Fear of speaking out could be crippling repairers efforts to reclaim their industry

Jan. 1, 2020
Are repairers feeling heat from insurers, related industries or even from their colleagues to keep their mouths shut?
Sramcik ABRN auto body repair collision repair direct repair programs If you've ever sat on the other side of the table or telephone with a member of the trade press and wondered exactly what we want, it's two things – information and insight. Information is facts and includes such things as: updates on state and local legislation, business trends, association and insurer news, and repair instructions. Insight is your opinion on how information impacts your shop and industry. Both have a tremendous impact on your survival.

The press rarely sees a shortage of information (though information in some specific areas can seem lacking at times). Notably, ABRN has detected a recent trend regarding insight. Repairers are clamming up on certain key issues, especially those associated with insurers.

That's a bit shocking considering how open repairers have been with their thoughts throughout the years. In the past, repairers tended to be enthusiastic when given the opportunity to voice their opinions about the influence and actions of insurers. That excitement stands in stark contrast to a growing phenomenon of interview subjects asking certain insurance-related comments be left out of articles or requesting their identities be protected. In the case of a recent ABRN cover story about repair programs, two successful shops requested their input be removed shortly before publication. Another successful shop declined to speak about any subject that could be tied negatively to insurance companies.

All this begs the question: Are repairers feeling heat from insurers, related industries or even from their colleagues to keep their mouths shut? From the research ABRN conducted for this article, the answer appears to be yes. The industry is paying a price for this attitude, according to some repairers.

The DRP stranglehold

Collision repair resembles most other industries regarding some areas of public knowledge. Certain, specific subjects – for example, trade secrets, proprietary information and strategic planning – aren't shared publicly. Businesses also will monitor any public comments that impact a professional relationship. For collision repairers, this can include relations involving insurers. It only makes sense for shops to be mindful of comments they make about the repair programs they contract with, says Dan Fischer, chief operating officer of Kniesel's Collision Centers (a 2009 Top Shops finalist) in Rocklin, Calif.

"When you're in a DRP, you're in a business relationship," he says. "You don't want to say something to jeopardize those business relations."

Other repairers say fear of losing these relationships is compelling shops to give insurers unprecedented control over them – control that extends to what shops will say and how they'll act outside a financial agreement. Fear of losing repair contracts is convincing repairers to refrain from criticizing the insurance industry and taking other actions insurers could see as threatening, says Eric McKenzie, body shop director for Park Place Bodywerks (a 2009 Top Shops finalist) in Dallas. McKenzie says he's been trying, for some time and with little success, to organize a shop association in Dallas like the recently formed Houston Auto Body Association (HABA).

"Shops are too worried to get involved," he says. "The DRPs are too strong here. They have too much influence. We have some of the larger network shops in Dallas, and they consider insurance companies their partners. I've had relatives interview for jobs with them, and they come right out and say that."

The stature and influence of these businesses impact smaller shops that fall in line with their particular business philosophy, McKenzie says. Without shops of equally great stature pushing back against the DRP-first viewpoint, other shops accept it. Efforts to form associations and the willingness to speak out are stifled.

McKenzie feels free to speak, in large part, because his shop has no DRPs. He also says he's well acquainted with the kind of fear DRPs can instill, having worked at several other shops that contracted with repair programs. Insurers harness fear to compel shops to hit the financial objectives they set for their DRPs, McKenzie says.

"When you're on these programs, insurers are constantly pressuring you to meet their goals for things like cycle time," he says. "They let you know that once you have so many strikes against you, you're off their program. You're constantly in fear they'll take it away from you."

Little wonder shops may believe making any negative comment – even a well-deserved one – about an insurer to the press could be the breaking point that ends a DRP contract.

This situation is compounded by a weak economy that only helps drive this fear as shops become more desperate to hold onto their repair agreements. Shops believe one misstep or misstatement may send them into ruin. Fears that already are well-entrenched grow even stronger.

Courage under fire

Repairers may feel justified believing there will be repercussions if they raise their voices, but the question remains: How much do they have to be afraid of? Are insurers genuinely looking to punish, or run out of business, repairers who publicly criticize them? Cases of such a scenario are difficult to document. An insurer, employee of an insurance company or any business that would adopt such a policy won't maintain written documentation about it.

Repairers point to what they see as a mountain of anecdotal evidence. Particularly, they cite instances in which they see shops victimized for speaking out, in some cases with devastating consequences. Case in point, Greg Coccaro's ongoing battle with Progressive.

Coccaro's ongoing legal clash – five years and counting with $400,000 spent on legal fees so far – with Progressive about a repair of a Mercedes (and charges of fraud and countercharges that followed) has been well documented. Coccaro believes his battle has more to do with his decision to confront an insurer rather than the subject of that confrontation.

