Five things about insurance companies that really tick off collision repairers:
1. Young “know-it-all” appraisers act like brainwashed corporate robots and have absolutely no automotive knowledge.
2. Supplement approval takes longer than counting Florida’s Election Day ballots.
3. Insurers refuse to pay for necessary procedures (yet expect repairers not to cut corners – or at least, not to get caught).
4. Insurers steer vehicle owners as skillfully as cowboys steer cattle.
5. Insurers are greedy, money-hungry sons of guns who care only about their own bottom line – and not at all about quality repairs.
But are they valid complaints? Sometimes. And sometimes they’re only valid to the person complaining. Repairers often see only their own side of the story and don’t even try to understand the insurer’s perspective – even if that perspective would help them to run a more successful business.
But getting an insurer’s honest perspective isn’t easy. Even when we offered insurance executives anonymity in exchange for open, honest answers to use in this article, many of them still gave us “corporate policy” statements that sounded like they went through a gauntlet of lawyers for approval (and probably did). Because these answers were typical of what you’ve already heard from insurers, we decided against running them. They wouldn’t have done you any good anyway.
The good news is, two insurance company employees (who we’ll call Bill and Ted) did take us up on our offer of anonymity for honest answers, and it’s their comments you’ll be reading below. But before you get started, understand that this article is supposed to be one-sided. You already know how repairers think – you are a repairer. What makes this article interesting is that you’re getting the opportunity to read what insurers honestly think. Not an opportunity that presents itself every day.
1. Young “know-it-all” appraisers act like brainwashed corporate robots and have absolutely no automotive knowledge.
Bill: This is a legitimate complaint for legitimate shops. However, this cuts both ways. Some shops prey on inexperienced appraisers and take advantage of their lack of knowledge and experience to get paid more. For example, a shop that learns an appraiser has no experience with frame or measuring equipment may exaggerate unibody/frame damage and gladly “show” the appraiser that damage. If the appraiser doesn’t know what the spec sheet and gauges are saying, he may be taken advantage of.
I agree that a lack of experience can be problem with some appraisers. … This job entails a lot of separating fact from fiction. I think a lot of new appraisers are sensitive to being taken advantage of and may go to extremes to avoid it. The lack of experience amplifies this; the less experienced the individual, the more situations he’ll find himself unsure of whether he’s being dealt with honestly. It can be difficult at times even for the most experienced appraisers.
Perhaps a little sensitivity to this by the honest shops will help appraisers learn and feel more comfortable with what you’re trying to explain. I know it’s not the repair industry that should be training them, but rather than complain about it, why not try to make it better? If the individual you’re dealing with is a decent, reasonable person and you are too, a lack of experience can be overcome with a minimal investment of time and effort.
If, on the other hand, the individual isn’t a reasonable person, that’s an entirely different scenario. I think the best way to deal with this is to educate and involve the customer. A shop owner or manager must realize the importance of his role as an educator and adviser. It boils down to a business decision. Each shop settles into its own style. Some may want to protect their customers from any hassles and handle everything for them. That’s a noble enough approach, but I think its time has come and gone. The days of having the customer drop off the car Monday, pick it up Friday and not be bothered in between are waning.
Another shop may choose to keep the customer informed and part of the process. I don’t think many customers would be upset by a call just to give them an update. Nor do I think a customer would be upset with a shop for calling to inform them of the results of their insurer’s inspection – and to ask for their input on how they’d like to proceed if there are problems or procedures not allowed for. As the insurance industry does, a shop should manage customer expectations.
Ted: Yes, some appraisers lack experience and knowledge. Guess what? I can say the same for body shop estimators. By the way, we hire folks that were estimators for body shops, too.
I could share story after story about incompetence at the shops. One estimate included replacing the air conditioning condenser, dryer and compressor. This car didn’t have air conditioning. But you don’t see insurance companies publicly complaining about incompetent body shop estimators. These stories are counter-productive. We need to work together by sharing technical competence. We need to be flexible and dedicated to preparing an accurate estimate and repairing the vehicle properly at the right price for the market.
What technical differences there are exist on both sides. When insurance companies hire away from body shops, some shops complain. When insurance companies hire technically unskilled people, some shops complain. When insurance companies train their own, some shops complain. Some shops complain all the time.
Shop owners should be the first to acknowledge there aren’t enough technicians in the country to fill all the technical jobs we have available in the collision repair industry. Both sides of this issue should acknowledge that we all have a challenge in hiring and training.
Here’s another issue: Estimators in body shops are generally paid much less than body techs and much, much less than painters. The estimator winds up, in many cases, dealing with pressure from the body and paint techs to alter estimate entries. The estimators are generally paid a base salary plus a percentage of the gross estimate amount, so the more money they put on the estimate, the bigger their paychecks. With pressure from the repair techs and financial rewards for extra money added to the estimate, where’s the incentive to write an accurate, fair estimate? When other businesses have this kind of incentive program and it results in overestimating practices, those businesses have been successfully sued or have wound up on “60 Minutes.”
