We are involved in a game with the insurance companies and we are on the losing team. I call it a game because the collision industry operates like no other business model I know of. Insurance companies wouldn’t play this game from our point of view. Let’s switch sides and put the shoe on the other foot.
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.
After attending a recent meeting with one of my largest direct repair accounts, I found myself totally stressed out. We discussed LKQ and aftermarket parts usage, as well as cycle time. Procedures now called for three alternate part searches for every part on the estimate - each of which had to be documented. Furthermore, going over their allotted four hour per day formula would force us to pay rental car ex-penses.
Currently I am struggling to get my shop's recently raised labor rates accepted by the insurance companies we deal with. Raising rates is one thing; getting paid the new rates is another
It amazes me how quickly some of us are ready to throw State Farm under the bus. Have we forgotten how much we loved doing business with State Farm up to this point? Perhaps the problem is not State Farm, but with the collision industry itself.
Our industry is afraid of the "N" word. We are so used to giving in to ridiculous concessions and demands that we say "yes" to almost everything. Who defined cycle time anyway? To me, it's the time elapsed from when a repair is completed to when I get paid. How's that for cycle time. Why hasn't anyone figured out that it takes more time for us to receive the payment than the time it took us to repair the vehicle? Why aren't we demanding twenty dollars a day interest according to our own version of cycle time?
I started my auto collision business in 1979, because I wanted to be my own boss, and I've been fortunate enough to survive for over twenty-seven years. I can even remember when I still knew how to repair cars. Now twenty-seven years later, you would think I knew little or nothing about repairing cars or running a business.
Twenty-seven years after opening my business in 1979, I'm trying to figure out how our industry went so wrong. Although I have learned many things in those years, I haven't learned how to produce a profit consistently.