Negotiation Tactics to Use with Insurers

May 1, 2012

Working with insurers will always be a main component of operating a collision repair business. You may not always see eye-to-eye with insurers, which puts the utmost importance on learning how to interact with them effectively. During repair discussions, especially when there are opposing views over processes and part types, shops need to know how to express their opinion properly and negotiate what it will take to make a quality repair.

FenderBender talked to James Moy, a coach with VeriFacts Automotive, about a few basic negotiation tactics to keep in mind during repair discussions with insurers that will help get both parties on the same page, and maintain positive relationships.

Negotiating is an important skill in order for shops to run like professional businesses. That’s because insurers understandably want to negotiate costs down; they have numbers to meet, and are potentially sacrificing their own bonuses or raises by giving in to shop requests. So repair facilities need to be equipped with the skills to handle that the right way.

Many shops don’t have the right person in place to handle negotiations. That person doesn’t always have to be the owner, either. In fact, it doesn’t really matter what job title you select to take on that responsibility. What matters is the skills and knowledge-level of the person you choose. Most importantly, your negotiator has to have the basic technical understanding of how to repair a car. They don’t necessarily need to know how to physically make repairs, but they need to have the competency to walk through the repair process and explain why every step on an estimate is necessary.

Your negotiator should have a thorough understanding of every job position within the shop. You can’t negotiate on matters you don’t know about in detail. For example, it’s very difficult for people to negotiate panel blends if they don’t have any refinish experience.

Stick to principle-based negotiations. That means you need to reach an agreement with insurers on some basic repair values the moment they walk in the door. Agree that you’re going to repair the car properly by following auto and paint manufacturer standards, and that you won’t make up any rules of your own during the process. That shows insurers that you’re taking your own interests out of the negotiations by referring to third-party information and documentation.

Actually having that documentation on-hand is crucial. It’s really hard to negotiate for certain items when you don’t have a guide that proves why it was necessary. And if you can’t prove why something is required, you shouldn’t charge for it.

Having that documentation also helps educate insurers. Education is a great form of negotiation. Insurers might just be unfamiliar with a certain process, so that’s an opportune time to teach them. Print out your OEM repair guides and P-Pages from your estimating system to explain why certain processes are required. Focusing on education produces better results than yelling.

The best way to simplify the negotiation process is by writing complete and accurate estimates. Don’t over write estimates and ask for more than you should. That’s a big mistake many shops make. Insurers recognize when that happens, and it’s one factor that can lead to negotiations in the first place. Write estimates for exactly what the repair calls for.
When you negotiate, use the repair estimate to guide the conversation.

Go over the estimate with the insurer line by line. Ask them specifically whether they agree with each step you’ve included. If they say “no,” don’t dwell on that item immediately. Skip it, and move on through the rest of the estimate. Once you get through the entire estimate, then go back to the items where there was a disagreement and use your printed documentation to explain why it was included. Avoid discussions about labor times and rates until you can first get the insurer to agree that a certain process is in fact necessary. Then you can refer to time studies in your estimating system to discuss delivery dates and cost.

Shops should never compromise when it comes to safety. All shops should draw a line that they will not cross. For example, welding on radiator supports, using unapproved sectioning procedures or installing used airbags are all issues that can affect the safety of a repair. Hold your ground on those issues, and explain that customer safety is your primary concern.

Don’t take the negotiation process personally. When that happens, the conversation is no longer based upon facts. That ruins the negotiation, and doesn’t make any progress on the issue at hand.

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