Isn’t it true that human nature is such that we remember those things that stand out? We forget the easy stuff or the repetitive stuff. When an estimator writes a sound estimate and agreement is gained easily, we tend to forget those transactions. Especially since these are the great majority of interactions. Nothing memorable and lots of them. The ones that stand out are those that fall outside the norm – the relationships that are more difficult.
Don’t forget that terrific relationships have been built between both industries and that the great bulk of our dealings are cooperative.
2. Supplement approval takes longer than counting Florida’s Election Day ballots.
Bill: Work volume is a problem. Companies – as well as individuals – differ in their approach to supplements. It would seem that insurance companies like to get as much as possible from their staff, as well as from repairers. Most companies don’t give their appraisers credit for supplements, nor do they factor them into their production models. This means extra work the appraisers must find time for in addition to everything else he has to do. As work is prioritized, supplements are pushed back.
Not to make excuses for excessive delays, but as always, there are two sides (at least) to everything. Another problem are those less-than-honest shops. (Yes, them again. They just seem to have an influence on everything don’t they? Food for thought!) Again, appraisers do a lot of separating fact from fiction – you know, “the junk guy just cleaned up yesterday, and he must have picked up that old part.” Or the shop that forgets to call until after the car is gone and then expects the appraiser to pay him for a pile of scrap and some invoices. Or the ones that just send a supplement through the mail a month after the car’s been fixed.
Appraisers may deal with shops differently depending on their past experience with them or the shop’s reputation. I know some shops are overwhelmed with paperwork and just can’t stay ahead of it, so they release cars on a direction-to-pay basis. The most important thing is to talk to the appraiser as soon as possible when you realize you need a supplement. Most shops know who will treat them fairly, and which appraisers won’t send a check for weeks or months. Consider prior experience, and handle future supplements accordingly.
Dealing with supplements is, again, a business decision. I think this comes back to the key of educating, advising and managing customer expectations. It’s amazing what a call from a customer – saying his car will be ready Friday but he can’t pick it up because there’s an outstanding bill – to the claims office will do. Especially if he’s in a rental.
Ted: Supplement approvals take too long? Yup! And it costs too much on both sides. Wouldn’t it be nice to write a complete estimate the first time?
There’s resistance on both sides of this issue. Shops want their money immediately and would like to believe insurance company estimators should write a perfect estimate. Insurance companies don’t trust shop supplements because so many of them are inappropriate or submitted well after any opportunity to inspect the damages.
Shop supplements often include charges for items already billed on the first estimate. And often the supplement is for price increases that can’t be substantiated. We even find that supplements include operations that were never done.
Bottom line? Insurance companies and shops should work together resolving supplements. When I’ve been involved in these discussions, the resolutions are very easy – but there must be an effort on both sides and a willingness to communicate.
3. Insurers refuse to pay for necessary procedures (yet expect repairers not to cut corners – or at least, not to get caught).
Bill: Another legitimate complaint from legitimate shops. But again, appraisers are, in many instances, making their best guess as to the integrity of a shop and what will actually be done. I think handling this goes back to adapting a proactive approach – educating, advising and managing expectations. Pretty much any rational person can understand that a business needs to be paid for what it does; a shop can’t be expected to pay a tech to perform repairs when the shop isn’t paid.
Ted: This one is way too complicated to address. That’s probably why you have trouble getting a response. “Necessary” is a judgment item and can only really be resolved when both parties are looking at the vehicle at the same time. No further comment!
4. Insurers steer vehicle owners as skillfully as cowboys steer cattle.
Bill: Yes they do! And it’s not likely to go away any time soon. DRP shops are as anxious to keep this alive as non-DRP shops are to kill it and get the work back on the open market.
Obviously this won’t be solved with an appraiser or with any one company. Insurers need to have DRPs to compete from a service standpoint, and the bean counters actually seem to think they save money with them. Insurers are good at selling it, and some customers really like it and are happy to bring their car to the shop, jump in a rental and come back to pick it up when it’s done. Simple … and that’s what they want it to be.
The way to approach this is with legal and legislative action on the state and national level. I think more shop owners and managers will need to get involved with groups like the Coalition for Collision Repair Excellence (CCRE), the Insurance Consumer Advocate Network (I-CAN), etc., support legal actions, get involved with state legislators and otherwise promote compliance with the consent decree if they hope to defeat this.
Ted: Define “steering.” It’s legal and not “steering” for an insurance company to inform the customer of the options available to him so he can make an informed decision about the repairs. If the customer is only given one choice – that he can only go where the insurance company says – then that’s steering.
