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Making Choices for the Consumer
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A poor repair at a DRP shop resulted in water lea...
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SEPTEMBER COVER STORY: Crash and Spurn
Auto repairs rank among the highest incidences of
consumer complaints in nearly every state. How can this be if insurers that perform post-repair inspections are doing those inspections well?
By Dave Williams
9/4/2009
Call it a baffling oddity, maybe even a paradox, that two insurance companies could receive similar quality scores from JD Power & Associates when each of their products offered under the guise of customer service are polar opposites and have such contradictory end results. It’s sad but true.
This is the tale of two companies, both rating near the bottom of JD Power & Associates insurance satisfaction polls. One deserves that position, in my opinion, and the other does not.
Two Extremes
At one extreme is GMAC Insurance, a company pushing hard to make its customers happy through its line of SmartServices, a first-of-its-kind collection of benefits intended to help ease the claims and repair process after an accident.
GMAC identifies the features of SmartServices as:
• SmartValet, which, upon request, takes care of an accident victim’s transportation details, arranging pick-up of the car and the customer at the accident scene and ultimately returning the repaired car to the customer’s doorstep.
• SmartParts, GMAC’s OEM-only parts guarantee, which includes sheet metal but excludes windshields, radiators, condensers and routine maintenance parts like batteries, spark plugs and filters. SmartParts isn’t a policy upgrade option, and GMAC provides no-hassle payment for OEM parts on all first- and third-party claims automatically.
• SmartInspect, GMAC’s post-repair inspection service designed to give car owners peace of mind by ensuring the quality and value of repairs after an accident. It’s the first formal reinspection program offered by an insurer to its customers. GMAC educates and promotes post-repair inspections to both insureds and claimants who have had repairs performed in all 50 states.
At the other extreme is Progressive, which touts Concierge Claims Service to expedite turnaround time and make the repair process hassle-free for car owners. Progressive adjusters take pride in showing up unexpectedly at the scene of an accident and arranging transportation details, towing and repair services. Unlike GMAC, Progressive doesn’t wait for an invitation to get involved. Progressive also boasts a post-repair inspection program where adjusters scour over completed work before customers’ cars are returned to them.
On the surface, Progressive’s enthusiasm to get involved in the repair seems noble. The flaw, I fear, and one echoed by other insurers I interviewed for this story, is that it takes choice away from consumers which, in Progressive’s customers’ minds, leaves Progressive accountable, more or less, for every detail of the claim and repair.
While both GMAC and Progressive ballyhoo customer service, shops would say there are profound differences in how each attempts to get the best possible outcome for its customer. Shops almost unanimously agree that Progressive’s adjusters push aftermarket and used parts harder than nearly any other insurer. Moreover, Progressive adjusters cut all but the most essential parts and services from a repair bill.
“They’re always a challenge to deal with,” says one Eastern shop owner who feels blackballed by the company.
That’s not the end of the story, either. In keeping with its philosophy of cost containment, Progressive goes overboard, most shops say, to get cars into its direct repair and Concierge facilities. The case of Greg Coccaro and his $40 million lawsuit against the insurer is proof of that. The company plays hardball with shops and isn’t afraid of suing or being sued. But by keeping repair costs low, at least lower than that of its competitors, and offering insurance to even the most aggressive drivers, Progressive has lots of loyal customers who are at least happy enough to continue buying its products.
By contrast, GMAC is more relaxed. It offers SmartParts as a free service to all of its customers nationwide and isn’t pushy about getting customers into its direct repair shops.
“We offer direct repair as an option when a customer asks us for a shop recommendation,” says George Hall, GMAC’s vice president of claims. “We believe that customers are most satisfied with an insurer when they have a say in how their car is repaired, so we try to listen to them and honor their wishes.”
Progressive and GMAC have different approaches to post-repair inspection as well. GMAC inspects cars when customers request it, while Progressive inspects every car when they’re returned to the claims center from the repair shop. Progressive’s Web site boasts, “When we’re satisfied with the repair quality, we call you...”
