The Society of Collision Repair Specialists (SCRS) sent out a note to all of its members regarding the special program that aired Feb. 11 on CNN titled, “Are Cheap Repairs Part of an Insurance Scheme?” The note reads as follows:
The pressure on automakers to reduce emissions and resource consumption is going to continue to drive vehicle design and increase the prevalence of an expansive list of more advanced materials and technology. This continual evolution in automotive architecture intends to produce safer, lighter, more efficient vehicles, and inherently requires increasing amounts of skill to repair and ever-increasing importance to follow proper procedures with the safest parts. It is the industry’s absolute obligation to react, equip our businesses and train our technicians to meet the demands of our changing fleet.
The good news is that, with efforts from industry organizations such as SCRS, I-CAR and others, the collision repair industry has increasingly more robust access to information from the automakers on the proper repair methods that should be utilized, the necessary equipment and the hazards of using certain parts or unaccepted procedures. As our industry invests in this highly sophisticated equipment and intensive, specialized training that are make and model specific, the costs of such investments have to be recovered. The biggest challenge facing repairers isn’t capability, but rather the downward pressure placed on repair businesses to do more, invest more, perform faster and to do so for a lesser return.
This is not a localized issue, or even limited to our country; it has wide-reaching impact on consumers worldwide. In the United Kingdom (UK), the UK Competition Commission issued a summary of findings after analyzing the interaction between the insurance and collision repair market. They came to a conclusion that many repairers in the United States have known for a long time: the market is not working well. In fact, they specified that the market is not working well because ‘competition between repairers to obtain business from insurers is focused on low cost rather than high quality of repair; that is, repairers are insufficiently rewarded for offering a high quality of repair.’
The businesses that perform collision repairs are highly skilled professionals who often have differentiating characteristics relative to particular levels of expertise, certification, training, equipment, capacity and quality of workmanship. In a well-functioning market, those with lesser skill, lesser capability and lesser quality would be incentivized to improve because those who perform better would receive appropriately higher degrees of compensation based on skill and competition. Consumers would seemingly seek out those with the best skill set available to them, further ensuring their vehicles are safely repaired and providing those leading repairers with greater market share. Unfortunately, insurers often refuse to recognize these gradations in the marketplace, just as they have proven not to distinguish similar gradations between part qualities. The CNN special program highlighted the practices of identifying the cheapest parts in their claims settlement practices, and it is similarly common that their indemnification practices reflect prices that are substantiated by the lowest common denominators in the market as well, not necessarily what consumers would support in a well-functioning marketplace.
It is important to recognize that there are both ‘good’ and ‘bad’ market representatives in every trade and profession. It would also be inaccurate to make the assertion that simply because a collision repair business works with an insurance company, they must be performing subpar work. What the newscast helped to highlight was that the system is broken, allowing those with the financial responsibility to indemnify for loss to interject themselves into influencing price and thereby the process and/or quality of services provided. Ultimately, if the consumer market demands from their insurance carrier to cease the practice of indemnifying losses based on low-cost principles rather than high-quality expectations, the market shift would provide necessary incentive for more of the industry to focus on quality adherence and consumer experience. For those looking to save the largest percentage in the shortest period of time when shopping for auto insurance, it is important to remember that not every policy has the same coverage, and not every repair is created equally.
SCRS encourages collision repair businesses, collision industry associations and interested parties to share this message with their legislators, regulators, consumers, news stations and all others with the power and influence to carry the conversation on.
