A Global Perspective on Collision Repair
If he had lived in modern times, surely “car insurance” would have been part of Benjamin Franklin’s “death and taxes” list of universals of the human condition. And it’s not only an American certainty. As the global marketplace shrinks, collision repair shops from Newark to New Zealand have to deal with the same pressures, worries and yes, advantages of working with insurance companies through direct repair programs.
It’s no secret that relations between the insurance and the collision repair industries in America can be as chilly as a Minnesota Christmas. But it doesn’t have to be that way. In other countries, collision repair industries have found ways to work together with insurance companies to achieve their common goal of customer satisfaction. While some of their solutions are large-scale, on an association or even government level, they foreshadow future changes for America, and give insight into what individual collision repair centers can do to prepare for the future—and improve relations with insurance companies today.
“It’s never simple, even in a smaller market,” says David Young, managing director of the International Bodyshop Industry Symposium, based in Buckinghamshire, U.K. “Control is changing all the time.”
The one sure thing is that relations with insurance companies are going to become more important as the American collision repair industry continues the consolidation that has already occurred in many other countries, says Greg Horn, vice president of industry relations for Mitchell International Inc., a San Diego–based auto industry consultancy. Evolving technology from Europe and more rigorous training and certification expectations, compel American collision repair shops to look at what’s going on around the world to be ready for what’s ahead for the United States.
“If you put yourself in an insurance executive’s shoes, he wants to reduce his liabilities and get cars repaired right the first time,” says Horn, himself a former insurance executive. “It’s interesting to look at the dynamics in countries like the United Kingdom where collision repair companies are very tight with insurance companies, and where they typically get 95 percent of their work from insurers. We’re seeing a dramatic decrease in the number of collision repair centers in America and as it becomes more competitive, those insurer relationships are more important.”
TRAINING AND EDUCATION
For increasingly complicated cars to get repaired correctly the first time, collision repair technicians have to know what they’re doing. And much of that knowledge is beyond the backyard garage, on-the-job-training of yesteryear. Formal training is what insurance companies in other parts of the world are starting to require from their direct repairers, and those expectations or even requirements are coming soon to an insurance company near you.
“There’s so much new technology in cars that insurance companies have to be more careful about where they’re sending cars to get repairs,” Young says, adding that professional associations in the U.K. have, over the past two years, adopted a set of industry standards called the Publicly Available Standard 125. The PAS 125, as it’s commonly called, consists of technical specifications for repairing cars. “A lot of insurance companies are saying that you must be PAS 125 [certified] or you will not get business from us.”
Technology drives progress and change, and that’s no exception with direct repair partnerships. One of the biggest technological changes taking place in car manufacturing has to do with the metals used to build frames and car bodies, says Horn. In response to consumer demand for safer cars that are also fuel efficient, European car makers are developing metal alloys that are stronger and lighter than previous materials. While in the past, it was safe to combine steel with steel when making structural repairs, these new metals are complicated materials that must be repaired in a certain way to ensure structural soundness.
“Now with these new alloys, you could introduce a new metal that could make the structure brittle, but it would look the same,” Horn says. Insurance companies are aware of these types of technological changes, and want to make sure the technicians at their partner shops are certified to make these types of complicated repairs.
Formal training and education have become government mandates in some countries. While Canada has a system of government-run insurance companies that don’t hold the same type of market-driven sway as American insurers, the government has stepped in on training requirements. Anyone who works on a car in Canada must go through three years of formal training that includes an apprenticeship. The idea is to do away with underground shops that might employ repairers who aren’t qualified to make repairs, says John Norris, collision division chairman for the Hamilton district Autobody Repair Association in Hamilton, Ontario. That levels the competitive playing field, since those shops typically don’t pay—or charge—as much. Also, the question of qualification isn’t an issue for insurers who know that anyone working on a car in Canada is qualified to do so.
“It’s one way to create positive working relationships [with insurers,]” Norris says. “It’s built into the fabric of what we do. We’re huge fans of it.”
It’s unlikely that formalized training will be government mandated in the United States anytime soon, says Denise Caspersen, manager of the collision division for the Automotive Service Association (ASA) in Bedford, Texas. Here, the formalized training and certification of collision repairers will likely continue to take place voluntarily and at an association level, like ASA and I-CAR.
In New Zealand, where there aren’t government mandates for formal training, the Collision Repair Association has taken a similar approach with the express purpose of trying to help shops improve their relationships with insurers, says Gary Geeves, chairman of the association. Collision repair technicians must earn eight “C-CAR points” every year to maintain their status within the association, which represents about half of the country’s 1,200 collision repair shops.
“Shops are catching on to it,” Geeves says. “The consumer doesn’t necessarily know about it, but the insurance company does.”
One of the things American collision repair companies can learn from Europeans is the ability to convey their qualifications to their insurance partners, says ASA’s Caspersen.
“It’s so important for a shop to communicate their areas of expertise to insurance companies,” Caspersen says. “It’s not just producing a quality repair, but communicating how you do those repairs to the insurance company that’s important.”
One reason Europeans might have a leg up on Americans in terms of marketing to insurance companies is the efficiency of European front offices, says Horn. In Europe, where higher education is typically subsidized by governments, everyone from tradesmen to attorneys can go on to formal post-secondary education. That means more highly-educated and tech-savvy front offices, Horn explains.
“They’re going to have to look at their front office personnel,” says Horn about American collision repair shops that want to have good relationships with their insurance partners.
Another reason for having a tech-savvy and efficient front office is because insurers are more likely to want to send and receive estimates electronically to speed up cycle times, which is what’s happening in Europe.
It’s essential for collision repair shops to have efficient front offices when dealing with insurance companies, Caspersen says. “Administrative duties are expenses that you can’t bill, so it’s that much more important that it be efficient.”
The most important metric to both collision repair shops and insurance companies in Europe is customer satisfaction, says Horn. It’s important to remember that commonality.
“Insurance companies know there’s a direct link between satisfied customers and renewal rates,” Horn says. “If you’re a body shop in any country and you’re getting poor customer service [feedback] you’re not going to last long.”
Jennifer Niemela is a frequent contributor to FenderBender.