Shrewd Player, Poor Payer: Progressive's "Concierge" Program - BodyShop Business
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Shrewd Player, Poor Payer: Progressive’s “Concierge” Program

Despite Progressive’s hardball reputation, it’s had no trouble recruiting shops for its “concierge” program – which eliminates all shop/customer contact and makes Progressive liable for repairs.

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Writer Charlie Barone has been working in and around the body shop business for the last 35 years, having owned and managed several collision repair shops. He's an ASE Master Certified technician, a licensed damage appraiser and has been writing technical, management and opinion pieces since 1993.

I was once quoted in this magazine very cynically remarking on Progressive’s “concierge” program that, “If I had a guaranteed flow of work from Progressive, a well-equipped, but small production facility in some out of the way industrial park that was staffed by six Koreans who could make fenders from stolen dinnerware, I’d do it.”

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The program is, after all, geared toward shops focused on production – it’s all about process.

But then last year, I spoke with a shop owner who told me his biggest problem was his *@#! customers. He hated dealing with them.

Immediately I’m thinking, “Concierge.”

My friend could hang all the calendars he wants, never paint the outside of his rented, aging building and never buy a razor blade again. He could do what he does best: fix cars. He’d never have to deal with a customer again.

But what really made me question my cynicism of the program was a discussion I had with Dan Frolich, owner of ARS Automotive outside of Pittsburgh. Frolich is well-known in the industry, a long-time I-CAR instructor and an ASA Grand Wizard. He’s also building the coolest bullet T-bird I’ve seen. Frolich knows what he’s doing in every sense of the word, and he loves the concierge way of doing business.

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I’m thinking, what’s a guy who’s built a great business over a lot of years doing in a program that would seem to be tailored for a low-level production facility?

Frolich says he’s been on the concierge program for three years and loves it. And, despite reports that customers participating in concierge don’t know who fixed their cars, he says they do – that he includes his shop’s warranty and that of his paint supplier in the finished vehicles.

Frolich is pragmatic in his assessment of the program: “It’s a basic business relationship,” he says. “They have the vehicles that need repaired, and we have the facilities to complete those repairs. It’s created a positive flow of work to our shop. Complete repair on a vehicle, drop it at Progressive’s facility, pick-up another one. If the vehicle is non-drivable, then they pay for the tow.”

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ARS heads to the local claims service center and hauls back three jobs at a clip.

After hearing about Frolich’s experience, I started to doubt my original assessment. Maybe I’d been mistakenly harsh on the program – so I set out to set the record straight.

Little did I know I’d go round and round trying to do that.

Progressive Knows Smart Marketing
Progressive is the insurance company to watch. Their innovative marketing has taken this once obscure company from the bleachers to center field in terms of cars insured in the United States. They’re now holding the No. 3 position in the nation, behind only State Farm and Allstate. By understanding what consumers want from an insurance company, they’ve been able to portray a corporation selling a commodity (coverage is coverage, right?) as one more concerned with their customers than its competitors are.

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In large part, their marketing – as opposed to actual company performance – has been the key to gaining market share. Imagine being able -much less willing – to give quotes of your local competitors for the repair of your customers’ cars? And then tell them to take their business elsewhere because you’d charge more for the exact same product. It’s sending that kind message that endears consumers to this company. Progressive appears virtually altruistic in its efforts to insure motorists. That works.

What also works is Progressive’s appearance when a claim is filed. It’s doubtful that there are many motorists who haven’t seen the ubiquitous white Progressive SUVs on the streets and at the scene of accidents. Compare the image of the typical young (read: inexperienced) Progressive adjuster to the grizzled professional driving the nondescript fleet sedan Nationwide issued him, and you can get an appreciation of the innovative presence (synonymous with youthful) Progressive has.

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Giving these immediate responses at critical times goes a long way toward reassuring a policyholder. Again, a carefully crafted feature of the Progressive marketing that gives customers a warm, fuzzy feeling.

