The Society of Collision Repair Specialists (SCRS) recently published the agreement, saying it felt that some of the requirements warranted being made public. As an insurance company executive, I often wonder what the association’s true intent is. My guess is that it’s not because they were trying to foster good relations with insurers.
Personally, I think it’s a childish reaction to a big-boy problem. Hopefully, they feel they accomplished their mission. I can assure you that it doesn’t build trust or confidence with any insurance company or organization looking to build common ground with the association.
But enough of that rant. What I’d like to focus on is some critique of the concerns about the requirements that SCRS raised, and my view of the stupidity surrounding agreements like this one. Suffice it to say, no one shall be spared the rod.
SCRS states that insurance carriers have continued to increase pressure over repair shops to obtain the quickest and cheapest repair. Does that really sound like a bad thing? Anyone operating a for-profit business should be doing the exact same thing. Don’t body shop owners pressure their staff and technicians to perform the quickest, most economical repair?
SCRS goes on to further state that to improve business conditions, body shops need to find their voice. I have a suggestion. You don’t need to find your voice. You need to find something else that only males have. I would suggest letting your actions dictate what your voice and mind are saying. If it’s not good business, don’t sign the agreement. Don’t fax, mail or e-mail a response. Silence can be deafening.
I would argue that it must not be too bad or else people wouldn’t do it. The trade-offs are apparently worth it to thousands of shops. That doesn’t make one shop better or worse than the other. It simply means that one man’s trash is another man’s treasure.
Would you sign that agreement if you had to give up an ownership stake in your business? Complain if you like but ultimately, you decide what you want for your business. Being a COD shop wouldn’t be worth giving up even a small portion of your business no matter how small of a percentage.
To SCRS’ credit, I agree that there are quite a few undesirable items noted in their press release about the COD agreement. The “most favored customer” clause—which requires the shop to give Farmers the best pricing it offers any other insurer—is a stroke of genius. State Farm struck gold with this one a few years ago. Farmers is trying to ride State Farm’s coattails by including a similar requirement.
I think this is a fair clause if you are State Farm and the largest insurance carrier in the United States. Why shouldn’t they expect to receive the best discount you offer? But it’s ridiculous that Farmers assumes they are entitled to the same discount structure. That’s similar to Kohl’s or Sears demanding the same discount structure from their vendors that Wal-Mart receives. You shouldn’t throw around your weight where it doesn’t belong. Clearly, Farmers is leveraging the industry’s inability to unite.
Remember that in any relationship, power is given. Body shops have given insurers the power to make demands. Shops have given insurers the puppet-strings.
I’m laughing inside because most of you don’t realize you have the power to change it. If you’ve ever seen ‘The Wizard of Oz,” you know Dorothy had the power to return home any time she wanted. I’m not suggesting you simply need to click your heels and recite, “There’s no place like home,” but it is almost that easy. Obviously, you don’t have any strings attached to you. You aren’t a puppet. You don’t have to jump when the puppet-master pulls your strings. The sooner you realize it, the quicker that ridiculous direct repair agreements become a thing of the past.
What makes Farmer’s “most favored customer” clause unique is the requirement that once a quarter you provide a written, I-swear-on-my-life, cross-my-heart-and-hope-to-die statement that you are in compliance with the terms of that provision. Give me a break! I think Farmers would be better served if it took the money it will spend to receive, document and follow-up with their COD shops on this and donate it to a charity instead. It would get more press and accomplish more. Body shops aren’t criminals on parole requiring a weekly or monthly check to ensure they aren’t breaking the law. Farmers should remove this portion of the requirement if for no other reason to show that they trust their COD partners.
What happened to the good ol’ days when a man’s word and a handshake was all that was needed? I miss John Wayne and those days.
For more information, here is a link to the Farmer’s COD Agreement; http://autoepi.org/uploads/Farmers_COD_Agreement_-_2011.pdf_-_Adobe_Acrobat_Pro.pdf
http://www.scrs.com/pdf-news/PR%206-20-2011%20SCRS%20Releases%20DRP%20Agreement%20Guidelines%20-%20FINAL.pdf for SCRS’s press release about the agreement.
The Insider is a corporate-level executive with a Top 10 auto insurer in the U.S.. Got a comment or question you’d like to see him address in a future column? Email him at Auto.Insurance.Insider@gmail.com.