The panelbeating business faces lean times while insurance companies cream off record profits.
That's the view of Motor Trade Association advocacy and training general manager Dougal Morrison.
Many panelbeaters were struggling to survive, skilled workers were leaving the trade, recruitment was difficult because of low pay rates and repair standards were falling, he said.
"We've been seeing business owners closing their doors and walking away, rather than cutting dangerous corners," he said.
Insurance Council of New Zealand figures show that companies collected a total of $1.3 billion in vehicle premiums last year, up $15 million on 2011.
They paid out $831 million in claims, up $6.5 million and all companies reported increased profits.
IAG, AA and Vero spokespeople did not comment on payments to panelbeaters but said repair quality assurance was a major focus.
An ex-panelbeater told us it was tough in the trade. He declined to be named for fear of his former company being blacklisted by insurance companies, which made up 80 per cent of its business.
"State pays $42 an hour. Out of that you have to pay your workers and everything else," he said.
Panelbeaters earned about $22 per hour, which compared badly with builders or plumbers, who had relatively low overheads, he said.
Panelbeaters had to provide a chassis machine, paint-baking oven and other high-value equipment to carry out increasingly- exacting repair processes.
"I've found in the last two years it's very hard to make money and if you take short cuts, they bite you in the bum," he said.
It left panelbeating businesses trying to make money from retail customers who, he said, really should not be subsidising insurance companies.
Panelbeating apprenticeship numbers were down 10 per cent in 2011 compared to 2008, spraypainters fell 30 per cent.
One Hutt panelbeating and spraypainting business was liquidated this year.
Insurance Council of New Zealand insurance manager John Lucas said there were quite likely too many collision repairers in the marketplace.
New cars were more complex, he said.
"We disagree, though, that there are substandard repairs being done where there is an insurance company involved."
Assessors view damaged vehicles, agree what needs to be done, and a price, with the repairer and finally check the completed work.
Another local panel beater, who also declined to be named, said that was no longer true.
Insurance assessors did their work from their desktop, using digital photographs and measurements taken by panelbeaters.
The three IAG companies - State, AMI and NZI - all paid $46 per hour for work but that included all consumable materials, such as filler and sandpaper.
"We are barely covering our costs," he said.
It made it difficult to attract and retain competent tradespeople.
"In Australia they are offering better money, better working conditions, all that stuff. We're losing tradesmen, not only overseas but out of the industry."
He said there was no pressure to cut corners in terms of quality.
"We're dealing with people's lives because if they [vehicles] are not right we're putting death- traps out on the road."
However, the cost of insurance had driven part of the business underground, he said.
Part of his work was certifying work from other repairers or DIY jobs.
"We are seeing a lot more inferior work because it is not coming through the mainstream system," he said.
Hutt News spoke to several panelbeating business owners. All declined to be named but said it was extremely difficult to make money at the rates that insurance companies paid them but all said there was no pressure to cut corners.
IAG New Zealand corporate communications manager Denise Bailey said crash repairers were not paid for time, so it was inaccurate to quote an hourly rate.
Repairers were required to have the correct equipment for structural repairs and welders had to be qualified.
The quality of repairs to customers' vehicles was of paramount importance and any claims of substandard repairs was of serious concern.
A team of quality and compliance analysts carry out random inspections of IAG customers' vehicles during and after repair, she said.
AA Insurance customer relations head Suzanne Wolton said the company believed in paying a fair rate for quality work and wanted repair costs to be transparent and justifiable because they were ultimately passed on to customers through premiums.
AA did not compromise on quality and repairs are carried out by its repairer network, and checked and approved by in-house trade assessors.
Vero spokesperson Vasantha Naidoo said the company paid fair and reasonable market rates to enable repairers to return customers' vehicles to within manufacturers' specifications and recognised industry standards.
Vero assessors were fully trained, industry-qualified and had ongoing training in repair methodologies to keep up with the changing market.
"We have a network of approved repairers that we monitor and audit on a regular basis," Ms Naidoo said.
- Hutt News