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I recently came back from the Midwest Collision Industry Forum held in Columbia, Mo., and a recurring frustration among repairers was reinforced to me during the session in which Chris Andreoli, corporate PD process manager of Progressive Insurance, talked about his desire to improve relations between repairers and Progressive. First of all, let me say that Andreoli gained my respect and many others' by showing up at the meeting to field questions from repairers, many of whom expressed immense frustration with Progressive. Bob Smith, representative for the Missouri Collision Coalition (AASP of Missouri, ASA MOKAN and SCRS MOKAN) jokingly posted a "No Weapons Allowed" sign on the door, and Andreoli also joked that he was a marked man. Andreoli showed much courage and, more importantly, a sincere desire to improve Progressive's reputation in doing business with repairers. He is well aware that Progressive routinely ranks near the bottom in shop surveys and is intent on improving that ranking. However, despite Andreoli telling the audience what Progresssive's corporate policies and procedures are, repairers time and time again stood up to refute those policies and cite examples of how they're not being followed by field personnel. Insurance field personnel making their own rules is nothing new to repairers, and Progressive isn't the only one guilty here. How many times have we heard about an industrious field agent all of a sudden declaring that "we don't pay for that procedure" when repairers before had no problem getting compensated for it? It gets to the corporate heads, and they profess to know nothing about it. Repairers often tell me their theory is that the agent is looking to make a name for himself or herself, or trying to impress his or her boss, and is often rewarded for doing so.
The bottom line is that these highly touted policies aren't effectively getting from the corporate heads to the field personnel. Either it's lip service or just a pathetic breakdown of communication. And if the corporate heads are saying one thing but incentivizing employees to do another, then their sincerity and credibility goes out the window. Andreoli had no real answer for repairers who were telling him how things really go when they deal with Progressive field reps, only to say that Progressive has defined business practices and, if they're not being followed, those reps will be communicated with. Maybe the responsibility lies with local management. Maybe some of these insurance companies are so big they can't possible babysit or manage their people well. Or maybe they just turn a blind eye to it. The reality is that even though every insurance company says it doesn't steer, we all know they do, and that in and of itself makes us suspect of them. Actions speak louder than words. If Progressive really wants to mend its relationship with repairers, more effective communication needs to happen between the top officers and the field reps. Right now, Andreoli is saying one thing and repairers are experiencing another. His efforts are commendable, but Progressive has a long road ahead of it...
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There was a good article recently in the Patriot Ledger (to read click HERE) about body shops and insurers battling it out in Massachusetts over a labor rate bill recently added to the State Senate's budget proposal for the coming fiscal year. The bill would create a new system of determining labor rates. Currently, rates are determined through negotiations between shops and insurers. The new system would have a commission comprised of insurers and repairers, as well as state officials, who would oversee a set of rates tied to a national average labor rate. The state's current average hourly rate is $34.55, compared to the national average of $42.45. As usual, insurers are saying the rate increases will result in higher-priced premiums for consumers, but repairers are arguing that with record profits of late, the insurers should be able to absorb that without passing it on to consumers. The fact of the matter is that an increase in labor rates is long overdue, it should happen and insurers can indeed absorb the cost.
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OK, our most recent survey is officially closed and the results are in. The question was, "Is an OEM-specified repair procedure the only correct way to repair a vehicle?" And... 57% of you said YES. 43% of you said NO. There are a lot of issues here to talk about. For those of you who voted no, when is it appropriate to stray from the OEM-recommended procedure? How much experience do you feel you need to have before you can determine an "alternate" repair method you feel will be just as good as the OEM recommendation? Also, if repairers are straying from OEM-recommended procedures, are they doing so due to insurer pressure or only on occasion when their expertise allows them to make the decision? Or is it simply the mentality of "there's more than one way to skin a cat"? Here's another question: if a repairer has better access to OEM repair information, can he or she use it as leverage to get paid properly by insurance companies? I would love to hear your comments on any of these questions. Join our community and post me a note. Thanks for your help.
