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Our “spy on the other side” Pat the insurance adjuster gets us caught up on how Consumer Reports A/M parts article affected insurers and why Clinton’s proposed budget may make repairers’ lives more difficult.
In the December issue of BodyShop Business, we ran an article titled, "Drop the Gun and Step Away from the Adjuster," in which we introduced Pat — an insurance adjuster who’s fed up with insurance companies penny-pinching policies and is working to help repairers any way possible. Because of the overwhelming response to that article, we’re bringing you more from Pat. It’s our hope — along with Pat’s — that this insider knowledge will enable you to run your business more profitably. — GK
Didn’t anyone ever tell you not to volunteer?
You didn’t volunteer, you say? Oh! You were volunteered!
Well … guess what? You may get volunteered again. It’s time to pitch in and do your part because the insurance industry may need your help. After all, you’re the "go to" guys (and gals), aren’t you? The people they "go to" when they need to cut costs.
Although their business plans undoubtedly call for improved bottom lines — accomplished in part by way of claim pay-out reductions — there could be a glitch or two in the plan.
One glitch is the recent Consumer Reports article about shoddy aftermarket parts. It seems unprecedented numbers of consumers are telling adjusters "no aftermarket parts" (A/M), and it seems most insurers have decided they’ll either back off on A/M parts all together or they’ll "cave" when people complain. Either way, those projected savings on A/M parts aren’t likely to materialize.
It looks like their response is to ride it out and wait for it to blow over. And maybe that’ll work — only time will tell. (But let’s not forget those pesky class action suits and the effects they might have on this issue.)
Here’s another glitch: It seems the Clinton administration’s proposed budget would include some new taxes for the insurance industry. I understand the American Council of Life Insurance was behind a recent insurance-industry-wide effort to mobilize a grassroots movement among insurance company employees to defeat the tax proposals included in the Clinton budget. They apparently feel this would equate to an indirect tax on policyholders. Sounds like they’re looking out for the consumer again — now that’s gotta make you feel all warm and fuzzy inside!
It also seems, ironically enough, the insurance industry feels it’s being unfairly targeted for higher taxes at a time when the government is debating how to spend a growing budget surplus. In other words, the government is already making too darn much money … the nerve of them to ask the insurance companies to manage with less profit. Sound familiar?
Well, predictably, the insurance industry says this will only serve to increase premiums and will ultimately be passed on to the consumers. I doubt that. In fact, market-driven rate reductions may well be the order of the day, which would leave them in a position of trying to maximize profits with less premium dollars to work with.
Now, how do you suppose they’re going to make that happen? Let’s see … cut back on executive compensation and bonuses? Probably not.
Trim another percent or two from the average claim pay out? Now there’s a more likely scenario.
So here’s where you volunteer … or not. DRPs may not have a lot of options aside from cost shifting (and whatever else some of them do to offset the discounted repair ticket) or getting out of that bed all together.
Independent shop owners, however, may want to look at this from a different angle. You don’t have to volunteer. In fact, maybe it’s time to take control of your business and be independent again. Now there’s an idea!
Only you can decide what all this will mean to your shop, and there are any number of ways to deal with it — but to trim another percent or two from your shop’s gross profit, well … that’s voluntary.
Writer Pat has worked in the autobody repair industry for more than 20 years, holding positions ranging from tech to manager. Pat is now a senior appraiser for a major insurance company.