Since auto inspections are my forte, I thought of some good questions to ask of any insurer claiming it eyes repair quality on the consumer’s behalf:
• Do insurance companies use competent people when performing repair quality inspections?
• Would they know a good job from a bad job?
• If indeed adjusters for some companies are looking over the shoulder of repair shops in their roles as inspectors, why do consumers still rate these insurers near the bottom in JD Power & Associates satisfaction surveys? Are reinspection programs not working? Do consumers not see value in post-repair inspections? Are insurers making a windfall by getting consumers to focus on the good parts of a repair without drawing their attention to known areas that were repaired shoddily and unsafely?
Differences again surfaced when I began asking these two companies questions about reinspections. GMAC was eager to talk about its post-repair inspection program and provided private telephone numbers to its upper-level claims supervisors, who were very forthcoming during more than two hours of candid conversation in a series of telephone interviews. Progressive responded to my request with this brief e-mail sent by one of its public relations staff:
”Thanks for your call. The Public Relations group at Progressive is dedicated to helping media get its job done by assisting with research and providing spokespeople but, unfortunately, our resources are limited so we cannot take part in all opportunities. We appreciate your calling us and offering to include us in your story, but we’re going to have to politely decline your offer.”
Reinspections and Ratings
Brian Sullivan, insurance analyst and owner of Risk Information, Inc., which produces specialized publications for the insurance industry, cautions that insurance company ratings and reinspections are a world apart, and the overall insurer satisfaction score doesn’t directly question or reflect the perceived value that post-repair inspection programs bring to the table. Since JD Power & Associates insurance satisfaction surveys reflect a variety of issues, not the least of which are price and service, Sullivan says “the quality score is far removed from implying repairs on claimant’s cars are either good or bad. Claims satisfaction and repair satisfaction are both tiny pieces of a very large pie.”
“The same is true even on the collision repair satisfaction survey,” adds Sullivan, “though it is a better indicator [of how well cars are repaired] than the picture one gets by looking at overall insurer satisfaction scores.”
Sullivan also noted that inspections aren’t perceived as necessary by customers unless an insurer has a quality problem on the initial repair.
Is there a legal reason insurers are choosing to offer and perform post-repair inspections?
“Direct repair is certainly an [insurer] endorsement of a shop, but there’s no ownership there,” Sullivan says. “And no one has successfully pushed liability through to an insurer, to any great degree, from a shop for shoddy work. Secondly, there have been virtually no recorded instances of significant injuries as a result of second-rate repairs that were driven by insurer demand. The only thing I can even remotely recall are a small number of non-OEM hood latch issues nearly a decade ago on [one of the import brands].”
GMAC’s Hall candidly admitted that GMAC didn’t necessarily inspect repaired cars because it feared inheriting a certain level of unacceptable risk if they weren’t properly repaired. Why, then, would GMAC ever go to the trouble of performing post-repair inspections?
“Because the company prides itself on being more than just an insurer that passes out checks,” says Hall.
The next question I posed to Hall was tougher. I asked, “Whose interests are GMAC inspectors representing when the company performs reinspections for consumers: GMAC’s or the car owner’s?”
There was a momentary pause, and I sensed that this was the point where straightforward, candid responses would briefly cease. Sensing that I was pushing for answers beyond the scope of what his legal department would approve, Hall said, “Ha, I’m not going to answer that.”
I didn’t have to listen to Sullivan long before I knew he didn’t share Hall’s enthusiasm for post-repair inspections, or mine for that matter.
“I don’t believe reinspection is going to become a big factor in the insurance industry because it’s an inefficient thing to do,” he said. “More than that, it suggests that first repairs are not of high quality. For an industry espousing trust at every turn through high-dollar media campaigns, the poor perception it could leave with consumers might be seen by some insurers as a risky thing to promote, not to mention the burdensome task of physically checking all those cars for flaws and defects.”
