A successful business requires more than just managing your employees and finances; you must also manage insurer relationships.
As with all aspects of the collision repair business, relationships must be managed to ensure they are beneficial to the business. Just like relationships with employees, vendors and customers, insurer relationships must be managed. Insurer relationships vary from an insurance appraiser coming into the shop to write an estimate to the shop writing the estimate as part of a direct repair program (DRP).
Not everyone in the collision repair industry agrees on what exactly the relationship with an insurer should be, but regardless, the relationship must be managed. A relationship must be positive to all parties involved, and this can only happen if the expectations are clearly identified from the start. Whether you welcome a partnership with an insurance company, such as a DRP, or you adamantly object to the concept, it is safe to say a collision repair center will have to work with insurers on some level, at some time. So why not make sure those dealings will be positive and beneficial to your business?
Know what you want
It’s important to have a clear understanding of what you are looking for from the relationship and the expected outcome. To do this, ask yourself the following questions: To what level am I looking to take this relationship? Will this relationship be beneficial to the business? What benefits will the business gain both short term and long term?
Tim O’Day, COO of Gerber Collision and Glass, stated, “We would only participate in a DRP program of an insurer whose objective is quality and service, not just managing cost. While there can be variances in how different DRP programs work, most are reasonable and offer the repairer the opportunity for a reasonable profit.”
Once you know what your goals are, it is time to build that relationship with the insurer. Start by communicating your expectations and ask what they expect from you. The expectations may be basic, from providing a lift at the time of inspection, to the complexity of monitoring key performance indicators (KPIs). Understand what insurers may look for from the relationship—cost containment, cycle time reduction, customer retention, etc. Can you help the insurer by meeting their expectations without putting the success of your business at stake? At the same time you must confirm with the insurer that you will be able to reach expected goals.
The insurer’s side
During your initial conversation with an insurer you will find out what their criteria for a business relationship is. What requirements will insurers have for you? Roger Wright, material damage director for AIG Insurance, says, “Shops on the AIG Personal Lines direct repair program must meet or have the following: the Collision Industry Conference (CIC) definition of a Class A Shop, computerized structural measuring equipment capable of creating a before and after printout of the structural damage, an I-CAR qualified welder who passed WCS03, an ASE- certified estimator who has passed the B6 exam, certification from an approved environmental organization, such as CCAR, Team Safety etc., evidence of continuing education, such as I-CAR courses or OEM courses.” As evident by what Wright says, most insurers will come to the table prepared. A collision repair facility should be just as prepared. This can only happen if you have a clear understanding of what you are looking for from the relationship and the expected outcome.
Expectations go both ways
You are now on your way to building a relationship with an insurer. Both parties have identified what they want and you have come to an agreement on what you expect. To make sure everything remains positive you must ensure all agreements regarding the goals and expectations are documented. It is not enough to have only the owner or manager know what the expectations are. All employees must clearly understand the objectives in order to meet them. Having written guidelines or standard operating procedures of all direct repair procedures for your insurance partnerships is essential to meeting requirements. A document such as this should include labor rates, allowable times for identified production tasks and payment procedures.
Monitor your progress
The insurance company should not be the only one that monitors compliance. You should, too, and share your finding with your employees.
Remember, having a relationship takes continuous work, although some require less work than others. This brings us to the next point—monitoring and measuring. You must monitor all aspects of the relationship on an ongoing basis. Is the facility fulfilling its obligations? Is the insurer doing what has been agreed upon? If you find discrepancies in what has been agreed upon, contact the person you originally met with and discuss the issues. It is imperative that you talk to the correct person; all too often the adjuster who comes into your facility may not be aware of all the details of the relationship. If the local representative is not aware of all the details of the agreement, give him or her a copy of your written guidelines. This just may force him or her to get more information.
Continuously measuring KPIs may be a requirement of a DRP. Regardless, a facility needs to measure to ensure success and potential growth of the shop. Don’t let the insurer be the only one who measures your results. Collision Center Manager Les Schmidt, of Sutliff Chevrolet Goodwrench Collision Center, measures several things. “We measure body and paint labor sales and costs, parts sales and costs, paint/material sales and costs, and sublet sales and costs. All expenses; fixed and semi-fixed, cycle time, hours sold and attended by technician and sales by insurers.”
Gerber’s O’Day says, “We measure and report on as much as possible.” This includes repair percentages, parts usage (OEM and non-OEM), assignment count, sales capture rate, estimate accuracy, customer satisfaction and severity.
From the insurance side, Roger Wright adds, “AIG Personal Lines measures five key performance areas: customer contact, estimate accuracy, customer satisfaction index, repair versus replace ratio and hours per day worked on the vehicle.” To ensure the relationship is beneficial to all parties involved, Wright adds, “We limit the number of shops on the program so that more vehicles go to the partnership shops. We treat the shop as we would our employees in regards to performance issues.”
It sill amazes me when shop owners mention they are thinking about discontinuing a relationship due to issues with an adjuster, payment issues, volume or other reasons. When I begin looking into the relationship and ask the collision center manager basic business questions about the partnership, he or she often cannot answer. You must know if the relationship you have with an insurer is profitable for your business and just how profitable it is. You will not know these things if you do not monitor and measure.
Back and forth
Monitoring and measuring is not enough; you have to make sure you comply with what you agreed on. Schmidt says, “We hire estimators with high integrity who are proficient and knowledgeable in insurance company guidelines. Our standard operating procedures place high priority on insurance company relationships.”
Gerber has a dedicated person whose primary responsibility of helping the staff meet insurance company guidelines, according to O’Day. “These staff members consistently review estimates and repairs and provide written feedback to our estimators and managers,” he says.
To ensure the relationship remains beneficial, you must communicate. According to Wright of AIG, “We meet quarterly with those shops repairing over $37,500 per quarter, others, every six months. Re-inspections are completed monthly and feedback provided to the shops. Those repair facilities needing improvement are given plans with specific actions required, measurement criteria, implementation dates and responsible person. Shops are treated as we would our employees with a corrective action policy.”
Keep looking
It is essential to meet on a regular basis to review the results of the relationship, both positive and negative. If you feel you need to meet more often with an insurer, initiate a meeting. Do not wait for them; your business is also at stake. Make sure you communicate any concerns. You must work out any issues you feel are having a negative effect on your business or terminate the relationship.
The choice is up to you on just how close of a relationship you would like to have with different insurance companies, but no matter what level you are comfortable with, make the relationship a positive one. A positive relationship will not only give you more work, it will help the insurer retain or gain customers. It can be a win-win situation for everyone. And after all, isn’t that what we would like to see in our industry?