In sharp contrast to that cuddly image is the reputation of the company held by the body shop industry at large. Progressive appears to be heads above others as the insurance company that shops love to hate (this is based on feedback over the last 10 years, as well as my own experience with their claims personnel, who rank among the rudest I’ve come in contact with).

Climbing the Ladder
Historically speaking, Progressive came out of relative obscurity, considering it’s a company that kicks up more dust than any other in today’s insurance claims world. It’s doubtful that you had much contact with Progressive 25 years ago since they were a second-tier insurer and never approached the behemoth status of Nationwide, Allstate and State Farm. However, an innovative management and marketing style injected new blood and new life into the company in the early ’90s.

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The ’90s is when Progressive hit its stride. With their unique Web interface, high visibility and out-fricking-rageous adjusters, they made it so no one didn’t see Progressive. They were in your face with their conspicuous first-response Progressive SUVs.

If you visit the Bad Faith Insurance Companies’ Web site (www.badfaithinsurancecompanies.org), you’ll see Progressive holding the No. 9 spot in their Hall of Shame ranking of the top 100 insurance companies listed. This is based on the number of bad faith actions filed by policyholders against insurance companies, which doesn’t surprise me at all given my first-hand knowledge of Progressive’s chicanery. Progressive adjusters push the envelope more than any we’ve seen in the last 10 years, which is the key to their cash position and leadership in the property and casualty industry.

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To give you a sample of Progressive’s aggressive claims management style (in case you’re lucky enough not to deal with them), Barney Slifer, a shop estimator and technician from Indiana had this to say:

“Progressive will pay for a vertical blend, but not a horizontal. A front fender that was repaired or replaced, they’ll pay for a color blend into an adjacent vertical door panel but refuse to cover a charge for blending into the other contiguous horizontal hood panel. Anchoring set-up labor times for a separate body-on-frame are weak; they allow an hour when setting up. In real-world labor time, using the proper and needed anchoring equipment, set-up duration can be double if not triple what Progressive allows. Labor to R&I running boards, plastic rocker panel cladding/replacing needed retainer clips and fasteners, parts that need to be removed before anchoring – these operations and costs are omitted. Unibody structural repairs and inner component replacement labor are written not at the higher frame and structural door rates, but at the lower sheet metal rate.”

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Examining Concierge
In an interview with Craig Moore, service center process leader for Progressive’s concierge level of claims service, he offered some insight into how they manage claims while offering their customers what they call “door-to-door service.”

J.D. Power and Associates 2004 Collision Repair Satisfaction Index Study

“The process works for insured and claimants,” says Moore. “We want to offer a choice. This is for drivable cars primarily. We’ll schedule a customer into a service center next day or same day – we want them in immediately. We do some paperwork and have a rental vendor on site. The typical appointment takes just 15 minutes with the customer.”

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When asked exactly how the repair estimates and pricing are determined, he says: “Progressive writes the estimate, we assign the job and we negotiate the AP [agreed price]. We ask for no discounts – we want quality work.”

Moore couldn’t get into specifics regarding the negotiation with the shops, but if their typical interface with non-network shops is any indication of how they’d approach one that depends on their referrals, I’d imagine the negotiation for an AP isn’t much of a negotiation at all.

I was also curious about supplements. One of the best aspects of a DRP relationship is the advantage a network shop has with respect to supplements. You typically can avoid the delays associated with requests for supplements because you simply document additional damage and keep on going. I learned that the shops in concierge, however, don’t have that level of independence or presumption of competence.

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“They stop the job,” says Moore, about how shops in the program handle additional damage. And they wait for a Progressive claims person to guide them in the work – which contradicts Frolich’s account:

“No problem on supplement work,” he says. “If it’s needed to repair the vehicle, do it. The staff at the Progressive’s facility that we work with is always willing to listen to input on how to better the shop and Progressive’s relationship.”

