Thursday, 21 March 2013 19:52

Shops’ Inefficiencies Are Legitimate Concerns for Insurers

Written by Insurance Insider

I wrote an article a few months ago focusing on inefficiency within body shops. That is, inefficiencies that are most commonly associated with the repair process. If it takes you seven days to repair a vehicle and the shop down the street could have done it in five days, you’ve just cost everyone money.

I recognize that all shops shouldn’t be painted with the same broad brush, but in my view, if you’re inefficient you’re guilty by association. Because of inefficiencies, insurers unnecessarily spend money every day that could have been used to lower premiums or offset the impact of a rate increase. Yes, most insurance companies are profitable, but it’s not as a result of all the great deeds and service provided by body shops.

 

Most shop owners believe that insurance companies are penny-pinching Scrooges looking to take control over the shops and the industry. That viewpoint is shortsighted. We try to contain our losses by working with shops to ensure estimate accuracy (also known as taking control of the shop). And we also try to find way for shops to be more efficient in the estimate and repair process (also known as taking control of the industry).  To recap the obvious, we will do whatever is necessary provided it is not illegal or completely unethical.

I’m certain some of our business practices are less than ideal but the facts are the facts. Shops would not be as advanced as they are today if it weren’t  for insurance companies leading them in the right direction. We try to help make you more efficient because when you aren’t, we lose and so does the vehicle owner.  So do you, as the shop owner.

How does the vehicle owner lose because of your inefficiency? The inconvenience of being without their car for a few additional days is just the beginning.  It can also lead to an increase in our customers’ premiums. Unfortunately, our customer won’t associate that increase in premium to an inefficient repair industry riddled with under-performers. They blame insurers for the rate increase.

The end result is that any additional unnecessary expense in the repair of a vehicle costs us money.  How do we account for the additional expense? The only way we can. We pass along that cost through premiums. What do most consumers do when there is a price increase? They look for quotes from other carriers and we potentially lose a customer. For some, that’s just free enterprise, but for individual insurers, that’s a lose, lose and lost scenario.

There is another area that can have an even more profound impact on our mutual customer: customer service. Back in the day, all shops were supposed to do was fix the car. Customer service was something you received at a hotel or from a switchboard operator. Even though the industry has evolved significantly, shops are still better at fixing cars than at servicing the customer. That’s where inefficiency and lack of process as it relates to customer service can be devastating to an insurance company. And God help us if your manager or estimator doesn’t like us. It shows in the customer service results.

I would argue that poor customer service indirectly costs insurers more money than a few days of rental or extra hour on an estimate.  While we don’t like to admit this publicly, we believe you are an extension of us. Our customers spend more time interacting with you than they spend with us. We can deliver outstanding customer service but if you do a poor job of it, we are going to pay for it. In short: We need you to be more efficient.

So that’s a look at what bothers insurance executives. You may not care because you have more pressing issues that require your attention besides appeasing the ‘rich insurance companies.’

The wish of every major insurance carrier is fairly simple. First, a high-quality, timely and a cost-effective repair should be assumed from a professional operation. Insurers shouldn’t have to monitor, correct, scold, chastise or force accountability in order to have it done right the first time.

More importantly, we wish shops would value customer service as much or more than they care about the actual repair.  Inefficient or lack of customer service processes hurts all of us. That’s something that none of us take to the bank.

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