The insurance landscape is shifting quickly for collision repair facilities, with new vehicle technology, repair standards, performance and efficiency requirements, and customer service expectations re-shaping how vehicles will be repaired in the future. John Harvey, vice president of sales for CARSTAR Canada, echoed a key message from the recent CARSTAR conference: “Only performance will drive growth.”
Over the past month, CARSTAR’s North American insurance sales team has met with top insurance carriers and CARSTAR franchisees at the CARSTAR Conference and trade shows to look at the future of the collision repair industry and how top collision repair facilities can prepare for what’s ahead. The era of discount-based programs is slowly being eclipsed by performance-based agreements (PBAs). Harvey commented that this is happening faster in the U.S. market, but the notion of discounts should rightfully be a thing of the past as insurers, armed with analytical tools and big data, become more sophisticated.
“A key driver of the growth at CARSTAR is through existing relationships with our insurance partners, primarily with PBAs,” said Arlo Johnson, vice president of sales for CARSTAR U.S. “These PBAs require exacting standards of performance, and the high performance that CARSTAR facilities are able to deliver drives their profitability as well as overall customer satisfaction. This successful partnership with our insurance carriers also requires a vision for the future, so we work closely to anticipate the needs for tomorrow’s collision repair industry and prepare the CARSTAR network to meet them.”
CARSTAR sees more than 90 percent of its repair business come through insurance claims, and more than 90 percent of CARSTAR stores participate in at least one PBA. Through this, it has a unique perspective on the changes to come and how collision repair professionals can address them. Key trends on the CARSTAR horizon include:
- OEM repair standards – More and more, OEMs are driving the repair standards for vehicles. This creates an opportunity for the insurance carriers, OEMs and MSOs to work together to identify the best approach for repairing vehicles safely and correctly while balancing costs, cycle time and vehicle value.
- OEM certifications – Hand-in-hand with repair standards are expanding certification requirements from the OEMs. This will be most challenging to independent shops that can’t afford to pursue these certifications across a number of vehicle makes.
- Pre- and post-repair scanning – As repairers gain a more comprehensive understanding of the need for pre-and post-repair scanning, there will be an opportunity for engagement with the insurance carriers on the costs and education with the consumer on why it is a critical element of the repair process.
- Self-management – Insurers are moving toward a self-managed model with large MSOs to streamline their process and better serve their customers. This requires the MSO network to champion training and develop processes that guide consistent, high-quality repairs at every franchisee location in the system.
“We want to support our insurance partners as they implement new strategies to streamline their processes,” said Harvey. “We can leverage the strengths of our network using the CARSTAR EDGE Performance Platform and CARSTAR Operations team to ‘self manage’ our business and guide us toward consistent and continuous improvement.”
Harvey forecasted that MSO and networks like CARSTAR will see wider use of PBAs as more insurers gain comfort with the concept and as margin pressures force them to think differently about their business. He noted that this bodes well for high-performing networks who can “self-manage” the way CARSTAR does with their EDGE performance operating model.
CARSTAR is backing the focus on PBAs with dedicated resources for franchisees to help them understand the requirements of each PBA and how to meet them:
- Created customized insurance plans for each store in the CARSTAR network that aligns with the EDGE Performance Platform.
- Expanded the CARSTAR account management team and aligned the continent to zones to provide better store and region-level support.
- Formed analytics team to provide strategic support, enhancing the ability to make data-driven decisions and creating a performance culture that pivots based on leading indicators instead of reacting to lagging results.
- Built a central review team that works in collaboration with the CARSTAR Operations team, stores and insurance partners to deliver a fully self-managed service. Central review is also creating a learning pipeline for the benefit of stores and their employees.
- Transformed their care center into a client and franchise services team supporting multiple programs internally and externally.
“Working with our franchisees and our insurance partners, we have been able to make great strides over the past five years in driving our performance and growing our insurance business,” said Johnson. “This requires open dialogue, a mutually agreed upon roadmap for success and a strategic vision for the future. We’re optimistic about how we will continue to build upon this growth and provide the highest-quality vehicle repairs and excellent customer service for years to come.”