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I'm sure many of you saw the article on our Web site in "Breaking News" about the American Insurance Association calling auto repair anti-steering legislation a "wolf in sheep's clothing." And I'm pretty sure it irked you as much as it did me. The article basically said that this legislation could cost consumers millions of dollars in higher repair costs (haven't heard that one before). Maybe auto insurance should cost more. Maybe consumers would be willing to pay higher premiums if they were guaranteed top-quality repairs.
The article also stated that the legislation reduces marketplace competition. Huh? I'd say steering everybody to one body shop in a given area pretty much does a heck of a job to reduce marketplace competition. When a policyholder makes a claim, insurance companies say they have the right to explain the benefits of taking the vehicle to a shop in their preferred networks. You know what? I agree. But once the policyholder says no after the pitch, all discussion should end. If the hard sell continues and things like "we find that shop difficult to work with" or "we can't guarantee the repair if you take it to that shop" are said, that's coercion and deceptive referral.
Let's look at that guarantee thing. In all their advertisements, insurance companies refer to "guaranteed" repairs. But we all know they don't guarantee anything because they don't perform auto repairs. And most shops guarantee repairs for life. So an insurer saying it can't guarantee repairs at ABC Shop but can at the XYZ preferred shop is, again, deceptive referral.
Let's also look at the insurance company's claim that the repair can be done faster if the policyholder takes the vehicle to a shop in its preferred network. Of course it can. The only reason it will take longer if the policyholder takes the car out-of-network (sounds like the medical insurance field, doesn't it?) is because the insurer will delay in sending an appraiser out to that shop on purpose. Perhaps if the policyholder is without his or her vehicle for three weeks, he or she will think twice about going outside the network next time. Pretty smooth.
The article also says: "...automobile insurance companies process more than 25 million auto repair and replacement claims annually. This puts insurers in a unique position to know which auto repairers do the best work and provide the best service." The best service? We all know of some body shops on insurers' preferred networks that are there for one reason alone: cheap, low-quality repairs. But the customer will never know the difference, right?
But this article is good for all of us to read to know what the insurance companies are pushing out there. It should motivate you to increase your efforts to get out your message and tell consumers the real scoop. Hand out fliers at your shop. Pool your money with other shops in your area to buy radio/TV spots. Tell your story to the local newspaper or news station and lay it on heavy about consumers' rights. They'll eat it up. Educating consumers is as important today as delivering shiny, structurally sound and aesthetically-pleasing vehicles back to them.
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 We've been talking a lot about diversification lately in BodyShop Business as a key to body shops' future success. I saw a perfect example of that the other day when visiting a Dunkin' Donuts. Back in the day, all Dunkin' Donuts sold was coffee and doughnuts. Have you visited one lately? Now they're practically selling everything, from breakfast sandwiches to lunch items to ice cream. Should you add on a doughnut shop to your collision repair facility? Of course not. But you should continually look at other service offerings that closely align with what you already offer but could bring in extra profit. After all, no business should be one-dimensional.
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So far, CCC and Mitchell officials have been fairly mum on details of the proposed merger other than to say the intent is to transition to a single platform. Naturally, there has been discussion among repairers about its possible implications. A few industry folks recently offered their thoughts exclusively to BodyShop Business:
“It will be very bad for the industry. The insurance companies already have a stranglehold on our industry, and having CCC and Mitchell merge will make it much easier for the insurers to keep us under their thumbs. This screams of what the McKinsey Report suggested to do.”
“Way back in the olden days, there were only two databases, Motor and Mitchell. In my early years in the industry, I worked for an insurance company, and we used whichever book the shops didn't and frequently paid the lowest time from the two books. “The real issue is not the database. There will still be three databases, at least for as long as Mitchell allows CCC to honor its commitment to Motor. The real issue is, and always has been, to get the insurers to deal with shops honestly and professionally, using not just select parts of one database or another but the entire database, 'Not Included' items and all. “So I don't see the merger as a real ‘threat’ to the industry. It might actually make things easier. The real focus should be convincing the insurance side to use one system or the other, and use the whole system as designed to arrive at fair and accurate damage evaluations.”
