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Lobbying for Your Livelihood

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In one of his fables, Aesop tells the story of a farmer who was able to unite his quarrelsome family despite their individual differences. After trying in vain to reconcile his family by talking to them, he thought an example might work. So he called his sons together and asked them to gather a stack of sticks and bring the sticks to him. The sons obeyed. Then the father tied the sticks into one big bundle and told the lads, one after another, to take up the bundle of sticks and break it. His sons all tried in vain to break the sticks. The father then untied the bundle and gave his sons the sticks, one by one, and asked them to break the sticks. This was done with ease.

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“Thus, my sons,” said the father, “as long as you remain united, you are a match for all your enemies. But differ and separate, and you are undone.”

As we begin a new year, most body shops, auto glass shops and collision repair facilities are still operating as “individual sticks,” which explains why so many are being broken. We’re not united. Our enemies, however, are united – and have common goals.

Undoubtedly, today’s collision repair industry is a world apart from what it was during our fathers’ day or just a few years ago, for that matter. All you have to do is look around to see the new “mega collision centers” popping up all around the country. State-of-the-art facilities financed and owned by wealthy investors or insurance companies, or both, are being built in record numbers.

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Insurers now have a monopoly on the collision repair process. Insurer “preferred shops” and insurer “glass networks” prevail. And all other body shops and auto glass shops are left to compete for the small market share of customers who refuse to be told where to have their damaged vehicle repaired.

These days, it’s absolutely critical to know what’s going on around you and to be actively involved in the industry. You need to know the state of the industry, the state of your market, the state of your shop and the state of your competition. Today’s collision repair world is unlike how it was in the past, when shop owners could remain indifferent to what went on around them yet could survive and even prosper. Unfortunately, too many shop owners today are still operating this way – and finding their businesses in trouble.

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Where Have All the Customers Gone?
In 1980, when a body shop needed a customer, the prospect pool was represented by 90 percent of the vehicles on the road. Only 10 percent of the vehicles were lost – with 5 percent being uninsured and the other 5 percent being a total loss. By 1995, however, the prospect pool had diminished to only 35 percent (uninsured 10 percent, total loss 10 percent, direct repair programs 15 percent and underinsured 30 percent). Today, the prospect pool is smaller than ever and becoming smaller every day. It’s no wonder some shop owners say business is slow.

While the prospect pool is decreasing, DRPs and glass networks are on the rise, with DRPs showing at least 6 percent growth from 1998 to 2002. Many insurers are now successfully steering more than 40 percent of their vehicle-damage claims through DRPs, and the vast majority of auto-glass claims go through glass networks such as Safelite.

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Insurer steering to preferred shops represents the biggest loss to our prospect pool. The various tactics insurers use to steer their policyholders to a particular repair facility are making it harder and harder for consumers to have a choice. Not all insurers engage in these tactics, but too many of them do. And too many customers and shop owners let insurers get away with it.

It also doesn’t help that more vehicles than ever are now being totaled. These total loss vehicles represent a significant loss of work for body shops. Most state regulations specify that vehicles be declared a total loss when damage meets or exceeds 75 percent of the vehicle’s value but, in reality, some insurers total a vehicle when the damage exceeds 50 percent. This is just plain wrong.

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Collision repairers are entitled to conduct business without outside interference from insurers or third parties. But that’s not the reality. The reality is that insurance control of the collision repair process is almost to the point of being total and complete.

“The insurance companies,” says Mark Barnes of Barnes Collision Center in Zebulon, N.C., “have a monopoly on the collision repair process.”

Get Involved
Political involvement is a necessity in today’s collision repair climate. Insurance companies are the biggest contributors to political campaigns and legislators at both state and federal levels, and they have an army of lobbyists and high-powered lawyers looking out for them. Very few body shop owners or auto glass owners are actively involved in an association, not to mention with supporting a lobbying effort or a political candidate. How many of us even bother to exercise our freedom and privilege to vote? If body shops, auto glass shops and those involved in collision repair hope to survive, we have no choice but to get involved.

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The collision repair industry can become a powerful force by uniting and becoming politically involved. And it’s not as hard as some people perceive it to be. For example, in North Carolina, body shops, auto glass shops and their respective associations joined forces in 2000 to introduce legislation to help fight the growing problem of insurer steering. Many naysayers downplayed this effort as a waste of time. However, a strong lobbying effort, consumer letters and phone calls, testimony from shop owners and their customers, and a persistent, intensive, year-long effort persuaded lawmakers that something needed to be done to help consumers.

