And, for many years, that’s how the industry worked — "until," says one shop owner, "insurers got their hands in everything."
As insurance-company involvement in the industry grows, many shop owners struggle to get paid fairly, are forced to use aftermarket crash parts, watch insurers steer away customers, get second guessed regarding their estimates and generally feel "under the thumb" of someone else. All this in combination has caused many shop owners to be resentful toward the insurance industry.
And this resentment is apparent from the results of our Industry Profile.
When asked if they lose business due to insurers steering customers, 77.6 percent of our respondents said yes and 22.4 percent said no. (It’s interesting to note that 36.5 percent are involved in one or more DRP and 63.5 percent aren’t involved in any. It’s logical, then, to assume non-DRP shops are losing work due to steering, but even if we assume all non-DRP shops are losing work — which isn’t necessarily true — based on these figures, 14.1 percent of DRP shops are still losing work because of steering — 77.6 percent minus 63.5 percent equals 14.1 percent, which comes from DRP shops. Says one DRP shop owner about insurers steering away business, "Yes [it happens], but I gain through my own DRPs, so it’s probably moot." What’s he saying? That he’s not sure if he should say he loses work due to steering since he knows that some of the work he gets through his DRPs is because of steering. The point here is this: Being on a DRP doesn’t rid you of steering — unless you’re on every DRP in your area.)
Some of the respondents who’ve lost business because of steering had this to say:
• "We’ve been in business for 19 years and 99 percent of the time, the customers are very happy. Yet insurers steer business away from us constantly."
• "I’ve had old customers tell me they were told to go to another shop."
• "Insurers are more concerned about cost than quality."
• "Insurers make the customers feel as though they won’t pay unless they take the vehicle to one of their shops."
• "Vehicles have been removed from our shop because of insurers."
A few quick comments from respondents who said they don’t have a problem with steering:
• "We spend a lot of money on advertising and educating the consumer."
• "I’m the only body shop for 4,000 square miles." (Lucky him!)
When asked who they deal with more — independent or staff appraisers — 43.6 percent of our respondents said independents and 56.4 percent said staff. Who do they have more problems with? About 35.3 percent said independents were more trouble while 64.7 percent pointed the finger at staff appraisers.
Respondents comments about why independents are more trouble included:
• "They feel the need to justify their existence by cutting the price no matter what!"
• "It’s harder to get paid on supplements."
• "They’re tighter with money and slower with supplemental claims."
• "They don’t want to pay for a lot of operations, fearing loss of contract with the insurance company."
• "Independents have a lot of companies and procedures to deal with. Staff has just one company."
• "Supplements are harder to collect."
• "They never know company policy."
On the other hand, here’s what other respondents had to say about why they prefer independents to staff appraisers:
• "Independents usually understand the repair process better."
• "It seems like the staff sometimes think it’s their money you’re spending."
• "Most of the independents in this area were body shop owners, so they understand."
• "Staff appraisers are trained to cut costs."
• "Independents are usually experienced body people and understand auto repair better."
Regardless of whether they’re dealing with staff or independents, 69.2 percent of our respondents said they think problems with negotiations are due more to company guidelines than individual appraisers. "Many appraisers know costs but are afraid to write proper procedures," says one shop owner.
"The companies tell appraisers what they can and can’t pay for," says another shop owner. "We continually hear, ‘I know you need to do it, but I can’t pay for it.’ "
But 30.8 percent of respondents disagreed, saying negotiation problems are more the fault of the appraiser than company guidelines. "A lot of appraisers are trying to impress the company by saving money," says one respondent.
Says another respondent, "Some appraisers sold shoes or ties before appraising cars," which, according to this respondent, makes it difficult to have an intelligent conversation with them — unless you’re discussing shoes or ties.
Still, despite some of the current problems repairers have with appraisers, 74.1 percent said relations with appraisers are improving, while 25.9 percent said they’re deteriorating.
What can be done to improve relations even more? Here’s what some respondents suggested:
• "[Insurers need to] hire very well-educated appraisers who are familiar with body shop repairs and painting."
• "Everyone needs to quit lying and cheating each other and be honest. If a shop needs more time, pay it; if the insurance company overpays, return the money. Just be honest. Why is it so hard? It’s ruining our industry."
• "I think things are just fine the way they are."
• "Allow shops to write estimates and repair based on best known methods."
• "Insurance companies should take a hard look at the State Farm Service First program. Good program!"
• "Insurers should write the policies, and we should repair the vehicles."
• "Stop doing surveys and pay the same rates in all areas. Within a 20-mile radius, State Farm pays three rates!"
• "All adjusters should have hands-on training under actual shop conditions."
• "Force the insurance carrier to back the warranty and re-work to satisfy our customer if they disallow our shop appraisal — and inform the insured of this fact."
• "Get paid for what you do; do what you get paid for."
• "Let customers know the truth about the laws and allow the customers to govern the marketplace."
While most of the suggestions from respondents revolved around being honest, training appraisers and educating the public, one respondent had a different idea. When asked how he plans to get along better with appraisers, he summed it up in one word: "Retirement."
Writer Georgina Kajganic is editor of BodyShop Business.