During the last several years, many have debated the legitimacy of the opinion that insurers and database providers dictate repair practices to our local markets. Many feel that they’re helpless victims of a fraternity of misers in collusion to pinch every penny possible. Others feel that the repair facilities are to blame for hoisting their white flags and allowing other segments of the industry to take control of what we – in the repair facility – ultimately have the final say about.
I agree that repairers don’t make adequate use of our industry forums and associations and, certainly, in many cases have allowed insurers to dictate repairs.
I also agree that, in more cases than not, the database providers appear to bend over backward for the insurance companies – creating resentment between insurers and repairers and causing confusion about local prevailing practices.
Regardless of which position you hold to be true (or perhaps you can relate to both), I think we can all agree that this is a problem that must be addressed and resolved. Business is business, and there are many methods and ways to conduct it but, ultimately, we’re all here for the same outcome: to be profitable. The problem arises when the operations necessary to properly return a customer’s vehicle to pre-loss condition aren’t monetarily addressed.
In recent history this problem has become progressively worse and is most easily identified in the refinish department, where there’s been an increased trend of labor time shortages. There’s also an increased expectation for shops to purchase extensive training and technologies with diminished compensation – a monetary penalty for being more productive. Last, but not least, there’s been an increase of case-by-case "revue" (yes, I know how to spell "review," but the definition of "revue" is a satirical performance!) on standard, not-included P-page operations.
The list could certainly go on and on, but these select issues exemplify the overall problems.
Time shortages are nothing new to this industry. They’ve been a thorn in the side of repairers for at least 15 years, and that’s a tremendous amount of time to be spent debating these issues.
Although there are individuals who’ve spent time pursuing a remedy to this situation, the repair industry – as a whole – has let it slide. We saw this issue arise back in 1989 with ADP’s refinish time studies and now again this year and last.
After becoming aware of the recent time discrepancies, I contacted ADP to understand what had happened. I was told by their representative that the refinish times had been reduced after review of new time studies being done with new equipment available on the market. One day and one phone call later, I was then advised by ADP that this was simply a mistake that they were looking into rectifying.
I’m not here to debase ADP or the information provided in their product; however, they demonstrate the most recent example of what’s happening here and, as we all know, they’re not alone when it comes to shrinking times.
ADP’s October 2004 release shorted repairers refinish times. This is a truth and it’s blatant. One of many examples easily demonstrates the gravity of the situation. The 1999-2004 Chevy Cavalier fender refinish time was cut from 2.8 hours to 2.3 hours. When considering both labor and materials (part of the equation that’s all too often forgotten) at our local rate, you’re talking about a loss of $35. And that’s the loss on that one panel.
How many times do you refinish just one panel? Not very often. But if one panel per job is affected and your shop does 100 ROs a month, you’re looking at a loss of more than $42,000 a year!
ARE WE ALL PAYING ATTENTION NOW?
ADP is attempting recovery on the matter and addressing the industry as to their error, but what about the years of minor reductions that aren’t as blatant and scurry by under our noses?
Insurance companies have departments that do nothing but product control on the database provider information, and I have no doubts that the providers are more than willing to recognize insurer recommendations. Little of the basis for this data is publicly traded because the providers can fall back on the "proprietary information" crutch.
We all know that time studies aren’t done on every vehicle and every operation; the expense would be prohibitive for such extensive research. But by not publishing the groundwork for these times, it allows for the appearance of covert manipulation behind the scenes. It goes by unnoticed on the front side only to be painfully felt in our net profit margins. Much like the Chinese water torture, each drip takes its toll.
Insurers monitor this data very closely. They should, since they spend ungodly amounts of money for this information to be in their best interest. Claims are expensive, and they cost insurers a lot of money. So if insurers can lessen the cost of claims through the database, they can be more profitable.
The question is why don’t repair facilities have a "product control" organization doing the same for them? Do we not collectively contribute a sizable sum of money for these products as well? We need to ask ourselves, what can we do to correct this issue? Fifteen years with no resolution tells me there has to be a better way.
Although we may have been treading water in some areas, we also made many advancements. Tremendous amounts of technological improvements have been made both in equipment and procedures. Look at the improved quality of our paint materials. Look at the improved quality of our paint facilities. Look at the improved quality of the technician producing our refinish work.
If you’re reading this, more than likely you either own or manage a repair facility and you’re interested in progressing beyond what’s merely acceptable. You’re more than likely interested in increasing your productivity and quality. My assumption is that you’ve probably attempted to accomplish all of the above and have probably dropped a couple of bucks along the way.
We all know that training and equipment aren’t cheap, but as they say, the road to success is paved with gold. If training and equipment are effective, they’ll almost always increase productivity and pay for themselves in the long run (at least in theory).
But when you combine the cost of training and additional technologies with the cost of labor-time reductions (based off new time studies using technologies utilized only by some in the industry), it results in a penalty for progress.
A perfect example can be found in any paint department. How many years has it been since blending and de-trimming became standard in the industry? It was never done before, but there was no such thing as a lifetime warranty either. It became a standard, acceptable practice in order to improve the quality of the work produced. Yet now, insurance companies want to pay for partial refinishing on repaired panels.
This is an operation that we all know takes longer and requires more skill than refinishing a new, undamaged panel. Where are the time studies justifying this arbitrary decision?!
I have insurers regularly questioning far less perplexing operations – tint, cover car, tape and mask jambs, just to name a few. Folks, we aren’t even charging for the two to three times we have to mask and then re-mask. We’re charging for it once, and it’s still being questioned.
And then they throw the salt in the wound. Once we provide a logical, real-world explanation for the necessity of these procedures, we all too often receive the adage, "Well, that’s just the cost of doing business."
