Ok, so there are 2 scenarios here to consider. First one is the...

Ok, so there are 2 scenarios here to consider. First one is the virus goes on for a while. The smash repair industry is a 5-6 billion dollar industry. AMA’s major competitors are small, normally one out smash repair shops. Some of these shops have insurer contracts, most don’t. As a result of poor labor rates & no contracts, most of these shops live week to week. You are saying the market has dried up rapidly, which it has. Who falls first? The small repairer who nips at AMA’s heals & gives the insurer an alternative if AMA happen to raise the rate or the biggest repairer in the Southern Hemisphere, who can drag work from other areas or leverage insurers for the left over volume when things get real quite?

Once those small repairers capitulate, AMA has for more leverage over insurers & far more ability to be here for the long haul. In the end, what is the purpose of motor vehicle insurance if they can’t get your car fixed for you? Suncorp are already realising this, hence today’s announcement, more will follow. Believe me, this event has sent major shock waves through the insurance market. The rate at which small, mortgaged to hilt repairers are falling over has all Insurers very worried. They are scrambling at the moment to make sure they are aligned with a repair network that can allow them to service their customers needs coming out the other side of this!

Then there is the second scenario, it turns around quickly. If this happens AMA are well placed to resume business as usual. At the current share price they extremely under valued in this scenario considering they have had a strong 3rd qtr financial. The insurers are still reconsidering their mindsets & positions on how they treat this company into the future & how they can guarantee being able to service their customers needs in another event. AMA still have their hail centres going flat out through all this. We come out quickly people all get back out on the roads, sick of being at home & accidents are everywhere.


Because of the short term & even more so long term thinning out of the industry AMA will be in a very good position to leverage the insurers once this is over & as I said before even during it, as insurers scramble towards the group to secure supply into the future.

An insurers worst nightmare is a market where the repairer can dictate the price. This epidemic has the ability to produce such a result on the other side through lack of competition & huge work volumes. Today’s announcement shows you that insurers can see the writing on the wall here & are keen to get new pricing & supply arrangements in place sooner, rather than later.

Expect to see deals between IAG & AMA Group again very soon. People keep going on about IAG’s repair hub, . They have 6 shops in Australia, which has taken them more than 18 months to set up. IAG can’t wait 10 years to sure up their repairer volumes & costs. They will look to lock in a new price right now before the balance shifts. This event has brought this to ahead right now!!