Ultimately, he says, “shops hold the liability for quality because insurance standards do not dictate that a car be inadequately repaired. You could argue whether or not there was enough money in it to let the shop survive, and whether or not using non-OEM parts is right or wrong. At the end of the day, there’s no requirement by insurers that shops fix cars in such a way as to cause them to crash. So, if a car gets fixed in a manner that renders it unsafe, the real liability is 100 percent on the shop.”
Insurer Reinspections: A Trend?
Can we expect to see a growth trend in reinspections by insurers? Sullivan says reinspections by Progressive and other insurers are “unnecessary.” They will happen in the future “only to the extent that shops deliver to consumers cars that are not properly fixed the first time.” He believes most shops are “reputable” so there “isn’t much need for insurers to oversee quality.”
“We’re not having an epidemic of consumer complaints as a result of unsafe vehicles,” Sullivan declared.
“Oh yes we are,” I countered. “Auto repair complaints are among the highest incidences of consumer complaints in nearly every state.”
“If consumers became overwhelmingly concerned about the quality of repairs they were receiving, the solutions for carriers would be changing the procedures they require of shops or simply changing shops,” says Sullivan. “If an insurer has to reinspect the work of a shop to ensure that it’s good, it would probably be advantageous for that insurer to find another DRP shop to work with.”
Sullivan explained what many of us already know – that consumers aren’t capable of making an informed decision about the quality of the shop they select because they don’t usually have a first-hand relationship with a body shop. And any consumer with enough claims to give them firsthand knowledge of a shop probably wouldn’t be a good risk, likely paying for repairs out of his or her own pocket. On the other hand, insurers, by virtue of paying for the bulk of repairs, gain knowledge about shops by hearing complaints voiced against them.
“True,” I rebutted, “but can insurers, who only have exposure to repairs as a result of their roles as financiers, be knowledgeable enough to know a good repair from a bad one? I don’t think so.”
Sullivan said that while insurers may not know it all, they know more than customers. He insinuated that because they hold the checkbooks, shops would be wise to be less contentious with them.
I asked Hall about the depth of knowledge GMAC adjusters who perform post-repair inspections have. While they’re not trained specifically for their roles as inspectors, he said, “a large number of them come from a body shop background and, on average, have nearly a decade of field experience in claims handling working for insurance companies.” They have “no formal criterion or list” that they follow during an inspection. Most often, they’re addressing “specific problems brought to them by a consumer.” But this “opens the door to more fully evaluate the repairs and reconcile the paperwork,” he said.
Hall says GMAC hasn’t found itself as an enemy of shops. The company believes “most shops want to do good work.” When it encounters flaws and defects in a repair or discrepancies in invoicing, GMAC “stands with consumers to see to it they’re treated fairly.”
Although I find it hard to believe, Hall says statistics and trend data on the reinspection program aren’t available. When pressed, he maintained that he was being honest, adding only that most reinspections to date were performed in geographical areas where the company had the greatest number of cars insured.
Customers At Stake
Sullivan isn’t so sure customers value the all-seeing eye of their insurers as it relates to reinspections of a shop’s work. He explains: “An insurer’s primary motivation is to make customers happy. In fact, they have a greater stake in customer satisfaction than shop owners do because insurers make their money on renewals. Presently, about 90 percent of consumers renew with their insurer every year, so obviously [the bulk of them are happy].”
While Sullivan concedes there are a large number of people who are unhappy with their repairs, as a percentage of total claimants, “it’s not significant because the vast number of people that have claims stay with their insurance company. In fact, if you do a search for the most satisfied customers in any insurance population, you’ll find the single most satisfied customers are those who have had successful claims.”
One of the problems for insurers, says Sullivan, is the fact that auto accidents are not scientifically consistent. That is, “you strike two identical cars on the same road at the same speed at what appears to be identical angles and you wind up with different damages. It’s because the laws of physics are such that any tiny variation results in a different outcome – sometimes profoundly different.”