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Of course, that was the key – what’s best for the consumer. Consumer safety was always the primary focus, not how much business is lost by independent shops. Lawmakers will listen to their constituents.

Because of this valiant effort in North Carolina, House Bill 13 became law. It eventually passed unanimously in both the North Carolina House and Senate and took effect April 1, 2002.

This is just one example in one state, but other states are taking action, too. Besides, North Carolina – which has more legislation pending to help consumers and shop owners – Virginia and South Carolina are looking at similar legislation. California made a great attempt at outlawing insurer-owned shops (SB 1648), but it was defeated at the 11th hour by the mighty forces of insurance power.

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Consumer groups are already a powerful force in politics. And let’s face it. The collision industry needs to become a force.

Insurers Use Their Clout
A recent example of how the insurance industry exercises its clout and political muscle can be seen in the defeat of Senate Bill 1648 – a bill to outlaw insurer-owned body shops in California. The National Association of Independent Insurers (NAII) could hardly stifle their glee at this defeat with their statement that SB 1648 would have “stifled competition.” Look who’s talking! Insurers are experts at stifling competition.

There’s little doubt that insurers have declared war on independent collision repair shop owners in America. The question is, what are we going to do about it? Of course we have to work with insurers and I’m certainly not suggesting that we have an adversarial relationship with them, but we must stand up for our customer’s rights, as well as our own rights as small-business owners.

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Yumi Vaught – president of the California Autobody Association, which supported SB 1648 – says most insurance companies opposed the bill and spent a great deal of effort as well as money to defeat it. “[The insurers] were a formidable foe,” she says. “They threw a lot of money into it, I’m sure. So at least by those indications, we weren’t considered peanuts.”

To see how well-organized and powerful the insurance industry is, just take a look at the large number of associations that exist just for insurers. Log on to the A.M. Best’s Web site at www.ambest.com/directory/ascdir.html, and you’ll see more than 50 insurance-related associations. Also check out the NAII’s site at www.naii.org and read some of their press releases, which will teach you what public relations – or misinformation, if you will – is all about.

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What Repairers Can Learn from Insurers
Can body shop owners learn from insurers? Absolutely. We’d be well-advised to start assembling our troops and making sure we do our part to tell the truth to American consumers. While we’re at it, let insurers know that it’s a two-way – make that three-way – street that requires cooperation and respect from all: the insurer, the customer and the collision repairer.

For much too long, we’ve allowed insurers to call the shots, with too little regard for proper repairs and consumer safety. The First Amendment of the Constitution of the United States of America guarantees our freedom to speak in public and to write letters to the editor, speaking out against oppression in any form. Still, too many shop owners roll over or cave in to insurer demands without as much as a whimper. Ever heard the phrase, “We can disagree without being disagreeable”? That’s where we need to be. Stand up to insurers. Do what’s right. Tell the truth and make consumer safety the No. 1 priority.

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The future of our industry depends on our building strategic alliances and uniting into a group with the common goal being the betterment of our industry and our livelihood. The time for mincing words has long past. The public is entitled to the truth and so are our lawmakers. True consumer information about collision repair is absolutely necessary to counter all the misinformation coming from third parties hired by insurers to administer claims.

By telling the truth, we can overcome many obstacles and will have a better chance of achieving success and of having a happy, healthy life. And, frankly, it’s up to those of us involved with collision repair to lay out solutions to our problems – problems we allowed to develop and grow, problems that now permeate every corner of our industry.

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The goal of everyone in the collision repair process – insurance companies, body shop owners, auto glass owners, customers and suppliers – should be to restore the damaged vehicle to its pre-loss condition, with safety being the primary concern. Insurers want the vehicle repaired quickly and in a cost-effective manner, but sacrificing safety in the process shouldn’t be an option.

Our apathy and concern over sharing information with the shop owner down the street for fear our secrets will be stolen have aided and abetted the insurance companies. The question is: Do we want our industry back, along with our independence and our right to compete on a level playing field? If the answer is yes, then it’s time to “tie the sticks together” into a bundle that our adversary can’t break.

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Writer Mike Causey is president of Causey & Associates, a full-service government relations firm that represents consumers and lobbies for consumer rights issues. He also represents the Independent Auto Body Association (IABA) and the North Carolina Glass Association. A registered lobbyist in North Carolina, South Carolina and Virginia, Causey is a writer and speaker on collision repair, insurance and consumer related issues and legislation. He can be reached at [email protected] or at (336) 210-1947.

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