Jewellers unite against insurers

5.2 k views | Posted March 16, 2010 |

Problems between jewellers and insurance companies might be worse than first thought after the JAA received a huge response to last week’s report.

Last week it was reported JAA CEO Ian Hadassin was lodging a formal complaint with the ACCC over concerns insurance companies may be harming the jewellery industry

Since then, Hadassin has been flooded with stories from dissatisfied jewellers who have had trouble with insurance companies.

Jewellers were particularly concerned by a practice that involves insurers giving preferential treatment to a specifically chosen group of retailers known as ‘panel members’.

Hadassin said he was inundated with comments about the matter and he summarised the complaints as:

Some insurance companies and many assessors force policyholders to deal only with panel retailers
Virtually all insurance companies attempt to persuade policyholders to deal with these retailers
The general consensus of jewellers was that insurance companies have little to no understanding of the jewellery industry
Jewellers also made allegations of panel-member jewellers “exploiting” insurance companies

“Many panel retailers take advantage of the lack of knowledge of both consumers and insurance companies to 'milk’ them,” one jeweller said.

Another common concern was policyholders not receiving replacement jewellery in line with the full amount insured and claimed.

Hadassin plans to take the new allegations to the ACCC.

Last week Hadassin revealed he was writing to the ACCC regarding a number of concerns, in particular the practice of ‘third-line forcing’ by insurers.

When a consumer’s jewellery is lost or stolen, the policyholder requires a quote from a jeweller to claim the cost of the items. Jewellery retailers say they are concerned 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.

Now, the CEO’s concerns appear to have been validated by the influx of support from jewellers.

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.

The JAA is already responding to concerns about a lack of knowledge of jewellery insurance claims.

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.

Do you have your own criticism or insurance horror story?

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