The Shop Perspective: Handling the Wave of Insurance Changes
Some shop owners rely on DRPs to drive business. Some are very passive when it comes to insurance negotiations. Others still are stern, but amicable.
And then there are those shop owners entrenched in a fight, aggressively pushing the importance of following OEM procedures, striving to upend what they perceive as a stranglehold over their businesses.
And that last crowd includes Rob DelGallo.
“I have a glued-on roof on a Sienna van. They welded maybe the front flange and the rear flange … the weld marks are not the right size per Toyota. There is glue oozing out. The vehicle owner went back, complained about water leaks and all this stuff; they blew her off,” he says.
That Toyota Sienna, according to DelGallo, owner of Factory Collision and Restoration in Weymouth, Mass., was originally repaired at an insurance company’s preferred shop; and just one of many cars on his lot with similarly botched repairs.
For him, that isn’t the worst part—it’s not being compensated for his repairs. It’s no surprise, then, that DelGallo doesn’t participate in DRPs, despite 80 percent of his business stemming from insurance work. What’s more, he only experiences severe pushback from one particular insurer.
And DelGallo isn’t the only one going through this.
Michael Bradshaw, vice president of K&M Collision in Hickory, N.C., has had his fair share of insurance dealings, as well. He, too, doesn’t participate in DRPs, but it wasn’t long ago (back in 2013) when the shop settled out of court with Nationwide for the same issues he’s having today: not getting paid for OEM-recommended repairs.
Having to constantly defend their shops’ position on repairs, both Bradshaw and DelGallo are in tune with the auto insurance industry’s overhaul. They each have thoughts on two constantly evolving, complex trends in particular that will reshape repairer-insurer relations: OEM procedures and virtual claims.
Following OEM Procedures
Insurance companies are like any other industry, according to Michael Bradshaw, vice president of K&M Collision: there are the average companies, the good ones … and the not-so-good ones.
When it comes to OEM procedures, most carriers have recognized that following those procedures is a requirement—but some don’t. So Bradshaw’s business went the certification route about seven years ago.
Now, the shop has over 20 certifications including Volkswagen, Jaguar, Land Rover, Bentley, and more. For Bradshaw, the certifications give him leverage with insurers.
“It provides us with the knowledge base to be able to point back to certain pieces of documentation,” he says.
Rob DelGallo, owner of Factory Collision & Restoration, sees certification being a larger trend in the coming years. As he puts it, “the auto manufacturers are going to step in front of the insurance companies.”
For the longest time, DelGallo wasn’t a believer in education programs, such as I-CAR, because he wasn’t sure there was a true return on investment.
Despite a number of appraisers being I-CAR Gold Certified, he always asked himself, “Do they actually do hands-on [training]? If they are trained, why is there a debate when shop owners detail what needs to be done for a proper repair?"
Getting your customer involved in the insurance negotiations is critical, especially if their vehicle is leased, he says.
If the insurer doesn’t pay for pre- or post-repair scans, DelGallo will bill the customer, and if they’re financially capable, the shop will go to court with the customer to get the customer’s money back for the scans.
Bradshaw says many shops do a poor job of educating customers. An educated customer is the best deterrent to unsafe repairs, he says. Make sure to discuss the repair plan with the customer and explain why the damage dictates the repair plan and what the manufacturer requirements are.
Handling Virtual Claims
“The final bill is usually anywhere from 2-10 times the initial amount,” Rob DelGallo, owner of Factory Collision and Restoration says.
For DelGallo, educating his customers on photo estimating ensures he doesn’t see much of it in his shop. He makes it a point to explain the customer is being shorted-based on the price he or she is given on the first estimate.
Even Michael Bradshaw, vice president of K&M Collision, says most of his customers come in with the knowledge that photo estimating can be inaccurate. He claims around 20 percent of customers will use some type of a photo estimating tool.
“Some of them (estimates) are so low that it’s blatantly obvious to a lay person that this isn't going to cut it. It’s not a reflection of what the final pay off is going to be,” Bradshaw says.
Customers are not trained photographers, DelGallo says, so they may not get the right angle. And Bradshaw agrees that the photos can be so far off and inaccurate.
With in-person estimates, you deal with a local appraiser who knows the shop and vice versa, and you reach an understanding, Bradshaw says. Now, the process is blind, with the photos going to an anonymous desk appraiser who doesn’t interact with the shop.
In addition to the photo estimating process, supplements are almost guaranteed, Bradshaw says. It creates a delay on the front end almost every single time. When you’re dealing with your shop’s local appraiser, the claims process can be much faster.