Say what? Are we talking about the same breed of claims personnel that we’ve all come to know and love? Does Frolich enjoy a particularly enlightened claims staff in Pittsburgh? Or does he simply have a special deal? My guess would be the latter. (I have no proof of this, other than the inconsistencies in his remarks and those of Moore. But let’s face it. Progressive likes having a happy Dan Frolich. And I couldn’t find any shops on the program other than Frolich willing to talk. Everyone had something to say, but no one outside of Frolich was in a position to do so.)

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In this era in which reducing cycle time is the mantra of industry luminaries, Progressive’s micromanagement of concierge shops would seem inconsistent with the ideals of an enlightened claims process. Unfortunately, Progressive seems to have gained a substantial advantage over their competitors with an aggressive claims-settlement style -nothing is left outside their realm of control.

In defense of this old-fashioned approach, Moore says: “We don’t want them to stop. We really have not seen stoppage [to any great extent]. The mutual promise is that we are not going to slow the work down.”

When asked how a claim would play out in a case in which a heavily damaged frame rail was slated for repair in the initial estimate, but under closer inspection revealed damage sufficient to warrant a replacement, Moore says that Progressive would not want the shop to simply order the rail.

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When asked how this kind of delay is consistent with good customer service and reduced cycle times, Moore says: “If they find something [that was] missed, they are instructed to stop the job, even though they have to wait for the inspection.”

Still, Moore insists that “the traditional supplement process is not a detriment to cycle time. … The results overall continue to be positive.”

I then related a story about a claim I was involved with recently in which a new Cadillac Escalade was hit hard in the nose and required more than $25,000 worth of repairs. The first-party insurer coerced the body shop into using an aftermarket radiator, which resulted in a week’s worth of delays, visits to the dealer and ultimately a new OE radiator installed.

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Says Moore: “Those examples of what happened to the Cadillac just don’t happen. This program is about end-to-end service.”

Moore did not, however, deny that aftermarket body and mechanical parts are used in the concierge program.

Also troubling to many shop owners about the concierge claims model is that very little in the way of credit or good will is generated for the shop doing the work. If you do a fabulous job, it’s doubtful you’ll get any recognition outside of some sales wampum like touch-up bottles stashed in the car.

But according to Moore (and Frolich), the customer does know who the shop is. “[Consumers] get a copy of the final bill from the shop. The [repair] contract is with Progressive,” says Moore. (My request for copies of the typical repair invoice given to their customers was denied, even with VIN and customer data masked.)

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If the repair contract is with Progressive, then Progressive is responsible for ensuring a quality repair – another aspect of the program that many repairers find troubling.

“We’re going to repair the car properly to industry standards,” says Moore. When asked which set of standards (in order to be a standard, it must be published and accessible to professionals), Moore hedges and replies: “For purposes of this article, we’re not getting into that. … We’re putting out quality repairs.”

Convinced I was leading him into a briar patch, Moore says: “I’m not answering any questions on parts or refinish standards.”

Good thing for him, because I was about to ask him about open blends, CAPA-certified parts and adherence to the only set of repair standards the industry has: the I-CAR UPCR.
Moore scoffs at the UPCR, and says: “They’re repaired in a way that we can stand behind them with a guarantee.”

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As for those value-added programs offered by your paint suppliers, Moore says: “We offer no paint guarantees. We find a written guarantee from us is better than one from a paint company.”

When asked what their customers are saying about concierge and satisfaction, he replies, “CSI? We survey all our customers, and we have had positive results.”

Those results, of course, are owned by Progressive and couldn’t be shared with me – or you. But I believe him.

Effects on the Industry
Admittance to concierge’s network of body shops isn’t open to “any willing provider.” It is both selective and restrictive, determined by the insurer’s needs and its desire to reward participants with a volume of workflow.

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“If we have enough shops to support the amount work we have, we won’t add [more] shops,” says Moore. “We definitely do give them some volume and make sure they have enough work. We limit [the participants] to make sure they’re getting work from Progressive.”

