Make sure an insurer's direct repair program is right for your business

Dec. 20, 2017
Back in 2011, we were in a program that was such a bad fit that I’d reached the point of actually wanting out of this industry. No joke, I genuinely would have given my shops away.

If your shop participates in two or more direct repair programs, you already know that no two programs are exactly alike. Every one comes with its own set of requirements, and we’ve found some are far more labor intensive or high maintenance than others.

Some insurers, for example, have very few adjusters in our state, and we may go months or even longer without seeing them. Others haven’t at all reduced the number of adjusters they are using, and they seem to have their hands in every aspect of the repair.

That’s why finding the right mix of the right programs is both challenging and important. Just because one program might bring you a lot of work, it may not be a good fit. You can have some of the higher-maintenance programs, for example, but too many of them can break you.

We tend to assign each program to a particular team. It helps that team specialize in that program. We also try to ensure each team has a good mix of high- and low-maintenance programs.

We also prefer to have the same programs at all of our locations, though we haven’t achieved that 100 percent. Some companies have rules on how many shops are on the program in an area, for example, or may already have a shop on the program in that part of town that is performing well for them.

But the primary message I want to convey here is this: If you’ve ever wondered if you’ve stuck too long with a program that doesn’t seem to be a good fit for your business, you probably have.

Back in 2011, we were in a program that was such a bad fit that I’d reached the point of actually wanting out of this industry. No joke, I genuinely would have given my shops away. I’m sharing this story because I suspect some of you may have reached that point at times – you may even be there right now – so I want you to know you can make the changes you need, as I have, to improve your business and reinvigorate your enthusiasm for it.

First, what was it about the program that led to my frustration and sleepless nights? A big part of it was the constant threats. Every day I wondered which matrix they would cite in a morning email, warning “If this isn’t fixed, you’re off the program. And remember, we are $X million of your business.”

That type of constant threat is not something used in a real partnership. We’re supposed to be in this to both win. I don’t perform well based on threats. I want to be with partners who understand that we have to work together to make this stuff happen. It’s not one-sided.

Near the end, they tried to tell me our supplement percentage was “the worst in the country.” I remember spending an afternoon reviewing 30 days of supplements, color-coding them to show which were their fault (70 percent, which were our fault (10 percent), and which were a combination of factors on our end and their end.

At any rate, these relentless threats led me to make adjustments to my company I wasn’t proud of. I’d even cut health insurance benefits – something I consider part of our corporate responsibility – in our effort to try to meet this program’s requirements.

Many of you probably know how scary it can be to cut ties with a program, even when you know it isn’t the right one for your company. This insurer’s program at that point accounted for 50 percent of our workload (a mistake I won’t repeat). You wonder what life will be like without that DRP? Will you be able to pay your staff? Will you make ends meet and stay open? All these types of fears come along with the bigger programs. Will it be life changing if you drop that program?

Spoiler alert: We’re still here. But next month I’ll explain what happened after we dropped the program.

About the Author

Ryan Cropper

Ryan Cropper owns Able Body Shops, with two locations in Anchorage, Alaska, as well as Total Truck Accessory Center.

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