Presenting a solidly unified front among repairers is widely viewed as the best technique for improving the industry’s working relationship with insurance carriers. A sampling of opinions taken from collision industry members for this article indicates that more body shop owners need to stand up and get active with local, state and national associations while being willing to become involved with legislative and regulatory issues.
Oddly enough, the industry could take some lessons from the Amish. True, the Amish don’t even drive cars let alone bring them in for repairs, but in the context of achieving a desired solution, they speak as one en masse. When a governmental problem needs to be resolved, an Amish meeting house is packed to the rafters. Everyone bears a respectful and dignified dead-silence except for a lone spokesman, who is asked by the others to speak on behalf of the entire community. (Although the Amish are known for high voter turnouts, it is considered inappropriate to seek self-aggrandizement or pursue a personal agenda.) There is no ranting and raving or spouting-off of individual grievances; they directly address the matter at hand in a powerfully single “we” voice. The politicians on the dais see a sea of determined faces eager for a prompt resolution.
A consensus among those involved with collision repair who commented for this story is that the industry remains fragmented and in disarray stemming from real or imagined fears of retribution, lingering distrust of colleagues and simple apathy.
“The collision repair industry must stop fighting each other and unite as one,” says Todd Bishop, a founding member of the Collision Repair Association of California (CRA). “We are our own worst enemy! We need to adopt the phrase ‘help me, help you,’” he urges. “The one thing I have found with the insurance industry is that they are fierce competitors (with each other), but in the political arena they band as one. They pool their resources together; they have figured out that pooling together gives them unlimited power.”
Paul Tetrault is the northeastern states affairs director for the National Association of Mutual Insurance Companies (NAMIC), and from where he sits he sees a disjointed collision repair segment seemingly dominated by a vocal few. “There may be situations where individual shop owners may claim to be representing the industry at large, and they may not represent the industry at large,” Tetrault says. As an example he cites a state association – he wouldn’t specify which one – that has a membership covering only 30 percent to 40 percent of the state’s eligible shop owners, indicating that such a high level of non-participation deprives the organization of its credibility and clout. Tetrault also hints that the attention being paid to shop owner vs. insurer controversies may be overblown. “There are a lot of situations where the relationships are good. It only gets noted when there are conflicts.”
Still, he does acknowledge that there is a disconnect between the two parties. “They’re coming from different perspectives. One side is controlling the funding that the other side gets,” he explains. “Both sides should recognize that they have a common goal in that they both serve consumers,” Tetrault says. “At the same time, there is a natural conflict: Insurance companies want to keep costs as low as possible, and in some situations that can lead to tensions.”
“The connection between State Farm and auto body repair shops is the customers we share,” notes company spokesman Dick Luedke. “Ideally our efforts and the efforts of auto body repair shops focus on making the customers’ experience of the collision repair process as good as possible. One way we do that is to look for auto body repairers who provide the best combination of quality, efficiency and price for our customers.” If a shop owner has a problem, says Luedke, “we believe local State Farm management is in the best position to assist repairers, and so we ask that those repairers contact local personnel when they have questions or concerns. Again, it is about our shared customers and how to best meet their needs. State Farm works to communicate with all repairers so that customers receive the best combination of quality, efficiency and price.”
Progress is being made at bringing together carriers and collision repair providers, according to NAMIC’s Tetrault. “Things are being done,” he says. “Sometimes it takes a third party such as a regulator or (government) committee chairman to get both sides at the table.” There are instances where a government body will “tell the two sides create a working group and come together, and that has had some success.” Bishop, owner of Dibbles Auto Body in Santa Rosa, Calif., contends that little has been accomplished toward rectifying the shop/insurer conundrum.
“From my eyes there is nothing in place. Until your associations and consultants as a whole band together on a state level and develop a plan on a national level, things will not change,” he asserts. “In some associations the biggest joke is: ‘If you want a DRP (direct repair program), all you have to do is get on the board.’ Not throwing every association under the bus – as I have seen some improvements in California and have read about others nationally – we still have a long way to go,” says Bishop. “If you own a collision repair shop you need to reach out to your fellow competitors as well as hold your associations accountable so they represent you as a whole – and not the best interests of a few – and we can all change this together,” he adds.