“Insurance companies are rules-based operations dealing in large numbers,” he says. “As a result, a lot of things get standardized. That’s how you have to run the business. The outliers – meaning those accidents that turn out to be a big deal that should not have been a big deal – give fits to insurers’ rules-based decision making.”
And as much as we would like to think that giving shops full discretion to fix cars as they see fit would solve problems, Sullivan says it would do the opposite and cause a catastrophe. The self-interest decision-making of shops would lead to “excessive costs,” which would cause an even larger number of policyholders to scream at insurers. Sullivan says the trick for insurers is “finding the balance in the middle, but there’s no perfect answer.” The conflict that we currently contend with is a natural outcome of this balancing act.
Pursuit of Quality? Nah
“But customers want the best work after they’ve had an accident, at least in my experience,” I argued. “And when they ask for a referral, they want to know which shop from a quality standpoint is above all others. A legitimate post-repair inspection should be a no-brainer, giving consumers peace of mind and allowing them to see the repair and its shortcomings.”
Sullivan sees it differently. When consumers ask insurers for a recommendation, “they’re not, contrary to shop owners’ opinions, asking for the name of the shop that performs work of the highest quality. With their lips, they may say that, but what they really want to know is where they can get an insurance price at an acceptable level, and they want service commensurate with that price.”
“There are insurers that offer customers over-the-top service plans and hand-carry them through the claims process, patting them on the back all along the way. They even deliver the repaired car with a big bow on it. It’s an extravagant performance, but it costs a fortune when compared to the standard policy, so there’s not a lot of customers buying top-tier plans. Consumers want a certain level of value and they won’t pay for more. Otherwise, the better plans would be the standard policy offering among all insurers, not the limited few.”
“Consumers choose insurers that successfully balance price against the product,” says Sullivan. As a whole, he contends, “they accept less than perfect service because they don’t want to pay premiums for it. It costs too much. The fact that the overwhelming number of them are satisfied is the evidence that I use to suggest that it’s not as bad as [shops make it out to be]. I’m not saying insurers don’t make mistakes or do unbearably stupid things. I’m just saying insurance is a business that operates by the law of large numbers, and often what shops say consumers need is greater than what consumers are willing to pay for.”
“But if it’s legitimate accident damage, consumers have a right to collect in full for that,” I reasoned.
Sullivan countered using the following example, which mirrors what many insurers believe – that if a consumer will accept 50 cents on the dollar, you really don’t owe him or her the dollar. I believe that this logic flies in the face of common sense and the doctrine of indemnification and leaves customers shortchanged on nearly every claim.
Here’s how Sullivan justifies it to insurers: “If you’re going to fix a fender, shop owners will want to mask the inner skirt to keep overspray from getting on it. To do otherwise would make it kind of a crappy repair, right? I mean, you’re not supposed to have visible overspray. But a consumer who doesn’t usually stick his head in the wheelwell isn’t interested in paying for that.”
“Here’s how you know that I’m telling you the truth. Insurers measure customer satisfaction much more closely than do shops. When they see two shops with exactly the same CSI – one that charges more to painstakingly perform work without leaving overspray or other telltale signs of the accident and repair, and the other shop that charges less and does enough to get by [assuming the repair is not unsafe] – all that matters are the CSI scores.”
Using Sullivan’s earlier words against him, I reminded him that the actual repair quality measured in a shop’s CSI score is a tiny piece in a large pie. Also considered in shop CSI is the cleanliness of the bathroom, whether or not signage directed the customer to the reception desk without confusion, and a host of other factors that have no bearing on the outcome of a repair.
Sullivan countered, “Safety aside, if the customer doesn’t perceive a value in the increased cost of a repair – costs that made possible extra procedures they didn’t find necessary at all – then insurers have a hard time paying for that. We all know that the majority of work in a repair isn’t visible by glancing at the paint and fender alignment. About 90 percent of the costs come from fixing what can’t be seen. Since the consumer can’t see all of the work, he or she is by no means the best judge of a quality repair even though he or she is the only one you have to satisfy. P.S. – he or she will probably get rid of the car in two years anyway.”