Let me illustrate. As the customer, you can choose one of these options:
a. Go to a shop that’s on the insurance company’s list, and the repairs are guaranteed for as long as you own the vehicle. The guarantee is from the shop and the insurance company. If there’s a repair issue, the insurance company will assist the customer because the insurer has a vested interest in the relationship with the shop and the customer.
b. Go to a “drive-in” by appointment and have a company estimator write an estimate and/or review estimates secured by the customer and secure payment for the repairs.
c. Go to a shop of your choice. A company estimator will attempt to inspect the vehicle and secure an agreement with your shop for the cost of repairs, and then payment will be issued. If there are repair issues, don’t call the insurer. They have no control over what this shop does, so they have no responsibility for the shop or any leverage over the shop.
If you choose “a,” then all the other shops in town want to call that “steering.” If you choose “b,” then you can keep the money, get the car repaired as you wish or select a shop in the insurance company’s DRP program. If you choose “c,” then you’re on your own.
When problems come up with the repairs, customers quite often holler at the insurance company that we should have told them to go to one of the DRP shops. Or done a better job explaining their options.
Damned if you do, damned if you don’t!
Non-DRP shops would like it if insurers told customers to go to any shop they wish – and just payed the bill. But carriers have learned that most customers appreciate getting a referral from the carrier, even if the customers decide not to avail that option.
5. Insurers are greedy, money-hungry sons of guns who care only about their bottom line – and not at all about quality repairs.
Bill: Of course. This is business. They’re in business to make money, and they have stockholders to answer to. The shops that are successful seem to be, in essence, beating them at their own game. That is to say, they’re being managed in a way that deals with the system as it is, rather than attempting to redefine it to be more conducive to their approach or to the way it once was. I think complacency and apprehension to change stop the repair industry from evolving at the pace of the insurance industry.
Change can be a hard thing, especially when it involves your livelihood and future. I know there are a million and one reasons why you shouldn’t or couldn’t change the way you run your business. But if things aren’t as good as they should be or it’s the same old story, same old gripes and problems, give it some thought. Even if an overhaul isn’t needed, perhaps a little fine tuning would make it better
Ted: All businesses are concerned with the bottom line. If they’re not, then they’ll go out of business very quickly. There’s always a balancing act going on between costs and proper repairs. Having said that, let me make it very clear that insurers can be more profitable if the customer is satisfied than if they cut the cost of repairs.
Renewal business is substantially more profitable than new business! If the vehicle isn’t repaired correctly, then the customer is much less likely to renew.
It’d be nice to know that all insurers and all of their managers understood this balance but, unfortunately, they don’t. There are many cases where the insurance estimator demands substandard repairs or where a local manager demands corner-cutting. There are even companies out there that have no concern for the quality of repairs.
The top 10 insurance companies cannot afford to ignore quality repairs. Yet even they have local managers and/or estimators who don’t follow company guidelines.
Are there improper estimates being written by carriers? Yes. Sometimes from ignorance, sometimes from arrogance. Either way, it’s inappropriate.
Shops aren’t immune to these same issues. Massive amounts of repairs have short-cut the estimate. Even when the shop writes its own sheet, they don’t always repair the vehicle the way the estimate was written. Shortcuts save time and money.
The shop owner may not condone shortcuts, but since there’s very little quality inspection being done by shop managers, technicians get away with all kinds of “time savers.”
Let’s talk about legal liability. If the insurer writes an inappropriate estimate, the subsequent repairs that match the estimate can leave the carrier liable for any resulting liability. If the estimate is written correctly but the shop cuts the corners, then the shop is on its own.
Real world: There are very few lawsuits over collision repairs. (There are some cases over diminished value, but that’s not a repair issue. That’s a value issue.) Quality is generally an issue of customer satisfaction rather than one for the courts. And customer satisfaction is or should be the No. 1 concern of insurers.
Rome Wasn’t Built in a Day
Honest answers from two insurance company employees aren’t going to solve all your shop’s problems, but they will help to give you a different perspective and to understand why insurers do some of the things they do. But where you go from here is entirely up to you.
“Bottom line,” says Bill, “is to educate, advise, manage expectations and get involved on an industry level.”
Says Ted: “These [five complaints of repairers] are very difficult issues for both industries, but they’re not really a serious issue with the top 20 percent of shops. They become very important when a shop is struggling or if the shop owner has an attitude against insurers. By the way, when we find a shop owner with an attitude, it’s generally because someone on the insurer side did something stupid. Either that or the shop owner just has a poor attitude about most things, including his own business.”
Don’t let your attitude stop you from being successful. You don’t have to like insurance companies, but you do have to work with them. And hopefully the candid answers and unique perspectives offered by Bill and Ted will help you to work with them a little more successfully.
Writer Georgina Kajganic is editor of BodyShop Business.