“The CRA would be interested in forming a working group of non-lobbyists from both industries that would concentrate on those aspects of the collision repair business that would benefit from reasonable discussions of policies and practices that impede a timely, high quality repair,” says Allen Wood, the organization’s executive director. “Each insurer trade group is heavy with professional lobbyists who don’t live with the everyday ‘in the trenches emotions’ of shop owners and insurance adjusters. By this I mean that there are repairers and insurer field people who work well together, but the lobbyists tend to focus on the horror stories.
There is a negative bent to discussions at the State Capitol,” Wood says. “Additionally, the industries would benefit from sharing information about business relationships that are positive in nature; that is, when problems do arise they are quickly corrected,” he observes. “These discussions might best be limited to individual insurers as the problems between insurers and repairers vary from one market area to the next. In other words, some shop owners and insurers work well together while others do not.”
The notion of repairers and insurers making nice can be a tough row to hoe, according to Wood. For some shop owners the concept is akin to “asking a child what he could do to get along with the bully that takes his lunch money every day.” A strong association is a necessity to get results. “There is a point where the individual has to stand for what he or she believes in and for the collision industry,” he implores. “The time to stand up has arrived. Most insurers benefit from a lack of regulatory influence – so they continue to do as they please. It is time to call to the attention of others the shortcomings of the regulator and the conduct of the insurers.”
Efforts to reach a meeting of the minds have thus far netted minuscule solutions thus far. “In California, CRA and other groups spent almost two years working on steering and labor rate survey issues,” Wood recounts. “This was accomplished through a series of workshops facilitated by the Department of Insurance. As a result of these workshops a proposed set of regulations was drafted to address steering. Although the proposed rules were not perfect, the collision industry was amenable to the language with a few suggested changes. The insurers responded by submitting a bill, Assembly Bill 1200, to the state legislature that seeks to weaken the law protecting consumers from insurer steering tactics.”
Wood goes to note how “the discussions regarding labor rate surveys were less fruitful as the insurers simply refused to participate, took their ball and went home. One must recognize that insurers relish the status quo. For things to stay the same is a win for them.” CRA President Lee Amaradio maintains that “insurers are not carrying the liability for an unsafe repair yet they are constantly trying to control the repair process with only one thing in mind – and that is the cost of the repair.” He says “the insurance industry views all shops as the same, and this is done with the purpose of using the substandard repair shop as a tool to control the better trained and better equipped facilities. They all know the vast difference between different shops and their individual repair procedures, but they purposely pretend that this dynamic doesn’t exist because it allows them to control cost.”
The Society of Collision Repair Specialists (SCRS) says it continually strives to establish a productive discourse among the two sides. “I believe there has been a great deal of work that has been done over the course of many years specifically aimed at developing communication and attempting to build understanding between both the repair industry and the insurance carriers,” says Aaron Schulenburg, the SCRS’ executive director. “Based on that work, I’m not sure there is a lack of understanding of each party’s perspective. However, there are ultimately some inherent differences in the objectives and responsibilities that both parties have in the claims and repair process,” he says.
“There are also significant detriments which exist in both industries that further complicate and confuse the situation because the variances in each industry are so drastic. In any given market, there is a broad range of repair facilities that all have different models, differing levels of quality and capability, and differing investments into things such as training and equipment; yet there is a single established platform for how they are all compensated,” Schulenburg reports. “Conversely, there are equally drastic variances in the insurance industry with carriers who have established different programs and policy coverage, different approaches to the claims adjustment practice, and differing philosophies on how they will indemnify their policy holder; and even those differences may vary from county to county, employee to employee, or shop to shop,” he says.
“Without a standardized and defined approach to what is ‘proper,’ an agreed understanding of the difference between established retail market charges and how they differ from wholesale agreements; and until we have widespread recognition and acceptance that our current ‘one-size-fits-all’ approach does not work, I’m not convinced that the communication will lead to improvement. It may lead to ‘understanding,’ but we need that understanding to translate into tangible improvements in how our businesses perform the work that we do,” Schulenburg points out.
