CIC’s Insurer-Repairer Relations Committee Tackles Length of Rental Debate

The Collision Industry Conference (CIC), one of many co-located events going on at NACE | CARS this week, kicked off on Tuesday with several committee reports, a technical presentation on welding, and an Insurer-Repairer Relations Committee panel discussion on the hot topic of “rental duration management.”

Marcy Tieger of Symphony Advisors moderated the panel, which consisted of insurers, repairers, rental car agencies and association executives. Panelists included: Randy Hanson, Allstate; Chris Andreoli, Progressive; George Avery, State Farm; Darrell Amberson, LaMettry’s Collision; Mike LeVasseur, Keenan Auto Body, an ABRA Co.; Mark Boudreau, Spectrum Collision Center; Frank Laviola, Enterprise Rent-A-Car; and Aaron Schulenburg, Society of Collision Repair Specialists.

Length of rental (LOR) has long been a controversial subject within the industry, factoring in CSI and expectations. The goal of the panel was to find an answer to the question: Should the industry have a formula for rental management?

First, examples of an LOR formula were given. One, if an insurer requires three hours per day of labor on a 30-hour repair job, the repair/length of rental will be 10 days (30/3 = 10) plus applicable weekends and holidays. Or, if an insurer requires six hours per day of labor on a 30-hour repair job, the repair/length of rental will be five days (30/6 = 5) plus applicable weekends and holidays.

The panel showed a multitude of data they gathered, including average billed days for drivable vs. nondrivable vehicles (9 days vs. 17.6).

The first question the panel attempted to answer was: What is the purpose of a formula?

“The purpose of a formula is to have consistency, but what we do is not consistent at all,” said LeVasseur. “At the first notice of loss, if it’s on Friday, it will sit in the tow yard three to four days versus if it’s on Monday, which is a quicker start. If the formula is for both of them, it creates an unfair standard. Large sublets are not included either. It should not be looked at by a call center person but rather someone with knowledge of the estimate who can build an exception. All I want to do is reduce the amount of friction, but sometimes we have to put up defense mechanisms. When you’re put in a box, it creates friction.”

Added Schulenburg, “One of consumers’ first questions is ‘How long will I be without my vehicle?’ The problem is more often than not, we’re giving them an answer that we know will be wrong based on formulas we’re using. Consumers will not stop asking the question, and we do need to be able to give them a more reasonable answer.”

Amberson believes the heart of the issue is that the formula shops are given usually amounts to four to six hours per day.

“It should be based on the industry average,” he said. “Our goal should be predictability. The ultimate goal is to accurately predict when that car will be done, and then we really make that date. I find the current formula ridiculous. The estimators who are given these dates know they can’t make them, so why do we play those games? We need to establish a good, real number and then build a formula around that.”

Added Boudreau, “It’s all about meeting the expectations of the consumer. At my business, we educate customers on the front end to educate the misconceptions they already have. It differs from car to car and business to business, so you better be able to tell the consumer what the expectation is. We are digging ourselves a hole before we have even begun the repair process.”

Tackling a second question, “If we need change, what factors will influence adoption?” Amberson answered, “Credibility. Our credibility is on the line.”

Schulenburg’s response was that recognition would prove to be the factor that would influence adoption.

“The general recognition that the current approach doesn’t work. That in itself is the biggest influencer of change.”

Added LeVasseur, “The entity setting the formulas is the insurance industry, so the influence would have to be acceptance by the insurers.”

Said Allstate’s Hanson, “There needs to be collaboration. Without that, if someone comes up with something… There has to be trust in the end. Otherwise, people will subtly influence things.”

“If we have insurers who really believe we share the responsibility to satisfy the customer, that will influence adoption,” said Boudreau.

Enterprise’s Laviola brought up the point that most insurers will give extra days based on parts issues, but said the problem still remains that “the customer was already told it would be done in ‘X’ days. How do we communicate to the customer, ‘Here is how long the car will take’? That’s the real challenge.”

State Farm’s Avery, commenting on the data the group gathered on length of rental averages across the U.S., said something that should offer all parties involved hope for a resolution in the future.

“We need some data, and for the first time, we have it to come up with a more intelligent formula.”

To read more on this year’s NACE | CARS Expo in Detroit, click here.