Insurers and the Economy

In January, you talked about how shops can cope with the poor economy. What awaits us on the insurance carrier side of the business?

Insurers are limited as to what people can afford to pay for premiums, they are not receiving the return on investment dollars they once did, and their options to reduce claim expenditures are all but used up. So what can be done as we wait for the stimulus package to bolster the economy? One option that has been bandied about is the notion of co-pays on a claim, much like the co-pay you shell out at the doctor’s office. I think this will be a last resort, since people usually are not in a financial position to co-pay the often large sums of money seen with an auto collision claim.

If the stimulus package has done little to revive the national economy by the forth quarter of 2009, insurers’ investments will not yield the necessary returns, and that may leave some domestic carriers vulnerable to global buyouts. I believe we will begin seeing some mergers this year as companies attempt to consolidate and fight to remain domestic carriers. Regardless of the domestic profits that some carriers may have enjoyed in recent past years, that money has long been given to the stockholders and is no longer available. The end result of global buyouts would create an even more competitive market.

No matter what happens with insurers, the important thing for repairers is to remain focused on repairing vehicles properly and carefully documenting reasons for those repairs. As carrier activity occurs in 2009, competitive pricing will become even more challenging as repairers will be pressed to prove proper repairs.

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