As collision repairers we are more than familiar with the perks we provide to insurers. Similar to loss leaders at retail stores, they are value added propositions we offer, or agree to provide, intended to entice the buyer, or insurer, to do more business with us because they receive “more.” “More” can mean lower cost, extra product, or extra services. In the collision repair industry we find these perks predominately in DRP relationships.
As we are well aware, our industry trend has been to provide more and more of these perks. Examples include free storage, no mark-ups on towing charges, parts discounts, free estimating on DRP vehicles, free estimating on non-DRP jobs (often replacing insurance drive-ins), free photographs of loss damage, free photos of repair steps, free total loss handling including reporting on vehicle condition and options, free estimates on prior unrelated damage, free rental cars, free pick-up and delivery, and more. I am not arguing that these perks are right, wrong, good, or bad. These perks are services, or cost savings, provided that are above and beyond the actual or direct costs of repairing the vehicle. Our billing is based on the estimates used to identify the vehicle repair costs, which is of course the tool used to compensate shops for services. In other words, only the direct vehicle repair costs are billed, not all the peripheral expenses. As repairers we are painfully aware that many of these perks are services provided by our administrative people, including estimators. As a result we have seen a trend where shops are adding to the number of administrative people while insurers are reducing their staff. The ratio of shop administrative staff people to production people (technicians) is getting close to one-to-one.
We are told by collision industry people from the United Kingdom that their trend of shops offering, or being required, to provide more perks is even more dramatic, resulting in significant loss of profit opportunities and a huge reduction in the number of surviving shops.