From the Desk of Mike Anderson: Automakers' Increased Role in Claims Seems Just on the Horizon as Connectivity Happens
Written by Mike Anderson, Autobody News
Published December 28, 2018
It’s been about four years since the industry began talking about the automakers playing a larger role in helping vehicle owners after an accident---using telematics to contact the driver at the crash scene, for example, to ask if they need medical help or a tow arranged for them, or to see if they would like a referral to a nearby shop certified by that automaker.
I frequently get asked, particularly by shops that have invested in OEM certifications, when that’s going to start to take place regularly.
I believe there are three things that need to occur---and are about to happen---to make that a reality. I should say these are strictly my opinions based on what I’ve read, conferences I’ve attended, etc. But the first thing that needs to happen is to have more vehicles “connected” via internet access. That’s happening rapidly. From the research I’ve seen, just three years from now, in 2022, nearly 90 percent of new vehicles in North America will be equipped with telematics.
But being equipped to be connected and actually being connected are two different things. To have more consumers choose to be connected will require two other changes that I see beginning to occur.
First, there’s a generational shift that has to happen. My 81-year-old father does not want GM’s OnStar to always know where he is. He’s concerned about privacy. But my 20-something-year-old niece, on the other hand, wants to stream music, so she wants to be connected to the internet 24/7. She wants her child to be able to watch movies while they are in the car. That generational divide may have slowed the adoption of vehicle connectivity, but that’s changing.
The other factor that has to be addressed is affordability. Studies have found U.S. drivers aren’t willing to pay even $500 a year to have their vehicle connected, and Canadians are willing to pay even less---under $200 year.
That’s why some recent announcements by automakers are convincing me that the connected car is about to become much more common very soon. There are automakers offering internet connectivity for $22 a month or even $17 a month. One automaker has said that in 2019 it will offer free internet connectivity for a number of years on its new cars.
So the technology is there, the affordability is getting there, and the generational shift is happening. As those three things align, it starts to bring to fruition the ability for car manufacturers to handle first notice of loss after an accident.
How will that look? Some automakers may offer their own insurance bundled with the car. They’ll want more control over their customer’s experience with that vehicle even throughout the claims process after an accident.
Others may do something more jointly with insurance companies, partnering with them to provide the insurer with accident information, for example, and working together on first notice of loss.
In either case, I think that shops thinking about where they want to be three or four years from now need to be moving toward OEM certification, so that as that OEM connectivity to the vehicles increases, you’re there.
Could this create some challenges in the meantime? You bet. OEM certification programs may have different parts use expectations than insurer direct repair programs, for example. That may mean giving up some margin by using only OEM parts or maybe stepping back from some DRPs. I think it’s conceivable that as automakers control more of the first notice of loss process, they could help a shop regain market share the shop may have lost by ending a DRP relationship.
Some shop owners will question whether there’s a risk of not getting a return on their investment in OEM certification. What if this increased involvement of the automakers doesn’t occur, or doesn’t result in added business for certified shops?
To me, that’s a little bit like asking, “What if I invest in a whole bunch of training for a technician who then leaves my shop?” My response to that question has always been: What if you don’t train that tech and they stay?
What happens, in this case, if you don’t get OEM-certified, and the connected car scenario I foresee happening plays out---only by then, the automakers already have their certified shops in your market? What will you do then?