Tips to ensuring DRP compliance

Aug. 26, 2014
We offer suggestions to help shops and MSOs figure out how to best ensure compliance with DRP relationships.

Ask anyone in a collision repair facility and they will tell you there are few requirements in their job as challenging as pleasing insurers. Most MSO operators build a significant portion of their business model around direct repair relationships (DRPs). Some strive to have any and all DRPs. Often we go to great lengths to market our businesses to insurers and when successful, we agree to contracts that make many demands regarding our performance and responsibilities. An insurer’s local representatives (inspectors, field staff, auditors, or whatever their title may be) may have their own interpretations of their company’s expectations, which adds to the commitment we have made. Their expectations include procedures or policies that suit their personal preference or convenience, making it their own variation of the process and its requirements. In other words, they may have interpreted the company’s requirements and implemented their own way of compliance. Complicating the situation, insurers often change their requirements and they periodically change representatives. It quickly becomes apparent that being in complete compliance can be a daunting task.

Start with the basics
The ancient Roman poet and satirist Horace stated, “No man ever reached to excellence in any one art or profession without having passed through the slow and painful process of study and preparation.” DRP training and set up is critical. A first consideration is who: Who will be the estimator(s) responsible for administering the DRP? Some shops and insurers prefer to have one key point of contact. Others prefer multiple people trained on a specific DRP so that all can handle any immediate needs, such as walk-in estimates, and staff absences are less of an issue. No matter your preference, it is prudent to have at least one backup person who can fill in if necessary. Setting up the automated estimating system with accurate labor rates and preloaded items is necessary. Spend the time to be as complete as possible. Not all companies are inclined to share the DRP contract with staff, as some data may be considered proprietary. Yet the terms of the agreement are the overruling guidelines of your commitment to the insurer. You must share at least the majority of the contract so the estimator knows exactly what the insurer expects. If you develop guidelines cheat sheet reference source for the estimator, you may not have to share the contract, but it will be critical that the reference be precisely accurate and complete in terms of all of the expectations the estimator is responsible for. Sometimes subtle wording in the contract can be significant. Obviously all of the required automated systems required for communications and auditing must be installed and the estimators trained on them. Having the insurance rep train the estimators as much as possible is helpful. This will provide insight as to their specific expectations.

Generally, guidelines cover the following dimensions:

1.    (Quality) Estimating guidelines
     a.    Parts – what part types (AM, LKQ, reconditioned) are acceptable
     b.    Best practices – repair vs. replace, refinish procedures
     c.    Profile – using the correct agreed to rates, mark-ups and discounts
     d.    Documentation – proper type of documentation as defined by the insurance company
          i.     Photo documentation and photo labeling
          ii.     Use of insurance specific descriptions for not-included operations (part code table entries)

2.    Customer communications
     a.    Keep customer informed throughout the repair process with progress updates

3.    Cycle time
     a.     Appraisal cycle time service levels
     b.     Timely handling of the appraisal (assignment sent to estimate written. May be different for drive-able than non-drive-able repairs)
     c.    Repair cycle time service levels
          i.     Require average daily labor production time
          ii.     Require Promise date accuracy (delivery of repaired vehicle to customer on date originally promised)

4.    Customer satisfaction
     a.    Overall satisfaction (CSI)
     b.    Kept-informed
     c.    On-time-delivery
     d.    Customer service
     e.    Repair quality

DRPs are each different, and their goals and expectations are unique. Even within a carrier there may be different guidelines for different age vehicles or even different policy types, for example an OEM parts rider. The agreements/contracts can be complicated and over 20 pages long. Some are the opposite. One example is a smaller, but well known company who has their criteria on one page. There are three sections including Mandatory Technical Training/Certificates, Mandatory Equipment and Preferred Criteria. Their overriding goal is excellent customer satisfaction index scores (CSI). They are willing to pay a fair price for parts and services. They believe shops that provide great CSI are typically competent and conscientious, which will result in good KPIs in other areas. In each case it is beneficial to gain clarification and understanding of expectations from local field people.

It’s important to note that the need for this information doesn’t stop at the estimator. The person responsible for parts needs to know the insurance company’s part guidelines for the specific vehicle when sourcing replacement parts. The body technician needs to know the insurance company’s best practice guidelines for repair. The office manager may need to know the process for billing and what is required on the final estimate.