“I've tried to tell shop owners for years that every time you give away a free procedure in the interest of getting along with insurers, you help them set a precedent. DRP shops have given insurers tons of so-called ‘proof’ that some procedures in the 'Not Included' column belong in the 'Included' column. ‘Look at all these shops that don’t charge for those P-page items,' blah blah blah. If the data providers turn into one (or one-and-a-half) giant entity, they’ll no doubt form an alliance with the insurers. It won't take place in public. The alliance will happen on a golf course. It will be much easier to manipulate one entity than three, right?”
“I believe that there is already a lack of competition in the collision repair data provider marketplace and that a merger between CCC and Mitchell would create such an enormous market share for a single entity that it would crush all meaningful competition and would be a complete barrier to entry for any other company interested in joining the market. I think the Department of Justice (DOJ) should prohibit such a merger under the antitrust provisions of the Clayton Act.
“I think it's also important to understand that there is already a significant lack of meaningful information collected by these same data sources. As they only include information on those shops that submit information electronically (i.e. DRP shops), the data they sell/provide on repairer prices, rates and practices is limited exclusively to those submitting electronically and is an extremely tainted data set already being (or at least attempted to be) applied to the collision repair universe at large.
“I think repairers should raise an outcry to prevent the DOJ from approving the merger.”
“I see it as a monopoly. It should be illegal but it probably is not. Talk about mining your data! They’ll have it all. As long as Audatex or Solera survives, there may be some hope, but now times and procedures will just get more time cut from the operations to suit the largest customer (the insurers). There will be no books to go back to and check times to see if they've been cut. This will probably be the nail in the coffin for a lot of shops as the merger progresses.”
“I think it’s too soon to tell. I suspect it could make things worse, although I feel if you're on your game as an estimator, it shouldn't be a problem. Half of the shops don't know how to use the P-pages anyway. So I could see abolishing the estimating guidelines for 'Not Included' items. I have learned that estimating is the core of our profit center, so we need to maintain control of the estimating process. Our industry as a whole spends between $1.05 to $1.26 to produce $1.00 of labor and it’s getting worse. So I see the problem lying with the estimators and the shops, not with the database.
“Since June 1991, industry leadership has toiled to enable shops to not require having three estimating systems. We created CEIDIS and CEICA and talked about it at CIC for 17 years. It now seems that perhaps we’ll realize the dream by attrition and consolidation, which is about the only upside from this. Perhaps shops will finally be able to cut their costs by 33 percent by not having to buy both Mitchell and CCC! “Seriously, the concern is that it could eliminate competition and therefore raise prices and stifle competition. We haven’t seen innovation in the estimating systems for nearly 17 years because [the database providers] don’t have to innovate. When I approached these companies about creating a consumer-friendly estimate, I was nearly laughed at. With less competition, there will be less innovation, not to mention less motivation to innovate, respond to the market and keep prices competitive. We cannot be sure that any ill will befalls us, but we know the track record in the past and can predict the future accordingly. This does have the potential to be harmful to the industry, but it’s not likely. Even if it does result in all of the worst-case scenarios, it's not as big an expense as the price fixing the paint companies get away with each year.”
“The collision industry complains that it's a pawn in an equation largely driven by stronger forces – insurance, information providers, etc. If you go on the Web sites of these information providers, it’s clear that their products are driven by claims handling processes, with the repair shop's need to write an accurate repair estimate for a motorist hardly even mentioned.
“So we now have an event that can have a dramatic impact on our businesses, and there’s hardly any mention, at the association level at least, of studying the issue, forming a position and possibly proactively taking steps to protect our interests. Are the CIC-style relationships that we’ve developed and become dependent on a hindrance to us thinking and acting clearly?"
