Are we past the point where we can count on insurance to pay all it claims to cover?

Is our industry headed toward the “managed care” health care model? I now require customers to pay costs their insurer won’t cover. Most of my customers can pay so I don’t think I’ll lose any of them, but really, are we past the point where we can count on insurance to pay all it claims to cover?

I commend you for holding your ground, and I hope that this plays out well for you. You mention the medical business as a model for the collision repair one, and I can see why.

The reality is that the collision industry sells an important service, but we’ve typically sold ourselves short. We’ve acted as though we “just” fix cars, when in fact we repair complex machinery that people depend on every day. Much like the medical field. Let’s continue the comparison: They boast about their education; we complain about ours. They charge for an office visit; we give ours away. They get paid for follow-up visits; we provide “corrective repairs.”

Today, many factors come into play when discussing co-pay options: Many direct repair agreements prevent you from charging customers for any difference between the insurance payment and your final bill. The growing number of collision repair chains makes for fierce competition for customers. Attempting to explain to a customer the details of repair expenses, varied quality of materials, and insurance industry practices creates doubt. And don’t forget customers’ expectation not to pay any more than their deductible.

I recently spoke with a repair facility owner in California who approaches his business as you now are. He some­times carries a six-digit accounts receivable. He explained: “Ray, I have customers sign an agreement stating they will pay their balance owed. The amount I am carrying in AR and ultimately getting paid is, in most cases, money I would have never seen otherwise. We have an excellent collection rate, but even if I were getting only 50 percent, it’s all direct profit dollars.”

I would like to see repair facilities be reimbursed appropriately for the repairs they do. I would like to see them return to greater profitability for the long term, and I would like to see all players in the industry support each other as we move into the coming years. 

Ray Fisher is the president of ASA-Michigan. This article represents his opinion and does not reflect the views of ASA-Michigan.