“The other inherent difference is in the objectives of each segment that are tied to the process. Businesses exist for one purpose…to be profitable. Companies pride themselves on their service levels and offerings, their capabilities and their perception in the market by their consumer; but at the end of the day, those outcomes are all possible only as long as the company offering them remains profitable. The objectives of repair facilities across this country ultimately are to be profitably paid for the operations and services they perform to repair the damage caused to the affected vehicle,” he says.
“Insurers desire to uphold their obligation to indemnify the customer for their loss while minimizing the loss expense in the interest of profitability. Neither objective is faulty in approach, unless the service or repair the customer receives, or the laws and statutes that exist, are compromised by the desired outcome. Perhaps if there were an alignment of goals to ensure that the driving priority is that the most proper, safe and effective repair is performed on the customer’s vehicle the rest of the pieces to the puzzle would fall into place,” says Schulenburg.
“SCRS has held a number of meetings with some of the largest insurance carriers in the country with a focus of getting the information and concerns that our constituency has onto the table, and finding out where we can go from there to impact positive change. We utilized direct feedback from our membership, which was collected and monitored through both surveys and market communication, and used it as a centerpiece to have some very candid discussions about the importance of addressing the realities of what happens in the offices, parking lots and production areas of shops across the country every day,” Schulenburg continues.
“We believe that the opportunity to present our concerns and perspectives has led to some better understanding; an understanding of why practices lead to friction, or why we as an industry expect certain things from the process. What will be the key indicator of the success of that communication is if those understandings translate into changes experienced in the field and there is a cumulative improvement in the process,” he says. “What is also important is for us to realize that there can’t be an expectation to continue to point the finger without also looking at our industry and recognizing the deficiencies that exist,” Schulenburg observes. “There are a great deal of businesses that we represent that personally makes me exceptionally proud to be involved in this industry and a representative of our trade; there are also those who don’t. As SCRS fulfills our goal of representing, informing and educating the collision repairer, we are certainly mindful that there is much work to be done at home to improve our industry as well. We currently have a number of initiatives in the works that are aimed at helping to raise the bar internally as well.”
Gary Wano Jr, SCRS’ immediate past-chairman, encourages shop owners to “re-define your business; work toward differentiating your facility from the norm. This can help when seeking remittance for items that may have been considered taboo in the past.” He goes to suggest that you “own your customer base through impeccable service.” This is best achieved through establishing standard operating procedures. “Set SOPs and follow them. From the floor sweep to upper management, the standard needs to be known. In most cases, if operations A, B and C are followed on all repaired autos without fail that consistency goes a long way when the insurer has to accept/authorize prior to carrier remittance,” Wano says.
“Unfortunately, there are a lot of auto body shops in the U.S. market that do not realize that the repair techniques of yesterday are unacceptable when repairing today’s highly advanced autos,” he reports. “That being the fact, I can understand why an insurance appraiser who consistently witnesses cars being repaired archaically in the largest percentage of body shops has a problem understanding when approached with proper repair methodology. It is due to this very reason that the insurer should not be involved in the repair portion of the claim,” says Wano.
“Since most auto body repairers are not willing to embrace continued education – because of the cost, time restraints and production slowed due to key people traveling to train – on specific model repair requirements, it is hard to imagine that a carrier would be willing to absorb that investment on all appraisal staff,” he adds. “In the same breath, how can the carrier’s appraiser be effective in the current role they play without the training?” The overall concept of insurers being so intimately involved in the repair process is a consistent hot button within the industry.
“I have always been a firm believer that there would be far less friction and far greater efficiencies if the collision repair process was left to the training and experience of the collision facility with only one goal: To properly repair the vehicle for the customer,” Schulenburg says. “So much emphasis is put on metrics and KPIs (key performance indicators), ‘approved’ procedures and authorization tracks; these are guidelines that are all intended to mitigate the cost of the repair. The fact remains that the repair cost is a direct reflection of what is required to perform the repair, not the other way around. Insurance policies don’t insure a loss for a specific dollar amount, they insure to make their policyholder whole in the event of a loss,” he points out.
“The best improvement of the relationship very well may be ‘let the repair expert repair the vehicle and let the insurance professional settle the loss,’” says Schulenburg. “Doing so better defines the responsibilities to the consumer and very well may improve the desired end goal for all parties involved. There has to be a level of trust, and given the current approach in the markets, that trust is seemingly very diminished today.”
