Sunday, 30 September 2007 17:00

Defining Industry Accepted Standards

Written by Dick Strom

The term – industry accepted standards – is used by both insurers and repairers as it serves their purposes to earn the consumer’s trust. Industry accepted standards, relative to collision repair, is the feel-good lure of choice – cast out to convince the gullible. 

Since the term is usually mentioned reverently – as if its true definition were carved in stone, secreted away in some climate-controlled cavern deep within the bowels of the earth, where it can never be influenced or altered by the likes of man, unfortunately no one demands its definition.

But, in case you hadn’t noticed, the collision industry has no set of “standards,” let alone “industry standards,” let alone “industry accepted standards,” because this industry has no structure to create industry accepted standards, with no means of enforcing them if they did exist.

In a previous article, I mentioned that the Collision Industry Conference (CIC) has been poking at establishing some form of industry standards for years, but their toothless lists of “best practices” have only been suggestive in nature and remain totally unenforceable, with no foreseeable change in that regard.

Insurers have convinced certain repairers to sign on to their one-sided DRPs, thereby agreeing to conduct business according to the dictates of the insurer. But these are not “industry accepted standards,” just demands created by the insurance company aimed at wrenching further control of the collision repair process from the collision industry itself.

A friend to the collision industry stated the case so well: The idea of “industry accepted standards” refers to the so-called standards certain repairers accept because they are too cowardly to stand up to the industry that shoves these so-called standards down their throats.” Aaaaamen!

It is not solely my opinion that the only standards the collision industry needs to hold to are those personal standards that govern each individual repair professional. You alone are the acknowledged repair professional. Only you can set and maintain an acceptable standard of repair – and only for your shop.

 Your standard won’t necessarily be the same as that of your competitor, for every repair professional and every collision shop owner has a different view of what is, and is not, acceptable in collision repair, and of how willing they are to follow the dictates of their consciences. You, the collision repair professional, set the standard for collision repair in the professionalism, or lack thereof, with which you deal with your true customers – the vehicle owners.

You also set the standard for repair in the type of parts and materials you use, the way you treat your employees, and in a hundred other ways. But the buck stops with you. Standards will never be successfully dictated or legislated in collision repair because, though insurers would like to believe vehicles are repaired by robots, last time we checked, each repairer is only a human being who resists being channeled, except for those who accept insurer-channeling.

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Abdicating responsibility

Insurers have successfully exploited repairers’ entrepreneurial independence and disdain for being controlled – by so-called industry accepted standards. In many cases, industry associations and societies are kept in turmoil with insurer interference in their inner workings. Like the dysfunctional hillbilly Lester family in Erskine Caldwell’s Tobacco Road, this industry’s response to every affront against it is to kick its tires and declare, “Well, it ain’t hurt the runnin’ of it none.”

Ambitious as it is in some areas, elements of the collision industry can lean heavily toward laziness in taking care of details, in lack of real-world education, and by becoming suckers for every flim flam man to come along.  It seems that many in the collision repair industry share the same recessive gene as did the Lesters, who fail to see that every calculated compromise against us, regardless of how small, further weakens and undermines our ability to maintain a reasonable profit.

But in the hectic pace of running a business day-to-day, one can be too busy to worry about the bigger picture, and tend to rely on associations to handle matters of “industry accepted standards.” After all, you pay good money in dues to alleviate the need to get involved. In the meantime, your profits are being incrementally, calculatedly, steadily reduced. Like the frog that is too complacent to leap from the cooking pot until eventually he is boiled, so do repairers relinquish their ultimate responsibility by expecting someone else to turn off the heat.

At times, I find myself ashamed to be associated with many of my colleagues in the collision repair industry. How can so many otherwise intelligent individuals be so stupid as to fall for anything that insurers propose concerning decisions on matters that most completely determine their future and adversely affect the future of other independents, citing “industry accepted standards” as their rationale.

Here is my message to collision industry professionals:  99% of those times you have come to an agreed price with an insurer rep, you just got screwed. Insurers are not in the business of losing money: the antithesis of the collision industry, insurers haven’t gotten to be the five-trillion dollar business they are by making bad business decisions that deteriorate their profits and viability. Insurers don’t run an “ain’t hurt the runnin’ of it none” operation.

So I ask, why are you still dealing with insurers and, in so doing. setting yourself up to be the big loser in court, perhaps unintentionally, circumventing the law? To the best of my layman, non-attorney knowledge, a shop’s legal contract of repair is with the vehicle owner, and has nothing to do with insurers. Any shop negotiation directly with an insurer rep is an infringement on the contractual agreement you have with the vehicle owner.

The insurer has a contractual agreement with the policy holder to pay fully for all reasonable and necessary costs of repair incurred, to make the policy holder “whole” again. Any agreements you negotiate directly with an insurer without the policyholder’s direct knowledge is an infringement on your customer’s rights. This isn’t rocket science. And there are no “industry accepted standards”in play here.

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Reversal is possible

There is one way out of this mess, but it requires that you kiss the fanny of your insurer partner programs goodbye, and return to conducting your collision business as the repair professional you are supposed to be  – independent of insurer dictates and mythical “industry accepted standards.”

You would be surprised to know how many shops have returned to free-enterprise business relations with vehicle owners. In the process, one may lose a little volume through insurer steering, but a number of shops have actually gained volume once vehicle owner customers discover that these shops no longer take marching orders from the insurance industry.

Those shops that are now working independently of insurers gain profit per job through collecting for all the things their former contracts with insurers forbade. Receiving compensation for all services rendered, such as vehicle storage when the vehicle turns out to be an insurance total, can amount to thousands of dollars, with no repair liability involved. The DRP alternative is in continuing to allow insurers to use your valuable property for their free storage lot. On the other hand, dropping DRP relationships may somewhat lower your volume, but generally more than makes up for it in increased honest profit per vehicle.

Getting out of the DRP rut will also require having your paperwork in legal order. The Coalition for Collision Repair Excellence (theCCRE) provides members with representative legal forms that every shop should be utilizing (www.theCCRE.com /toll-free 877-700-7743). Plus theCCRE’s nationwide member support group and information Discussion Board is unlike any other you may have experienced, providing a venue to actually explore issues such as standards that can acceptably apply to all industry professionals.


Consumer awareness builds

Recently, one of our customers quipped, “So, what aren’t insurers paying for today?” Especially since all the deservedly negative insurer publicity surrounding Katrina, consumers are finally seeing through the multi-million dollar insurer media ads about why one’s coverage is better than the others.

Consumers are getting the picture that insurers are not their ally and have their own set of “industry accepted standards.”. Most consumers view insurers as a necessary evil, not to be trusted. They’ve seen the influence insurer cost-containment policies have put on insurer-subservient shops, and they don’t like it.

One vehicle owner who wanted us to repair her vehicle was skillfully insurer-steered to another local shop. Now, after having taken her vehicle back to that shop twice to have re-repairs performed, she refuses to take it back for the re-repairs still needed. So she hired our shop to conduct a Post-Repair Inspection (PRI) on it, which tallied up to $12,000 of yet needed re-repairs. That shop will pay, whether in buying back the vehicle or otherwise. But one thing is for sure,  this vehicle owner will never again be cajoled into having an insurer-recommended shop repair any vehicle of hers. And she won’t be hesitant about exposing such insurer tactics to everyone she meets.

She remains unimpressed by so-called “industry accepted standards.” And she’s not alone – not by a long shot. 

Dick Strom, Modern Collision Rebuild, 9270 Miller Road, NE, Bainbridge Island, Wash. 98110; (206) 842-3621; emailmoderncol@qwest.net.

 

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