Insurance companies love to fall back on that old broken leg. Our utilities, facility maintenance, insurance coverage and even first aid kits are the cost of doing business. But any product that’s used directly on a specific vehicle to complete a successful repair is the COST OF THE REPAIR. The lines between the two are very distinct; however, very often they’re misconstrued – and never in the repair facility’s favor. Go figure!
I’m sure most of you have experienced how line items are right up there on the hit list for insurance companies. None of the carriers want to pay for them, and some carriers pay for only some of them. But in the present business climate, it seems like all the carriers want to argue most of them.
It amazes me, looking back down the beaten path, how again we have topics that have been argued for a good deal of most people’s careers. We have brave pioneers who’ve tackled these issues – putting their livelihoods and reputations on the line – only to let the industry wait for a resolution to occur.
Well guess what? When the industry doesn’t exert the effort to fight for what it deserves, individual actions can be in vain. How frustrating must it be for these individuals who exhaust their energies championing causes without 100 percent backing from their peers? And if the industry would provide these individuals with its full support, imagine where we could be?
We’re talking about issues that cause financial disaster – issues that draw the line between the black and the red in our financial statements.
There are multiple operations we could dissect, but one of the most prime (excuse the pun) examples is prime and block, fill sand and feather, featheredge primer surfacer. Call it whatever you like, it’s an operation that (given our local rates and a shop that does 100 ROs a month) accounts for anywhere between $63,000 to $84,000 a year.
Why on earth is this still even a topic of discussion? Why after 15 to 20 years have we not reached a firm conclusion?
The blame is almost consistently laid upon the insurers for not paying for these "extraneous" charges. But how on earth can we blame them?
Insurers are looking to control their costs, and these are expensive operations. They should be; the materials we use to perform them are some of the most expensive used in the refinish process.
But are insurers truly the entity to pick our bone of contention with? The database providers all too frequently leave their explanations as vague as humanly possible, open for each side to battle out their own interpretation.
But, then again, can you really blame the providers?
We, as repairers, haven’t held the providers accountable for the information they provide. They’ve been allowed to sit on their fence of indecision and waver on their positions, depending on which constituent wants an answer.
Months back I had a conversation with a Mitchell representative involved in the company’s product development. The issue at hand was the vagueness of the prime and block listing. They list the operation as not included in the refinish process. One of our local adjusters argued the point that because it’s not included in refinish, then it must be included in body labor (bless them for trying). After lengthy discussion and persuasion, I finally came to some semblance of conclusion with Mitchell and had them put this statement into writing: The operation and/or materials for featheredge-primer surfacer application is not included in Mitchell remove and replace (body) as well as refinish (paint) labor operations.
I won the battle, but how about the next guy in the same situation? Not many outside of the four walls of our shop were privy to this breakthrough. This wasn’t reprinted in the guidelines; nothing in the bigger scheme of things was ever done to correct the situation, so the prime and block operation is still at great debate in the industry.
We can all fight the good fight on every individual scenario, but until it can be resolved publicly, we’ll never move forward as an industry.
Accountability starts at home. We can lay blame and point fingers until we’re blue in the face, but we all have a responsibility. We can complain the database providers are vague and don’t define the operations they list in a clear, concise manner, but what about the operations that are?
I can’t tell you how many repair facility estimators I’ve met who couldn’t justify their damage appraisal by referring to the P-pages if their life (or livelihood) depended on it. Some don’t even have the ability to write a thorough appraisal to begin with. They’ve probably never even flipped through the pages of a procedure manual.
Knowledge doesn’t mean you know all the answers; it means you know how to find and make use of them.
But there are those of us who don’t use the most basic of resources provided to us. How many of you actively participate in or are aware of the local and national organizations that band together to achieve a better industry? How many of you are familiar with the online tools such as www.ciclink.com that provide a forum to question labor time allowances? How many of you or your employees regularly look at the procedure manuals?
Perhaps you can say yes to all of the above, but believe me, many out there can’t.
Folks, we can’t rely on anyone else to do this for us. We need to further our own education regardless of how long we’ve been in this industry or how much we think we know. We as repairers have the ability and duty to elevate our position in the overall scheme of things by becoming more informed and increasing awareness.
If one shop is progressive and fights for what’s deserved, yet five other facilities remain complacent with partial payment from the insurance carrier, nothing is going to change.
We all know this industry is fragmented. There are DRPs and independents, dealers and consolidators. Everyone has a different method to run their business, but if there were a way to work in unison, imagine the possibilities.
Keep in mind, the choice to give an agreed concession to a particular company in exchange for perhaps a greater volume of work is a business decision. The choice to not fight or even ask for what’s clearly owed to you as a repairer is just plain lunacy.
Insurers do their job: They pay for repairs and attempt to control their costs where they can. They do not set prevailing rates or prevailing practices unless they’re allowed to. Stand up for your repair facility, become involved, actively pursue the best possible business ventures you can – and do the same for your industry as well.
I haven’t said anything new here, and I don’t have answers for everything I’ve proposed. Perhaps we need an organization maintained and funded by repairers to perform product control on the providers. Perhaps we need inter-industry marketing to increase awareness of what resources are available. Perhaps we need an online bulletin board for shops to announce their individual victories when fighting for a cause.
It’s time for us to find some new ways to accomplish the things we’ve tried for so long to attain. We as repairers need to find solutions to our problems for each other. Nobody else will provide them for us.
We need to hold providers accountable for their databases. We need to hold insurers accountable for paying the cost of a proper repair. And we need to hold each other accountable for demanding what’s deserved for our industry.
Writer Aaron Schulenburg is the body shop manager for Winner Automotive Group in Dover, Del. He also spent five years in sheep’s clothing as an outside field adjuster for one of the major insurance companies. He can be contacted at [email protected].
