Maximizing Insurer Scorecard Ratings
Insurer scorecards have long been used by insurance companies as a way to preselect repairers that have achieved certain performance metric requirements for insurer direct repair programs (DRP). Those metrics generally fall into a scorecard that includes a mix of severity costs, cycle times, rental days, CSI quality, and other key performance indicators (KPIs).
As the owner of Gates Auto Body, a multi-shop operation in Wisconsin on 35 DRP programs, Troy Gates knows the increasing importance of strong scorecard ratings and the challenges shops face in meeting them. In an effort to help, Gates founded Performance Gateway in 1999. In 2013, the company launched the Gateway Scorecard, a system that allows shops to measure and track their own customizable scorecard with real-time data.
Gates recently sat down with FenderBender to discuss the challenges of insurer scorecards and the growing trend of performance-based assignments.
What are some of the common issues shops have with insurer scorecards?
A lot of the challenges we hear from our customers are that with insurance scorecards becoming more prevalent, it’s critical that they have the data in a timely fashion. When shops only receive the data from insurers every six months or quarterly, it’s too late for the body shop to make changes, react to the data and improve their performance.
Secondly, not being able to drill down to the claim level causes the same problem. You can’t really perform a root cause analysis and identify what you could have changed. For example, is your replace versus repair percentage out of standard simply because of the mix of vehicles that you repaired during the last quarter or were four out of the 10 vehicles repaired with the insurer in the grey area that you could have done more to have repaired additional panels? Without being able to analyze it on the claim level, scorecard data is not as meaningful.
An additional challenge that we can have as repairers is a lack of transparency regarding the data on the scorecards. Right now, shops are only getting that scorecard information on roughly a quarterly basis, and even then, there is a lack of guidance for interpreting the ratings. Shops are also unable to compare those scores with those of their peers.
It’s the same as when the insurance company evaluates their own employees on a performance review; the more transparent you are about the expectations, the higher chance you have of the employees meeting those expectations. A higher level of transparency and more real-time data creates a sense of trusted partnership where we understand better what role each of us is playing.
What do shops tend to struggle with the most when it comes to maximizing scorecard ratings?
We definitely see a full range of areas that shops struggle with. It’s important to have a balanced perspective on your business, rather than just focusing your attention on one area. For example, if you focus primarily on cycle time, then your alternative parts usage goes down because you’ll focus on OEM parts. That’s where the balance scorecard can really help point out these kind of issues.
You need a balanced approach for all the metrics because if you pursue only one of them, the others will become out of balance. It’s understanding where you’re at in this moment in time and coaching your employees to get back the balance.
How do you see insurer scorecards and the ability to measure KPIs evolving in the future?
We see the future of the industry being driven by performance-based assignments. Instead of the insurer recommending the repairer that’s closest to the vehicle owner, the repairer who has scored highest and is within a reasonable driving distance will be recommended first. That’s what’s really going to transform our industry.
The fortunate part about that is that it will level the playing field. What I’m excited about is that I see an exciting future for those of us who are willing to invest in our businesses, measure our performance, and take control of our destiny.
If the industry is going to move to a world based on performance-based assignments, then we need to understand, on a very dynamic level, how we’re performing and how we can continuously get better. We wanted a tool that shows not just how you’re performing for this insurance company, but how you’re performing overall as a company, and how you’re doing against the industry.
How is a product like the Gateway Scorecard beneficial to shop owners? How does it solve some of the problems with insurer scorecard ratings?
The premise is that instead of there being multiple systems and multiple viewpoints of what the scorecard looks like and how it functions, we made it completely configurable for the insurance company.
We can work with insurance companies who want to track specific KPIs and they can build their own scorecard and have their DRP network of shops feed into it to track their performance. What we’re trying to do is bring transparency back for the shop. Previously, the shops weren’t really able to see the data the insurance companies were looking at on the scorecards. Our tool allows for shops to understand in real time what their data looks like and how they’re being measured in those DRPs specifically.
For Gates Auto Body, we’re on 35 different DRP programs. It’s impossible to keep up with all the different requirements today if we don’t have systems to keep track of it all. I really wanted to have a simple system that consolidated well.
So it makes it a lot simpler for us as body shop owners to know where to go to find our ratings, if we’re meeting expectations, and how we’re performing against our peers. Basically, shops receive an email notifying them that they have a scorecard ready to view. They’re able to click on it and access it. We do all of the data integration for them.
There’s also an extension called “My Shop Scorecard,” where shop owners can build their own scorecards to run their companies with. If a shop just has a DRP scorecard, they only see the jobs that relate to that DRP. So they only see 10 percent of their actual work. It also allows us to drill down to the individual target. What we’re able to do is really see how we’re performing and we can drill all the way down to the claim level. We get that root cause analysis.
The third thing we can do is we can view our performance in the Gateway Industry Scorecard, which shows how you’re performing against your peers on industry measurements outside of the insurance companies. So we can see how we’re performing on paint material profitability, or parts utilization, or cycle times in our market area.
Will the ability to compare peers remotely continue to evolve?
The vision we have long term is creating virtual performance groups. Today, you have 20 Groups that meet on a quarterly basis, but only a small percentage of the total industry is able to spend the time and money required to invest on that level.
We want to be able to create virtual performance groups where body shops will be able to group together. We’ll be able to create virtual performance groups with a very specific targeted profile without having to spend the time and money. We’ll be able to provide external help and ideally, ignite a lot of peer guidance.
How does this go beyond the DRP relationship? Is it something non-DRP shops can benefit from, too?
This is basically a performance benchmarking system. It doesn’t matter if you’re in a DRP or not.
It’s really about understanding what I need to focus on with my employees to differentiate myself from the competition and how do I ensure I’m running my business as efficiently and profitably as possible? That’s universal.
Over half of insurance claims today go to out-of-network shops. The industry scorecard is a way that shops can get in front of insurance companies as an out-of-network shop.
And as they perform well, they have a way to market themselves to DRPs. It’s a way for them to generate more referrals and get started in this new transformation of performance-based assignments.