"I believe they're out to punish me for speaking out," he says. "They want to make an example out of me for anyone else who would do the same thing."

Coccaro has no hard evidence to support his conclusion, but he points to the time, expense and zeal Progressive has invested in a battle that began over repairs to a single vehicle. He also points to what he says are other ongoing practices by insurers to intimidate shops.

"Certain shops get steered against, and the shops who speak out get business steered away from them," he says. "I also know of certain shops who don't get paid for certain operations because they've spoken up. Insurers make trouble between a shop and its customers. No customer wants to get in the middle of that.

"It's like whack-a-mole in this industry," he says. "You stick your head up, and they're going to knock it down. That's definitely what they do. They intimidate people."

Coccaro worries other repairers who hear of these same practices or who learn about his ordeal will become less inclined to criticize or confront insurers on any level. Repairers increasingly are unwilling to be vocal as they adopt new attitudes about their place and that of insurers in the industry, he says.

Coccaro believes the industry is so dominated by DRPs that repairers, particularly the newest generation of operators, have ceded any notion they can do business any other way and have accepted DRPs as the norm.

"This is becoming a generational problem," he says. "The newer generation is different than the one I and other people grew up in. They don't realize how different things once were. You're seeing many folks who are willing to go along with whatever the insurers want. You don't see the same interest in doing things like joining an association."

Coccaro's upbringing in the industry has played the major part in his decision to battle Progressive. When asked if he would recommend other repairers take the same road he has, Coccaro says no but quickly points to the reason he has shouldered this legal battle.

"This is about who I am," he says. "I can't see myself doing business any other way. I feel like I have to do this, so it's worth it to me."

Association trends

While Coccaro worries repairers are losing interest about speaking out, some associations say they're experiencing significant growth because shops are being squeezed so strongly by insurers – to the point where they're fearful about what they say – they're seeking a way to push back.

Bob Skrip, president of Skrip's Auto Body in Prospect, Conn., and of the Auto Body Association of Connecticut (ABAC), says his organization has grown. ABAC membership is increasing even with the target insurers have placed on the backs of members who have decided to be vocal.

"We're growing more than ever," he says. "This year we've experienced growth like no other."

Shops aren't alone in wanting to join associations. Vendors, jobbers and other industry members have shown increased interest.

"We had more than 70 supporting advertisers in the newsletter," Skrip says. "We no longer call them our sponsors. They are investors."

The main issue driving interest in the ABAC is the troubled economy because the industry is in a survival mode, Skrip says.

"Shops are looking for models – shops that are surviving," he says. "You want to be like that model shop. Join an association. That's helping make that shop survive."

Similarly, shops in the Houston area are joining the HABA, as they search for ways to deal with insurers better. James Brown, president of Rapid Body Works in Spring, Texas, and president of the HABA, says his association is geared more toward constructive dialogue, instead of conflict, with insurers.

When he helped create the HABA, Brown was faced with the same challenges McKenzie found in Dallas. Shops were concerned an association membership would harm their DRP relations.

"A little more than half of shops I spoke to were afraid to get involved," Brown says. "I tried explaining the Houston Auto Body Association wouldn't be problematic for the insurance industry. We want mutual respect and accountability for the industry. We're not an anti-insurer organization."

Brown is familiar with threats made by some insurers to prevent repairers from joining associations. While attending a recent industry event attended by shops from 20 different states, he heard stories about a lot of insurers telling shops they'd hurt their DRP relations by joining their association.

Still, Brown believes the best way to handle differences with insurers is through dialogue, the Texas attorney general's office and the state legislature when necessary. For example, his shop, which focuses on high-end vehicles and is manufacture certified to work on several makes, must deal with insurer requests to use aftermarket parts. Attaining used or other aftermarket parts can slow cycle time. Educating insurers about how some of their own practices aren't in their best interest is valuable, he says.

In case some industry members might believe the HABA's approach is too tame, the group has been successful working with the attorney general's office. On Aug. 23, the office ruled the Texas Department of Insurance was required, under the Public Information Act, to release results of a survey of insurer claim payments. Progressive, GEICO, Allstate and Farmers argued the information was confidential.

A larger voice

The work of the ABAC and HABA, combined with the growing interest in both groups, has the potential to ignite a renewed interest among repairers to speak out. As part of this effort, it's important for shops to begin speaking with one another.

About the Author

Tim Sramcik

Tim Sramcik began writing for ABRN over 20 years ago. He has produced numerous news, technical and feature articles covering virtually every aspect of the collision repair market. In 2004, the American Society of Business Publication Editors recognized his work with two awards. Srmcik also has written extensively for Motor Ageand Aftermarket Business. Connect with Sramcik on LinkedIn and see more of his work on Muck Rack. 

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