Insurers are adding costs to repair process

Jan. 1, 2020
What one insurer sees as an advantage to them often adds cost to the repair.

Some people might see this article as just "another DRP shop owner whining about requirements of an insurer program that they voluntarily signed up for." Others may say it's just a cost that's offset by the benefits of participating in the DRP.

But the larger message I'm trying to convey is this: Insurers are interjecting costs (often needlessly) into the claims process. In some cases these are costs only for those shops on the insurer's DRP. But in others they affect all shops handling a claim covered by that insurer.

Camille Eber

These costs are largely the result of the administrative requirements implemented by insurers that hamper shops' ability to operate efficiently, reduce cycle time, increase touch time, brand themselves with the customer, and maintain some reasonable level of return-on-investment.

Here are some of the things that I see needlessly taxing our staff:

  • Every insurer has different requirements in terms of the number and type of photos they want taken. I can think of no strategic advantage any of these requirements offers a particular insurer. The industry should develop a standard for this, and let insurers who want something different pay extra.
  • Some insurers want estimates written in particular ways, sometimes even calling particular operations something other than what they are. Keeping estimators up-to-speed on these often-changing rules is a costly challenge, and the requirements hamper shops' ability to write a complete blueprint for repair (thus reducing the need for supplements or delays in production) upfront.
  • Some insurers want the cheapest part available at least attempted, often resulting in ordering, installing, removing and returning a part that everyone involved in the process (sometimes even the parts vendor) knows isn't going to be acceptable for that particular vehicle.
  • Some insurers micro-manage the process to such a degree that it seems impossible to believe they wouldn't come out ahead by going back to preparing their own estimates and sourcing their own parts.

Other requirements that insurers place on shops make at least some sense; they offer that insurer something in the way of differentiation or internal consistency. But I have to wonder how often these ideas sound great as they are discussed in a conference room at the home office without anyone really considering: Is what we're getting out of this really worth the costs we're adding to the process?

I can understand, for example, wanting to make sure a shop has adequate, clearly identified customer parking. But does asking a shop to designate a certain number of spaces only for use by customers of that particular insurer really add much value?

We are sometimes asked to change paperwork repeatedly, with some changes being for something as minor as one-tenth of a labor hour. This can involve printing, copying, mailing or filing of dozens of extra pages for technicians, customers or the insurer.

Many of these things may seem minor in and of themselves to the insurers who are asking for them. But they add up to a sizeable burden for an administrative staff already stretched thin by the following: processing total losses (which sometimes can be a two- or three-hour process) without compensation; using the specific customer authorization or other forms each insurer wants used; handing out co-branded materials each insurer wants customers to have before or after repairs; remembering each insurer's arbitrary caps and limits; being the bearer of bad news to the customer about what the insurer isn't considering part of the claim; and trying to ensure each insurer's claims are our Number 1 priority (something they all ask for).

As I said, I'm not whining about agreements that we always have the option to walk away from. What I'm saying is there are ways we can make the process – whether within a DRP or without – work more efficiently for the shop, the customer and the insurer. It just requires some thought and cost-benefit analysis before a new rule or process gets put into place.