Tuesday, 31 July 2007 17:00

A proposed DRP profile that is fair to all

Written by Lee Amaradio, Jr.

1.     DRP rates should be discounted no more than 10% of our door rates across the board (SB 1492 by former Senator Jackie Speier suggested this). Every time we raise our door rate we automatically raise our DRP rates.

2.     A claims processing fee should be charged at 1.0 hour per estimate to include all photos and uploads. This is a bargain when you consider what independent adjusting firms charge. 

3.     LKQ parts should be marked up 35 %. This equals a 25% discount off list which is comparable to OEM parts, plus a 2% handling fee because of the extra time involved with the ordering process. If I buy a LKQ door for $100, and mark it up 25% I make a $25 profit. If I buy a new OEM door at a list price of $133.00 and get a typical discount or mark down of 25%, I pay $100 and I make $33 profit.  There’s a big difference between mark ups and mark downs.

4.     We should do only one LKQ search and document it with a reference number. Our time is very valuable and it costs us money when wasted.

5.     If any LKQ part is received unacceptable then we should be allowed to order OEM and not be required to lose time waiting for another LKQ part.

6.     Shops should be rewarded on the percentage of LKQ parts we use with a bonus incentive.

7.     If, for financial reasons, aftermarket parts are used, those aftermarket parts should be marked up 35% because, in most cases, these parts are marked up rather than discounted from list. I used the same formula as I did above with mark ups versus discounts, so 35% is a fair mark up.

8.     Every vehicle should be torn down and a complete estimate uploaded to the insurance company. They should review any photos and have a maximum of 24 hours to respond before repairs are started. After repairs are started or completed no labor adjustment should be allowed. 

9.     Set-up and measuring are two separate procedures. Set-up is installing the vehicle onto the frame rack and measuring a vehicle is installing a measuring system under the vehicle for the purpose of measuring the structure.

10.  Set-up should be 2.0 hours at frame rate. Measuring should be 1.5 hours at frame rate to guarantee that the vehicle is measured correctly. A computer printout would be required to get paid.

11.  Frame replacement should always be at mechanical rate as it is a mechanical repair. Some DRPs are already pushing that this be done at body rate.

12.  Blend times should be adjusted on a case-by-case basis and partial paint time should be eliminated. We all know it takes more time to blend a panel than to paint it and there really is no material savings because we usually throw away enough to complete most panels.

13.  Paint caps should be eliminated as they are illegal. With the rising cost of materials, this is another way of bending the rules to cut into our profits. Shop owners are entitled to a profit on every job -- unless we make a mistake.

14.  Each vehicle should be repaired to the vehicle manufacturer’s specifications so as not to diminish the value or warranty to the consumer. OEM certifications should be required in order to force shops to a higher standard.

15.  High dollar vehicles should be repaired at a premium labor rate and not the standard DRP rate. These vehicles are more costly to repair for a more demanding customer.

16.  Cycle time should be 2.3 hours per day (according to our industry surveys) with all circumstances considered. Only where the shop is undisputedly at fault for late completion should they be required to pay for any rental reimbursement. After all, we don’t collect the rental premiums.

17.  There should be a bonus program giving credit when we deliver vehicles under the expected cycle time. (Say $2.00 per hour?)

18.  Washing and cleaning a vehicle for delivery is part of the repair process and we should charge .5 hours for this procedure. This is a separate department and costs money to operate. I can’t take my car anywhere and get it washed for free. Why do we agree to this stipulation?

19.  We should be paid 2 hours at body rate to process total loss vehicles. (They take hours to estimate and process, not to mention the free storage.)

20.  CSI is a serious issue in our industry. I have never been able to match the insurers CSI with my own in-house numbers (mine are always much higher). I believe they should be able to be disputed and adjusted accordingly.

21.  Shops should be rewarded for an above average CSI in the way of a bonus incentive.

22.  All shops should be certified and classed with an A ,B, or C, rating in terms of facility, equipment and certified training. Labor surveys should use this same profile when determining rates for an area. This would correct current market surveys and allow the insurers to raise an individual shop’s labor rates based on their certification without having to raise everyone’s across the board. This would reward the best shops because we are all very different in terms of equipment and quality. This would encourage shops to “step up.”

23.  DRP contracts should be nationally standardized for all and no longer one-sided. They should require a commitment from both sides.  Shops make large investments with no guarantees that their current DRP contracts will continue.

24.  Concessions should be capped by our legislature. We need to contact our  representatives and become part of the solution by speaking up and standing up for ourselves. We could create a shop owners union for the purpose of being represented as a whole. There is safety in numbers. Insurance companies break antitrust laws everyday and nothing ever happens to them. What are we afraid of?