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OK, it's been a week since I got back from the Collision Industry Conference held April 15-17 in Philadelphia, the city of brotherly love, and here are the 10 Things I Think I Think (yes, I know, the title is a blatant rip-off of Sports Illustrated reporter Peter King's popular column. Thanks, Pete!). 1. I think Philadelphia is a great city. I got a real charge hoofing it every day from the Sheraton to the Crowne Plaza and mixing it up with the downtown crowd. 2. I think I jinxed myself and two companions when I said, "You know, I find it amazing we haven't been panhandled yet," because right after I said that we were panhandled by three different people in the course of one city block. 3. I think I was hoping the Pennsylvania Department of Insurance representatives weren't in attendance at the CIC meeting on Thursday when attorney Erica Eversman, during her presentation, said something to the effect that all departments of insurance are a mess or clueless. But I was wrong. Commissioner Joel Ario was there, and he took exception to Eversman's comments. 4. I think I was very touched when Dan Risley read outgoing SCRS Chairman Farzam Afshar's speech for him at the Corporate Awards Dinner Tuesday night. Farzam is battling cancer and couldn't make it. The entire Babcox Publications family is praying for you, Farzam. 5. I think I'm very glad Toby Chess's presentation involved only a telephone handset this time and not wrist restraints. 6. I think I really enjoyed the soft pretzels served during the break on Thursday, with spicy brown mustard no less. Way to go, Michael Quinn! 7. I think the most spirited discussion happened on Thursday during the Parts Committee's presentation. Two points made by attendees were: Salvage part prices are much higher when you consider what it takes a shop to prepare them and get them ready for installation. Price quotes should be for parts in undamaged condition. Damage allowances are to be negotiated at the time of delivery. 8. I think the reception Wednesday night sponsored by DuPont was out of sight. Great food and great conversation. Just once would I like to see my name sculpted in ice like that. 9. I think I feel bad for anyone who becomes the next victim of one of BodyShop Business's videotaped interviews. A few words to the hapless person: don't worry, you look great. And just be yourself. 10. I think I really enjoy CIC meetings.
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 Who doesn't like Shark Week? You know, the week-long series on the Discovery Channel that basically shows what sharks do best: hunt and eat.
I love sharks, much for the same reason I like rollercoasters: they scare the heck out of me and remind me that I'm alive. I've gone to bed many a night thinking, "While I'm drifting off to slumber, some 20-foot eating machine is prowling the depths of the ocean looking for a midnight snack." Even at the municipal pool in the summer, I'm often compelled to thrash toward the edge by the thought of a snaggle-toothed mako lurking somewhere beneath my feet. I know, I need therapy.
I think my (and many others') fascination with sharks began after viewing the blockbuster movie, "Jaws." I was only five years old at the time it hit the theaters, and I was one of the millions of people who, after seeing the flick, were scared to go more than ankle-deep in the water. In fact, my parents still have a photo of me from a vacation to Tampa Bay, Fla., that documents my fear: it's a panoramic shot taken far back from the surf line, so I'm no taller than a grain of rice. All you see is the arching blue sky, an expanse of white sand and a little boy in red swim trunks staring nervously down at his feet...no doubt hearing the haunting "duh-duh – duh-duh – duh-duh" Jaws theme song. After that, relatives knew that anything shark-related – books, rubber toys, jewelry with teeth (and sometimes the whole jaws), stuffed animals – were perfect birthday and Christmas presents for me. Naturally, then, when Shark Week rolls around, I'm glued to the TV. Last year, I was watching it late one night when I saw some incredible footage of some researchers racing their boat alongside a Great White that was chasing a seal. Right off, I couldn't help but think of the shark as the insurance industry and the seal as the body shops, not from the standpoint that the insurance industry wants to swallow the collision repair industry whole, but more of the mismatch between the two entities. The seal was so clearly overmatched, and while it was doing a good job of evading the shark, twisting and turning and occasionally eluding the shark's jaws by acrobatically leaping out of the water, you knew it just delaying the inevitable and would eventually get chomped. And then one of the researchers made an interesting comment: "You can't help but root for the seal because he's so clearly overmatched." So take heart, repairers, the world is on your side. And your recent legislative and other pushback efforts are showing that you have more teeth than some folks believe...