Your performance goals
Of course we wish to please the insurer. However, there may be variables within their expectations and as a business operator it is important that you send a clear message to your staff regarding your expectations. Some KPIs are in conflict with each other. For example, shops are often working hard on cycle time scores and sometimes confronted with a request from a customer or insurer to slip a job into the schedule before other customers to address a compelling need. Should your staff do it at the expense of shop cycle time scores?

Another example could is average paint hours per job. Some industry experts tell us if you write thorough estimates that include not-included items, a good benchmark is to exceed 9 paint hours per job in our periodic reports. Some insurers have their own expectation, such as a benchmark of less than 7 paint hours per job. MSO staff should have direction from management regarding expectations.

Perhaps you want to please the insurer at all costs. You may direct staff to take complete DRP administration direction from the insurer. On the other hand, you may elect to give your staff the goal of being ‘on the high end or tolerable’ to the insurer. Or perhaps you may direct staff to not just satisfy the insurer’s expectations but to exceed them. Management instruction to staff should be clear so that they don’t feel conflicted and confused, which can lead to frustration. As an MSO operator, you are ultimately responsible for compliance with the insurer’s expectations. Develop clear, realistic expectations for staff so that they are in compliance with your direction. Also understand that each job should be approached with thoughts of a safe, quality repair based on manufacturer repair standards. Decisions on each aspect of the repair can be influenced by our KPI standards, but ultimately we must do what is right for the customer and the vehicle. Therefore, especially when considering data for a small number of repairs, the nature of the jobs we have will have an immense amount of influence on the scores.

Auditing
Insurers have been auditing collision repair shop estimates, and even their own staff estimates, for a long time. Unfortunately, it is common practice, less efficient than completing the task in one step and comes with an implied lack of trust or confidence. Perhaps one day as an industry we can develop estimating systems, processes and/or highly skilled consistent dependable estimators who will eliminate the need to audit. But for the foreseeable future, auditing is a reality. As claim handling administrative and estimating responsibilities have been shifted to collision repairers through DRPs, more and more shops are embracing their own auditing processes. One shop I know implemented its own modest, but common sense approach where each estimator audits one of their colleague’s estimates every day. They have an audit sheet with basic guidelines and scores. The sheet is submitted to the shop manager and he is responsible of correcting any behaviors, misunderstandings or mistakes with the estimator who created the estimate.

 For several years now, estimate audit tools have been available to help repairers increasingly self-manage their DRPs. These tools show exceptions to the guidelines to alert the estimator of changes that may be required to ensure compliance.

 “First, from within CCC ONE, users can run Advisor at any time during the estimate; or when locking the estimate, Advisor is automatically run. Line level exceptions are highlighted within the estimate using a light bulb icon to draw attention to a potential issue. Other exceptions not related to a specific line, such as odometer or the customer’s address missing are shown in a view below the estimate,” says Mark Fincher, vice president of Market Solutions for CCC Information Services. “Second, CCC leverages its network of insurance connections to actually share their guidelines with repairers. Today over 25 insurers share their guidelines through the application to provide repairers with real-time updates and eliminate the need for the binder or specialization. Third, Advisor is not just for insurer guidelines. Repairers can configure over 200 rules of their own to help ensure accuracy on every estimate written. Items like flex additive, weld through primer and sound deadening pads, which can all be commonly overlooked and end up on a supplement. can all be configured for exception if parts related to those materials or operations are added to the estimate.”

Rick Tuuri, vice president of Industry Relations with AudaExplore, a Solera Company, details their Estimate Check system. “It allows the repairer to run the estimate through a rules review prior to committing to the insurer. For the insurer, we offer Estimate Review, which checks submitted estimates against their rules. The main point is it is imperative to use all of the tools at your disposal prior to submission to the insurer. We recently had an instance of an MSO doing this in all but one of their regions. That region was getting bad marks, and relationships were deteriorating. Estimate Check was in their bundle, but they hadn’t loaded it. Once loaded, the problem is going away; but, it will take time to rebuild the relationship and get past the problem. Load and use it!”

MSOs have taken the self-management model to a new level. Many have created a new role within their organization to perform a second review of the estimate before it is uploaded to the carrier. While this has created an additional expense, MSOs have seen a return on their investment through increased estimate accuracy, meaning less supplements and enhanced service for their carrier clients by reducing re-inspection requirements.

From this, CCC ONE Central Review was created and delivered to the MSO community in mid-2012. Creating a new workflow using rules and an intuitive dashboard for managing volume, the Central Review solution was quickly adopted by many MSOs. The solution uses a number of parameters to triage including estimator (to be used for new hires), amount of estimate and advisor score by insurance company or across all insurance companies.

