George Avery of State Farm, Robert Knott or Nationwide and Randy Hanson of Allstate discussed industry consolidation, technology and future trends during the Collision Industry Forum insurance panel discussion Oct. 12 at NACE. Dan Stander of Fix Auto Highlands Ranch in Littleton, Colo., moderated the discussion.
Like this article? Sign up to receive our weekly news blasts here.The insurers agreed that consolidation is a trend affecting both repairers and the insurance industry itself. The recent growth of several large multi-shop operators (MSOs), such as The Boyd Group, ABRA, CARSTAR, Service King and Caliber Collision; as well as the growth of smaller regional MSOs has been well documented and noticed by insurers.
“MSOs that can replicate quality procedures are attractive as a group,” Avery said. “Using a score card to rate MSOs across the board represents an interesting opportunity. But just like independent shops, they must perform to stay on our system.”
But there also are downsides to the growth of the MSOs, they said.
Knott said that some of the regional MSOs need to make sure they don’t grow too much in a specific market. “MSOs have several challenges, such as oversaturation in a market and growing too fast.”
Avery said that consistency of service and operations can be a perplexing challenge. “Do all the stores in the MSOs operate the same way? Do they act in a uniform way and provide a consistent repair experience? Also, when companies get too big it can be a challenge to communicate.”
Hanson agreed that it’s difficult to integrate multiple locations. Knott said that there are good and bad MSO performers, just as there are good and bad independent shops.
Hanson said that the collision repair industry suffers from a “tremendous amount of inefficiency” that consolidation alone cannot cure. Instead, shops should consider expanding their hours of operation or finding other ways to better-utilize their facilities and equipment.
Consolidation in the insurance industry is likely to continue as companies seek to grow. “The only other way to grow is by taking another company’s customers,” Knott said, and those are costly acquisitions because acquiring a new customer is seven times more costly than retaining their own customer, he said.
Allstate recently purchased Esurance, which sells car insurance directly to consumers online and over the phone. Hanson said both existing and new customers want outstanding coverage, a user-friendly platform and ease of use at a good price.
Knott said technology changes so quickly that it’s hard for insurers and repair shops to keep up. “Our customers are pushing insurance companies to evolve with technology and a challenge is how fast can we adopt new technology. But if we don’t change we will be left behind.”
Allstate replaced 100 legacy systems into one delivery platform, Hanson said. “It was tremendously complex and we spent hundreds of millions of dollars to implement it. We recently adopted cloud computing. It is very flexible and offers more applications and options. I’ve been pleasantly surprised by cloud computing."
With cloud computing comes the complex issue of data ownership.
“Cloud computing is great because it allows you to access your data anywhere,” Knott said. “However, there is great concern over data ownership and who has access to the data.
Hanson said the issue of data ownership is interesting. “We view it as the customer’s data, not the shop’s or the insurance company’s. It is our obligation to keep it secure and protect it.
State Farm is developing its own cloud and securing the data is one of the most important initiatives, according to Avery.
Advancing OEM technology is a trend that concerns repairers and insurers, Stander said. ”If cars won’t be crashing into each other due to accident avoidance technology, what does that mean for repairers and insurers?”
Avery said that accident avoidance technology won’t be fully implemented for 15 to 20 years. “With or without that technology, we need to figure out a way to help our customers in the future. Customers will not tolerate inefficiency. They will find what they want with or without us.”
Hanson said the new OEM technology has the potential to change the way insurers do business, but it’s not clear what those changes will be.