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Thanks for all of your encouraging comments regarding the Industry
Unity series of articles we just wrapped up in April. Many people
requested copies of the articles they could hand out at meetings with
their colleagues, so to make things easy, I’ve included downloadable
PDFs below that you’re free to use. It’s this kind of feedback that
allows BodyShop Business to continue to improve and better serve you,
our readers. Industry Unity: One Voice
January 2008, 11 pages
Industry Unity: Troubled Times
February 2008, 7 pages
Industry Unity: DOIs: The Fox Guarding the Henhouse?
March 2008, 5 pages
Industry Unity: What Have We Learned?
April 2008, 5 pages
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Wow! My first blog. This is truly a special occasion. I remember 25 years ago when I plunked down $900 of my hard-earned paper route money for my first personal computer, a Commodore 64. At the time, there was no Internet, but even if there had been, I wouldn’t have been interested in blogging or socializing in chat rooms. No, I was a mischievous 11-year-old, and I had only one main reason for buying my own computer: to hack into the FBI’s computer system.
You see, the movie "War Games" starring Matthew Broderick as a young man who hacks into a military central computer and almost starts World War III had just come out and inspired young hooligans all over the country to attempt to do the same. But try as I might, I could not breach our country’s intelligence network. Perhaps that's why I'm blogging you today from a sunny office and not some dark, cold prison with a cellmate named Rufus breathing down my neck. I was, however, able to make a hot air balloon float across the screen after typing enough lines of computer code to make even Bill Gates' head spin. See, with my purchase of the Commodore 64, I received a free one-year subscription to Commodore 64 magazine, and every issue contained lines of code you could type in to either create some video game or make some other cool graphic effect…if you call a balloon floating across a screen cool. I’m still haunted by its image…and my decision to buy a Commodore 64 instead of $900 of Apple Computer stock.
But the past is the past, and today I bask in the glory of being able to offer all of you a new and improved Web site that is yet one more tool to help empower you with the knowledge you need to run a profitable business. The Web site is the product of the hard work of the entire BodyShop Business staff, and I cannot thank them enough for having a vision, executing it and living our mission statement of helping body shop owners conquer their everyday business challenges.
So what’s new? For starters, the new Web site involves you! Signing up for our community gives you a chance to comment on anything you read – the BodyShop Business Blog, feature articles, letters to the editor or news. Joining our community also allows you to participate in our Custom Showcase, where you can show off photos of cars you've customized or restored.
We know how the Internet has turned us all into newshounds searching out up-to-the-minute news updates. Look no further than BodyShopBusiness.com, which will feature the latest breaking news updated daily.
Myself and Managing Editor Michael T. Peltier know that only part of our jobs involves sitting behind a desk. We’re dedicated to covering industry events and visiting body shops all over the country to keep our finger on the pulse of the collision repair community, and now we’ll chronicle our travels for all to see in our "From the Field" section. Whether it’s a Society of Collision Repair Specialists meeting or a visit to a shop in Houston, Minn., we’ll report on what’s going on in the real world and keep you connected to your fellow repairers via written articles, photos and video interviews.
We designed the site to be easy to use, and we trust you’ll find that this is the case. A lefthand navigation bar leaves you just one click away from all the vital information you need. Under "Reference Shelf" includes the latest industry legislative efforts, statistics, State of the Industry report, a comprehensive list of trade associations, and more. Searching for an article you read in a bygone issue of BodyShop Business? Find it under either "Business Center" or "Tech Center," where past articles are categorized by subject matter. You’ll also find the current issue and previous issue on display for your perusal.
We put a lot of thought and hard work into the site, but ultimately it’s up to you to decide whether it serves your needs. I encourage you to send me feedback. Is there something we’re missing? Did you not find something you were looking for? The site is by no means final and will ever evolve, so your input is crucial for us to constantly refine it and make it the ultimate one-stop shop for collision repair information. Happy surfing!
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