The collision repair industry is a unique monster.
In no other industry in America do you have the type of arrangement we do. The shop provides a service for the customer, but the customer doesn’t pay the bulk of the cost. The burden of cost is usually on an insurance company.
This funny little love triangle accounts for some very interesting days around the old body shop. When you consider all of the other relationships your business involves you in (vendors, employees, etc.), you may feel like you’re being pulled in several different directions.
But the fact is, insurers are always going to ask you for concessions. Sometimes they want a general agreement, and sometimes they may just want to cut some items off a particular estimate. Nature of the beast. We all know that.
Insurers are trying to control their costs, just as you do. We, as repairers, have to remember that if not for insurers paying for our services, there would be a lot less market for us to enjoy.
But we also have to remember that at the end of the day, those other relationships mentioned above are dependent upon your business making a profit and being there tomorrow.
You know what it costs to run your business. (If you don’t, stop reading now; you need more help than this article can provide.) A collision repair professional should be in a position to work with the insurance companies that can help him to improve his business. Most are, and that’s how and why we have DRP relationships. Repairers agree to do certain things (usually involving billing), and insurers agree to include the shop on their list of preferred facilities.
They ask. You agree.
They ask for more. You agree.
They ask for more.
Where does it stop?
That’s up to you, my friend. As I said, insurers are trying to control their costs – just like you. That’s their responsibility to their shareholders.
Your responsibility is to your business. It’s your job to know when the give-and-take gets to a point where it no longer benefits you.
Is it in repairers best interest to assist insurers in reducing their claims severity? Yes.
Let me explain.
Severity can be addressed many different ways. Repairers can help insurance companies reduce their administrative costs by agreeing to take care of administrative work themselves. This, of course, means overhead expense for shops.
What’s in it for us? Independence. Shops used to be dependent on insurers, and now insurers are becoming more and more dependent on us.
Repairers also can help insurance companies reduce their rental vehicle costs by reducing shop cycle time. Repairers can help insurance companies reduce their parts costs by utilizing alternative parts when applicable. Repairers can help insurance companies reduce their claim costs by not billing for work not performed.
On any individual ticket, it’d be hard to find the advantage for the repairer of making less money. However, over the long run, it’s in our best interest to reduce severity. In a recent article in ASA’s Collision Repair Report, 10 percent of automobile claims in 1995 resulted in a total loss; in 2003, 22 percent of claims resulted in a total loss. That means fewer cars in the shop. Period.
Small-business owners across this great country make decisions that affect their business every day, just like you do. The major difference is the amount of influence insurers have over collision repairers.
Notice I said influence, not control.
But we must be fair. If not for insurance companies paying the bulk of collision repair cost, how many of your customers could afford to fix that fender bender?
My point is, as a collision repair professional, you have to decide what’s right for your business. And once concessions reach a point where they don’t benefit you, maybe it’s time to “Just Say No.”
Writer Craig Griffin is an estimator at Laney’s Collision Centre, a collision repair facility in El Dorado, Ariz., owned by his father. Griffin is a member of the Collision Industry Conference’s Estimating Committee and the Automotive Service Association’s Collision Division Estimating Subcommittee. He’s also a proud Pup, and as such, believes Toby Chess is a stud.
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