My least favorite phrase out of any insurance representative’s mouth is, “Well no one else asks for that,” or, “I cannot pay more than that because we only pay the prevailing rate in your area.” I know we have all heard these phrases and if you haven’t then that tells me you are leaving money on the table.
Insurance premiums have risen drastically, and so has the cost of repairs, but unfortunately what insurance companies pay body shops to make good on the promises they have made to their customers has not kept up with inflation and the rising cost to repair a vehicle and the knowledge to repair vehicles. The insurance companies complain about the rising cost of repairs and blame body shops, but it’s not the body shop’s fault. It’s the fault of manufacturers and technology. Insurance companies haven’t kept in line with inflation on what they pay body shops per hour, and we all know it’s wrong. In my opinion I equate insurance companies to the mafia at this point.
Body shops are being extorted by the insurance companies with the excuses of “prevailing rates” or a “prevailing wage” but let’s look at the definition of what a prevailing wage is per the U.S. Department of Labor. “The prevailing wage is defined as the average wage paid to similarly employed workers in a specific occupation in the area of intended employment.” If you are some person off the street this may seem fair, like the insurance companies are all paying body shops equally so there isn’t any discrimination in pay. This isn’t correct because all body shops are not equal, just like the roles of body shop employees are not equal. Some shops have more training and certifications to repair vehicles and should be able to collect a higher wage. A shop that can section a Porsche should be able to collect a higher wage than a shop that does not even have a spray booth. A painter versus a prepper or a tear down technician versus a senior collision technician make different wages so why is it OK for the insurance companies to lump everything together and pay a single “prevailing rate?”
Let me make this statement again. Body shops are making good on the promises insurance companies make. Insurance companies need us and depend on us but refuse to pay a fair rate for what the body shops are providing. If we try to get together and fight them by talking to other body shops about what we are charging, then they throw out that we are “colluding” against them. So, it’s OK for the insurance companies to strong arm body shops by price fixing, but the moment we try to stand up and fight for ourselves the insurance companies want to say we are colluding? Shame on the insurance industry because they are only thinking about the bottom line and not the promises they made to their customers.
So how do we combat this on an everyday basis? By continuing to ask for higher rates of pay. By continuing to ask for the insurance companies to pay for what we use for repairs that are a given in our industry like body filler. By asking insurance companies to pay for the direct repair cost that we incur when we repair a vehicle, not just what they want to pay. The insurance companies used to never pay for cover car, flex additive, hazardous waste, seam sealer, setup & measure, but because as an industry we continued to request it, they finally decided to stop fighting us on it and just add those items to the estimates. And if for some reason they aren’t added to the estimate, they typically don’t fight us over supplementing it because again as an industry we didn’t give up requesting those items.
Now we need to continue requesting all of our direct repair costs that we incur and continue to request them even if the insurance company continues not to pay them. If we don’t request payment for what we do or provide, then that gives the insurance company the opportunity to continue to deny other body shops those costs with the reason of, “Well no one else asks for this.” Then a vicious circle continues of body shops not getting paid for work completed or products provided.
I know you are thinking we shouldn’t have to go through this to get paid for what we are using or doing, and you are right. It’s not fair, but this is where we are at, and we have to look at how we can combat this type of treatment from the insurance companies. Body shop organizations are pushing hard and trying their best to get rules and regulations changed, but they need boots on the ground, meaning body shops, to do their part by continuing to ask for payment on work performed and products provided and used. It’s a group effort, and my shop may only be a drop in the bucket, but eventually if we all work together that bucket will overflow.