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Track performance real time to maintain DRPs

Tuesday, August 19, 2014 - 07:00
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I predict that getting and keeping direct repair programs is about to change dramatically. As always, I’m not arguing here whether DRPs are good or bad. But I am predicting that if you are a DRP shop that just waits for an insurer to tell you how you did last month or last quarter, you will get passed up by those taking a more proactive approach.

Some of this is technology-driven. As I describe below, new tools give shops more information than ever about how they are doing in real-time. But part of it is just the new reality facing insurance companies. The fact is, they are having trouble increasing their top line (sales). Competition makes raising rates difficult. More people are carrying high deductibles or liability-only insurance. Teenagers are waiting longer to start driving. More people are using car-sharing programs. All this adds up to fewer premium dollars for insurers.

I also think insurers have squeezed shops about as much as they can. The average cost of repairs, which was mostly flat or even dropping over several years, is starting to rise.

The result? I think we will see more insurance companies laying off staff, shedding brick-and-mortar, and turning even more to technology. More insurers, for example, are using programs offered by the information providers that allow non-DRP shops to exchange estimates and supplements with insurers much as DRPs do. This will save everyone time, but it also helps the insurer build data about non-DRP shops’ performance.

To me, it’s like a pro baseball team having a farm team. If you’re a DRP shop now and you have a bad month, the insurer slaps you on the wrist and says, “Get better.” But if they have a pool of data on non-DRP shops, they can immediately send you to the bench and bring in someone proving themselves as a performer.

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For DRP shops, that means it is critical to know how you’re doing in real-time, when you still have time to adjust. One East Coast MSO, for example, has agreed if they miss certain targets with Insurer X, that insurer gets an additional discount for the next 90 days. You better believe that MSO wants to know every day how it’s doing in terms of those metrics.

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