For better understanding, I reached out to Cheryl Magers, Compliance Manager for LaMettry’s Collision in Minneapolis, Min., an MSO with eight locations. Among her responsibilities is auditing estimates for compliance through a central review process. She allowed me to watch as she performed a review on a DRP job. It happened to be a late model VW side hit that included door, quarter, pillar and suspension damage. An airbag had been deployed. The following is a brief outline of the review process I saw, including checking for compliance in these areas:

-Customer information, including email address

-Insurance information, including facts of loss

-Vehicle information, including correct VIN

-Photos, including air bag, trim, R&I needs, seat belt, wheel, pillar, suspension, blends, and other required data like VIN, mileage, and dash warning lights. (Cheryl said she was also using this to create a picture in her mind of the aspects of the damage.)

-Notes, including regarding alternative parts

-Main body of estimate (she quickly read each line)

-Cost of repair as a percentage (possible total loss?)

-Consider questions an insurance inspector or auditor would ask

-Line properties, notes, origin

-Suspension lines, reviewed photos for proper illustration

-Add copy, parts notes

-Checked for “forgetables” like glass kit, wheel weights, etc.

-Checked for non-included items like steering angle sensor reset, feather prime and block, etc.

-Checked outside the system for factory repair data attached, such as from Alldata

-CCC repair data

-Referenced P-pages to evaluate included/non-included items in headliner replacement

-Event log

-Communicated events to insurer

-Advisor report (this scrubbed the estimate and provided items to consider and an overall score)

In this example, Magers found a few areas of concern and sent an email itemizing suggested changes to the estimator. She also set up the file for a second review before uploading it to the insurer. The exercise took about 30 minutes, including her explanations. I asked Magers for pointers. “Try to arrange the photos in the same order as the lines of the estimate. Put manual entries by their associated items instead of at the end of the estimate,” she said. “Most importantly, read the estimate before uploading! Also, share monthly and quarterly KPI and performance reports. It's really hard to juggle just the right mix of parts and OEM repair procedures in order to achieve compliance goals and still maintain the desired level of profit and customer satisfaction.”

The goal, behavior
In a perfect world, insurance inspectors and auditors, as well as MSO compliance managers, would audit estimates, identify areas of concern and work with shop management to train and coach estimators and other staff to be in perfect compliance whenever they create an estimate or administer a claim. That would be the most efficient model. All of the auditor/inspector/compliance people would work themselves out of a job. Of course that won’t happen in the foreseeable future. However, if we strive to get as close to that goal of perfection, it will be in the best interest of the shop, the insurer and the vehicle owner. 

It is important to carefully consider how we get the behaviors we seek. There are, of course, many management styles. We’ve all experienced that dictatorial style where a behavior is demanded with the implied consequences of further harsh criticism. Some people behave as if they believe they are a hammer and all problems are a nail. Too many times the auditor is critical of the estimator because they didn’t think the way they do. For example, we hear phrases like “Why didn’t you consider….? Why didn’t you think to put a note on ….? Why didn’t you word the note this way….?” Those phrases may get the point across and cause a behavior change. However, most leadership/management training today says that an approach that causes people to see the end goal and give good reason to get there while causing the individual to WANT to get there is more effective. Rewarding good performance is an important component.

Conclusion
DRP compliance will no doubt be an ever-increasing component of MSO success. As we are seeing more self-managed programs come to be, compliance is a necessity. And frankly, isn’t that what we as repairers have been asking for a long time? “Just let us repair the vehicles and manage ourselves, and we can provide positive results.” Compliance can be a key to insurers having confidence in our accountability and thus accepting self-managed programs.

Subscribe to ABRN and receive articles like this every month…absolutely free. Click here

Sponsored Recommendations

Best Body Shop and the 360-Degree-Concept

Spanesi ‘360-Degree-Concept’ Enables Kansas Body Shop to Complete High-Quality Repairs

ADAS Applications: What They Are & What They Do

Learn how ADAS utilizes sensors such as radar, sonar, lidar and cameras to perceive the world around the vehicle, and either provide critical information to the driver or take...

Banking on Bigger Profits with a Heavy-Duty Truck Paint Booth

The addition of a heavy-duty paint booth for oversized trucks & vehicles can open the door to new or expanded service opportunities.

Boosting Your Shop's Bottom Line with an Extended Height Paint Booths

Discover how the investment in an extended-height paint booth is a game-changer for most collision shops with this Free Guide.