Dealing and Third line forcing.
“I’m drafting a letter to the ACCC and to the Insurance Council raising the matter of third line forcing,” Hadassin said.
When a consumer’s jewellery is lost or stolen, the policyholder requires a quote from a jeweller to claim the cost of the items. Hadassin’s concern is that after the claim has been approved, claimants are being forced to go to a select group of jewellers (panel members) chosen by their insurer.
“We believe that’s third line forcing and is in breach of the Trade Practices Act, and that’s what we want stopped,” Hadassin said.
The CEO claimed consumers could be forced to deal with the insurance company’s panel member if they chose not to.
The ACCC website stated: “Broadly speaking, exclusive dealing occurs when one person trading with another imposes some restrictions on the other’s freedom to choose with whom, in what, or where they deal. This type of conduct is common between buyers and suppliers.”
There are two types of exclusive dealings: full line forcing and third line forcing. The test as to whether any exclusive dealing activity is legal is based on whether it substantially lessens competition.
Full line forcing can be deemed legal but third line forcing is different, and it’s this area that the JAA believes is harming its members.
“Third line forcing is a specific form of exclusive dealing prohibited outright by the Trade Practices Act,” the ACCC website states.
“It is not subject to the substantial lessening of competition test. It involves the supply of goods or services on condition that the purchaser buys goods or services from a particular third party, or a refusal to supply because the purchaser will not agree to that condition.”
The practice means jewellers who are not part of the select group may be missing-out on potential business because customers are unaware that they can obtain a quote from any jeweller they choose.
“What’s needed is policy holder education and jewellery retailer education because both parties don’t fully understand their rights when an insurance claim is made,” Hadassin said.
The JAA is also working on educating jewellers about how insurance policies work.
Hadassin said this was in reaction to commonly-made mistakes by jewellers dealing with insurance claims, including not properly understanding price limits in insurance policies.
“A consumer might have $20,000 worth of jewellery stolen but the policy limit might only be $6,000, in which case the jeweller is wasting their time preparing a quote for many items totaling $20,000 when only $6,000 will be covered,” Hadassin explained.
“The jeweller should first ask the consumer: ‘What is the limit on your policy?’ And the quote should never be more than the policy limit – otherwise another smarter jeweller will put in a quote to match the policy limit and they’re going to get the business.”
An educational brochure for jewellers to offer customers, detailing the latter’s rights when making an insurance claim will be provided from the JAA.
The JAA will also consider the controversial practice of valuations for insurance purposes. It does not believe valuation certificates should be prepared or supplied for new jewellery items and it will discuss this matter with the Insurance Council and individual insurers.
More reading:
Ban jewellery valuations
Valuing insurance
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