What would you do other than scream at the system, desperately try to renegotiate or ask the surgeon to double up on the anesthesia?

This is similar to the unending tug-of-war between body shops and insurance companies over what the latter is willing to pay for repairs. In many cases, the relationship works well and seamlessly, while others go sideways and end up being a bad experience for both parties involved.

It doesn’t matter if you’re a DRP shop or not---they will grind you at every turn anyway, and if you’re not prepared, they can hamstring your business in more ways than one.

AkzoNobel Small Business Consultant Tim Ronak presented "Overcoming Objections to Payment and Requested Procedures" as part of the SCRS 2020 Repair Driven Educational Series presented at SEMA360.

Many shops nationwide are having issues getting OE repair procedures approved, or persuading insurance companies to reimburse for certain repairs when they submit their bills and estimates.

Through a series of roundtable discussions with shop owners and managers, Ronak has been able to devise some strategies to address these issues and how they can be resolved.

If you’ve been in the collision repair industry for even a short time, you’ve undoubtedly heard these lines more than once---the leading 14 excuses any shop can encounter:

“We don’t pay for that.”

“This is the cost of doing business.”

“That’s part of the job.”

“It’s the market rate in your area.”

“That’s not a competitive rate in your market.”

If those don’t float your boat or...

...persuade you in any way, it’s time for their Plan B:

“Sorry, but the prevailing rate in your area is [fill in the blank.] So, we cannot pay more.”

“We can add some extra time on something else to cover the difference.”

“No other shops in your area are asking for that amount.”

“These rates are too high.” (Meaning a prevailing rate does exist.)

“This is a four-hour repair, not a six-hour repair.”

“We pay for aftermarket and used parts only.”

“You don’t need to perform that procedure.”

“The OEM repair information does not say ‘required;’ it says 'recommended' or 'suggested.' Since they do not ‘require’ the operation, we will not pay for it.”

And finally, after all of the wrestling doesn’t work, the insurer might say, “Please accept our non-DRP rate.”

Shops run into all of these “reasons”---excuses---often, when all they want to do is return the car to its 100% pre-accident condition without compromising safety and functionality, Ronak said.

Insurers will wrestle with collision repairers customarily about things such as scanning procedures, pre-fit on a quarter panel before it’s installed, or a road test at the completion of the repair, now called a “dynamic systems verification," Ronak said.

Ronak developed a comprehensive list of General Objection Categories.

One of the main objections is...

...rates, and the problem is many shops are unable to make their case when negotiating rates with the insurer. Without enough substantiated proof, the insurance company will win almost every time, Ronak said.

Challenging the asserted rate assumes you have done your own research to dispute it, Ronak explained. Use of any contracted or DRP rates in the calculation of "prevailing market rate" could be a violation of the Sherman Act, and could be described as purchaser price fixing, which is illegal and a federal offense.

If an insurance company has negotiated a certain rate with one shop and then uses that negotiated rate when calculating an average rate for a market, it has "bought down" the market rate and may be an unfair trade practice.

To determine the rates, shops are familiar with labor rate surveys provided by the insurers with zero oversight.

“They provide a survey that can’t be edited,” Ronak said. “They tell you that this is how much you should accept because they think it’s fair. They pick the shops to use and then determine how much they will pay in each market. The question here is---should you really trust someone who owes you money to tell you how much they owe you or do you need to verify that?”

For shops to successfully challenge rates, they will need to prove the prevailing rates provided by the insurance companies are inaccurate, outdated or unfair.

In summary, it’s the shop’s obligation to make a case every time when an insurer tries to cut its rates or coerce it to perform an inferior repair and compromise quality.

Being proactive is key. Do your own labor rate surveys and back them up with...

...the proper documentation. Be prepared for the insurer’s talking track and be ready to respond promptly and definitively. Develop a plan and a strategy and make sure anyone dealing with the insurance companies is on the same page.

Ronak grew up in the collision repair industry beginning at age 14 working within his family’s business in Calgary, Alberta, Canada. At 17, he became the youngest interprovincially-certified auto body technician in Canada.

In 1993, Ronak began working for the Canadian federal government, administering and developing advanced training programs for the automotive industry within Alberta that led to a management position with a large GM dealer in Calgary.

Fifteen years ago, Ronak joined AkzoNobel and has since developed numerous seminars focused on operational improvements in the collision center. Over his 25 years with AkzoNobel, he has helped more than 1,000 collision repair businesses improve their overall operational performance.