And what this selective process of limiting network participants does is manipulate the repair marketplace – which is inconsistent with the example set by State Farm when they introduced their Service First program nearly a decade ago; the program is open to any willing participant meeting minimal requirements. State Farm watched the others in the insurance industry, noted their mistakes and launched what appears to be the most successful repair network in existence today.

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In addition, while Progressive is a fervent advocate of reducing cycle time, it’s guilty of furthering the most inefficient process in the claims environment today. While most preferred shop programs have established an arm’s-length relationship based on trust and random inspections, Progressive is holding to the old-school process with respect to repair process, parts selection and supplements.

Everyone in the business today will testify to the high rate of supplements required to repair increasingly complex cars damaged in collisions. On a hard hit, there’s virtually no way you can foresee hidden damage, which is why any competent estimator will only write what he can actually see. In a more efficient operation – let’s say a DRP arrangement – the damaged vehicle can be torn down for a proper, thorough damage report, a comprehensive parts order made and a reasonable set of expectations set for both production staff and the customer.

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Within the concierge level of claims service, however, there’s a clear disconnect between the production staff and the customer, with the added layer of insulation between the two parties. It’s claims micromanagement at its worst.

In a statement released by the insurer, they summarize their philosophy for their employees: “At Progressive, creativity and business go hand in hand. Our open culture encourages people to take risks, learn and grow. The company sets clearly defined and challenging objectives that motivate people to achieve optimal performance.”

Progressive claims personnel clearly do push the envelope – take risks, if you will. However, the risks they take aren’t about creating an enlightened version of claims management, but are instead, clinging to a business model that ran aground in the last century. The concierge level of claims service is more regressive than the names this company uses would imply.

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Clearly there are exceptions to the generalizations, but there’s a culture within the claims business, one that furthers distrust and contempt for body shop owners and those who would file a claim. In fact, this is actually taught in schools offering an associate degree in claims management – it’s an “us and them” viewpoint, i.e. we’re the company, these are our reserves and the rest of the world is out to take a piece. More than most, Progressive’s front line people exude this sentiment.

On the other hand, Progressive also knows what people want – customers love service. Just take care of it. Don’t bother me. I’ve got my kid’s soccer game to go to, dinner to fix and I just want my car back. Progressive understands this better than anyone.

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Full Circle
Traditionally, the shop owner has functioned as the advocate for the customer, intervening with respect to unreasonable and unworkable proposals from an insurance company. But with that kind of interface absent in the concierge program, it’s clear that the will of the insurer will rule.

While some might think that awful, the fact remains that Progressive has assumed 100 percent of the liability for the outcome of the repairs. And being in the business of risk management, no insurer will consciously incur undue risks. (The sacrifices in overall quality may be more of a cosmetic or inherent nature, the full effects of which will only be seen years down the road.)

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This is the problem with the de facto “industry standards” the property and casualty industry likes to claim it uses in the administration of these kind of programs. They’re vague at best and subject to the whims of a claims person’s interpretation on any given day. And it’s hard to hit a moving target.

But if your strong suit is repairing cars and you’re in need of some major dental work, go for it. Making money is good. But if your objective is to maximize your profit by working the claim, this program is not for you.

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After my research and interviews, I have, to some extent, returned to my original impression of the program and I stand by my original remarks. Under the correct conditions, I’d do it. I wouldn’t have to worry about nitpicking customers, techs with booze on their breath talking to them, poor-fitting parts and paint that will peel off the open blends.

Every shop owner is different. Some want to hit a home run on every job and tend to spend their resources working the claim and seducing their customers. Others couldn’t be bothered and just want a steady stream of work.

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Who’s to say which is better for the industry?

Writer Charlie Barone has been working in and around the body shop business for the last 33 years, having owned and managed several collision repair shops. He’s an ASE Master Certified technician, a licensed damage appraiser and has been writing technical, management and opinion pieces since 1993. Barone can be reached at [email protected]

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