As president of "Faith" Quality Auto Body, Inc., a large auto body shop with several direct repair programs, I annually renew several company insurance policies with carriers. This year, I decided to conduct an experiment by approaching the insurance companies the same way they approach me. 

Amaradio

My garage keeper's insurance was first. After receiving several quotes of substantially different amounts, I contacted each company. I wondered why there would be such a large price difference if they were all substantially the same. Obviously, they weren't the same, which accounted for the significant price difference.

To prove the point of this experiment, I took the average of all the quotes, then approached the highest charging insurance company and told them the amount I was willing to pay. I explained that I had conducted a survey based on the quotes I received and the amount I was offering them was usual and customary for this type of policy. Needless to say, I wasn't surprised when they politely told me, "I'm sorry, but our company doesn't operate that way." I then offered to give them all of my insurance business if they reconsidered my offer, but they declined.

What did I expect?

Would workers' comp be different?

My workers' compensation carrier was up next. When I requested a quote, they gave me a form asking how many full-time employees I had (68) and other information they considered necessary, saying they would be in touch shortly.

About a week later they called with a quote that was, as expected, a little higher than last year. When I asked for the rationale, they explained that the cost of doing business had increased over the last year and they were forced to pass this on to their policy holders to stay profitable.

While this makes perfect sense to anyone outside the collision repair industry, it bothered me because, due to some of my DRP contracts, I am unable to raise my prices to compensate for my own increased cost of doing business.

Going one step further, I asked if they would shift some shop employees over to the office side of the column. This would create a substantial savings since the office staff premium is less than one-fifth of the cost of shop staff. They looked at me like I was asking them to commit a crime because, of course, it is a crime to incorrectly categorize an employee.

Does cost shifting come to anyone's mind? Insurance companies want us to do what they wouldn't even think of doing themselves. I couldn't help but remember how often I've been asked to cost shift by the insurance companies I do business with.

How about a quantity discount ?

Next, I decided to raise the ante by approaching my auto insurance company - the one that has had my business for years. I own five cars including my new Cadillac. When I received my quote, I wasn't surprised to see that the Cadillac carried the highest premium - almost twice as high as my daughter's Hyundai. And after all, why shouldn't it - it's a Cadillac.

I asked my agent if there was something he could do to decrease this premium to somewhere close to what I was paying for the Hyundai. He explained to me that there was nothing he could do because a Cadillac costs more to repair. Unless you are in the auto body industry, this is logical.

Realistically, when I repair a Cadillac, I make less money than if I repair a Hyundai. The discount on Hyundai parts is smaller because it is a foreign car. With a Cadillac, not only are the parts more expensive, but I give a larger discount to the insurance company. Though I do it, somehow it doesn't make sense; I should be charging a higher hourly rate to repair a Cadillac than I charge for a Hyundai.