“The problem the repair industry is running up against is that [repairers] are fighting with insurers when their problem is with consumers who aren’t demanding what they want to sell. Inspections won’t solve that problem. Insurers are not inherently evil, any more than shop owners are inherently evil. They’re just regular people, and their goal above all else is to have happy customers. Saving money by screwing customers is a rapid way out of business.”
“Shops have much more leeway in screwing consumers than insurers do because they tend to have one-off relationships where the majority of money is made on one single repair. The insurer doesn’t make any money unless that consumer renews for a long time. At the very least, an insurance company’s need is identical to a shop’s need to keep customers happy. But I submit that insurers probably have a greater need.”
Too Stupid to Know?
It’s no secret that consumers are most satisfied when you give them what they want. The problem, says Sullivan, is “they don’t want [the full-blown menu of services] shops are demanding. Granted, it may be out of ignorance that they don’t understand what [they need or why], but that’s not the insurer’s fault. When a shop claims it needs to do this or that, and the insurer won’t pay for it because the consumer isn’t willing to pay for it, I don’t think you can blame the insurer.”
“Safety considerations aside – and by the way,” says Sullivan, “most non-OEM parts like fenders and headlamps aren’t safety related – things like uneven fender gaps that you or I might see as a problem that aren’t obvious to a less-knowledgeable consumer doesn’t merit an extra 25 percent or whatever the additional cost happens to be for an OEM part over a non-OEM part. Non-OEM parts are not inherently a bad thing, and some consumers really, really want those parts and the savings. The problem lies in the mandated use of crappy non-OEM parts.”
If you listen to Sullivan long enough, he’ll try to convince you that consumers are too stupid to know their needs. They place little value on post-repair inspections, OEM parts, top-level service and other menu items shops need to charge to put cars as near as possible into preloss condition. He’ll also attempt to convince you that cycle time is the most important consideration to the customer and, with at least some consumers, he may be right.
Even so, don’t we owe bottom-line honesty to all of our customers? And don’t we owe it to ourselves to have integrity in our dealings with them – even those customers we know we could easily take advantage of?
In 1995, Jim Lynas convinced me that consumer education and post-repair inspections were the great equalizers because they showed consumers a true picture of the repair and provided them with tools by which they could hold insurers accountable.
Sullivan says if repairers could get a large campaign together to convince consumers to “ask for more, there’s a chance they could drive consumer demand for a better level of repair. But I think in the end they would be frustrated because I don’t think consumers really care.”
“In [consumers’] eyes, they get enough to be satisfied the vast majority of the time. If insurers were systematically paying low levels to repair cars poorly, lawyers would be all over them, and they are not. There are selected areas where things fall apart, but it’s not a massive conspiracy to defraud consumers. Besides, class-action cases are good equalizers, too.”
GMAC’s low customer satisfaction scores are probably not going to be rectified by post-repair inspection or any similar burdensome program, contends Sullivan. He believes the company suffers from a lack of brand awareness.
“People just don’t say ‘I have GMAC’ with the same enthusiasm or zeal that they say, ‘I’m with State Farm’, or, ‘I’m with Allstate.’ Still, I’m willing to bet if the company means business about listening to consumers, pays for complete repairs and backs it up with legitimate post-repair inspection, shops can enthusiastically recommend it to their customers and help turn things around. That’s a marketing maneuver that even the largest insurers’ budgets can’t buy.”
Writer David Williams produced award-winning show cars and high-quality collision repairs from his Ohio-based shop, Precision Collision, from 1977-1999. Williams was the first WreckCheck licensee to operate in a mobile capacity, primarily assisting attorneys in the states of Ohio, Kentucky and West Virginia. Learn more about Williams and his work at www.SafeCollisionRepairs.com.