Thursday, 23 June 2011 16:17

Telling the Tale of the “Neutral Information Provider”

Written by Insurance Insider

In the Middle Ages, civilians didn’t have computers, television, radio, Pong, or even ping-pong. So what did they do for entertainment? One tradition was story-telling. The great thing about telling such tales was that you were forced to use your imagination. Although it’s important to note that you weren’t expected to believe everything that was being said.

Fairy tales often have a happy ending and tell us about a world where anything is possible. The tale I’m about to tell you is about the “neutral information provider.”

This tale begins in the 1980s, around the time of the first electronic estimating system. For decades prior to the advent of electronic estimating, shop and insurers slaved away preparing handwritten estimates. Along came a brilliant man named Maximillion. He believed that there was a faster and more accurate way to prepare an estimate. He thought he could equally help body shops and insurance companies through the use of technology. Because this new idea would benefit both parties, he thought he would be able to sell this new product to two different customers. In fact, he could charge the same amount to each. It was the beginning of the now over-used term “win-win.” All he had to do was find a way to take the data from printed estimating books and put it in an electronic format.

In a matter of three weeks, he created a robust software application. He spent the next few months selling his product to insurers and repairers alike. Everyone in the country adored him. He was a hero living the American dream. He was making far more money than he ever dreamed possible. Life was grand. Who would have imagined that putting a book into a computer could make so many people so happy?

If we were in Medieval Times, our story would have ended there and the hero would ride off into the sunset with a beautiful maiden on the back of his horse. But because we’ve witnessed computers, television, radio, Pong and ping-pong (and even Beer Pong, a newer non-technology-driven version of Pong fueled by alcohol), we have something else they didn’t have in the Middle Ages: “reality.” It’s difficult to use your imagination and dream big when you know it’s virtually impossible to have a happy ending with an information provider.

Our story resumes with our superhero Maximillion looking to expand his very profitable business. The challenge is that he now has competition. As a result, he is losing customers. Max is faced with making his first big decision since deciding to go into business. Does he sell his product one at a time to 60,000 body shops spread all across this free and beautiful country, or does he sell it to a handful of insurance companies? I think we all know which route Max took—the path of least resistance, of course.

The insurance companies purchased the estimating system and required shops to buy the program as a prerequisite to be on their direct repair programs. Maximillion’s profits soared and so did the insurance company’s leverage.

Here the fairy tale ends and the nightmare begins for the shops. Maximillion is trying to serve two masters. Unfortunately, it’s not possible. Shops and insurance companies have different interests and needs. The once-neutral information provider is being pulled in two different directions.

I think everyone knows who prevailed. Maximillion could lose millions if he chooses to side with the shops. Right or wrong, he is heavily influenced by the insurance companies. Although he attempts to remain neutral, it’s nearly impossible in a world where cost drives most decisions.

Now let’s use our imagination as to what happens next. Over the next 30 years, the strong influence of the insurance companies is evident in all three major estimating systems. We’ve witnessed and experienced the so-called enhancements to the systems, enhancements that were clearly designed for one purpose—to appease the demands and suggestions of insurance companies.

This isn’t a fairy tale. It’s the reality of what has transpired. Shops should be outraged. They should be sending a strong message back to the information providers and take action where appropriate. For the information providers, being neutral should not be a choice but a requirement.

Shops and insurers alike pay a lot of money to the information providers. The estimating software should not be influenced by any one group or groups. These companies should provide information—not a service where the highest bidder decides what’s added or modified to the database or system.

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