Monday, 02 June 2008 03:45

Have the Insurance Companies Pushed Collision RepairersToo Far?

Written by Lee Amaradio

The collision repair industry has reached a point where enough is enough. Shops have been watching their bottom lines drop to a point that is becoming dangerous. The insurers are so accustomed to getting something for free that when there is a legitimate charge, they make us feel as if we are the ones that are being unreasonable by asking them to pay it. 

We are so used to hearing “sorry, we don’t pay for that,” that we accept this as a legitimate reason to give something away. Excuse me! On what basis are they saying that they won’t pay for something? On the basis that So and So’s never charges for it. Guess what – they are not at So and So’s.
    Recently I had an issue where a certain insurer (you know who you are) contacted my shop weeks after a repair was complete and said that they had located a tow company that would have towed a certain vehicle (that had already been completed) for $300 less and wanted me to reimburse them for the tow. They really stepped over a line here. Our shop does not mark up our tows and I paid the money out. Does this sound like extortion? Now they wanted me to pay them for the privilege of working on their insured’s vehicle.

     This is a large DRP and they told me to get the money back from the tow company. Essentially extort money out of the tow company. In a nutshell, they want me to use the same unethical business practices that they use—either I give the insurer back $300 or they quit using me; trickling down, the other tow company gives me back $300 or I quit using them.
    There is something drastically wrong here. The insurance companies are getting so arrogant that they think that they are the only ones entitled to make any money. Now they have decided that the tow companies are being paid too much.
    We could all get along fine if one thing, an easy fix for both sides, would change. Just listen to that little voice in your head that tells you it’s wrong to steal, and, guess what, it’s wrong to steal even if it’s your job.

Questionable ethics
As much as I would like to sugar coat this, I can’t. Deceiving the consumer and cheating them is becoming common practice for many insurers. Insurers are breaking the law every day when they ignore what they promise their policy holders.
    Insurers continue to use their well thought out word dialogues, statements like “We have had problems with that shop in the past” or “We cannot guarantee your repairs if you use them” or “You may choose any shop you want but we can expedite repair if you use one of our recommended shops.” Here’s my favorite: “They don’t meet our standards.”
    •Problem shop: If the truth were told, the “problem” shop, according to the insurer, was the shop that wanted to repair the vehicle in a way that cost the insurance company more money—even though it was the manufacturers’ recommended procedure.
    •Guarantee: We won’t guarantee the work if you use them. This is always a deal killer because what they don’t tell their claimants is that a warranty from a substandard facility is only a sure guarantee that you will receive more substandard work.
     •Expedite the Process: Insurers may purposely delay sending an adjuster out to stall the repairs so their words ring true. As a result, the customer ends up wishing that he would have listened to them and used the recommended shop.
    •Standards: When insurers say that a shop does not meet their standards, my response is: what standards? Even though a particular shop “does not meet standards,” the reality is that many of these shops exceed the “mythical” standards. Unfortunately, the consumer usually assumes the opposite, which is that the insurer’s standards are on the higher level. 


     Why do the insurers think they are the ethical ones? It is not our shop’s policy to deceive customers to make or save money. I’m required to adhere to laws that have been put in place to protect the consumers. Whereas I’m not above the law, I observe many insurers going from bad to worse.
    The Department of Insurance is not enforcing complaints against the insurers, but the DOI and the BAR have plenty of time and resources to come after the collision repairer. I wonder why?
    It’s a matter of principle. It sounds like a tactic used by organized crime. An argument can be made that the insurance company actions violate the RICO act. Extortion is the same whether it is done by a gangster or by an insurance company. If we don’t stand up for ourselves against these unethical business practices, who will? And what will it take to get the Attorney General involved?

Follow this scenario
Imagine with me, if you would, what insurers stand to lose by pushing collision repairers to the breaking point. Like the straw that broke the camel’s back, insurers have way more at stake than they seem to acknowledge. They should wise up and be thankful for what they have been able to accomplish and lighten up.
    Think for a minute what our industry could be like if we were able to mimic the insurers and put the shoe on the other foot. What if we were successful in lobbying our legislators, creating laws that they were forced to adhere to.
    Consider this: What if all the concessions we are giving became illegal? What if once an insurer entered a shop, they would have to pay to repair every vehicle according to factory specs? This means no more used weld-on parts (all OEMs recommend against them).
    What if all the labor rates in Southern California were doubled to match the rates in Northern California? What if all of the existing laws were enforced by the DOI and new ones were passed that remove the insurer from the repair process?
    What if the data bases were updated by repairers (not the insurers) and used only as they were intended to be used—as a guideline, thus eliminating data base manipulation. What if the body shop’s operating policy was the standard that each insurer was compelled to use as their guide (with each shop’s policy being different)?     What if all insurers had to use whatever estimating system the shop chose? It would be up to the insurers to subscribe to all three providers—this time for the repairer’s convenience.
    What if shops had a company policy that no vehicle will be started until a complete agreed upon estimate is finished? If the adjuster takes more than 48 hours to complete this task, the insurer can expect to pay storage. What if every vehicle was held until final payment is received? What if we charged $45 a day for vehicles that were completed and waiting for payment?
    What if all tow bills were marked up and paid by the insurance company? What if insurers were required to pay an administration fee on all supplements? If the check for the final payment doesn’t match the final bill, a new check must be reissued; the vehicle will accrue storage until the correct payment is received.
    What if we were more concerned about our own bottom line instead of the insurer’s? What if the DOI enforced laws that protected the shop and the consumer and forced the insurers to pay for legitimate charges? If they refused, the insurer would have to take the policyholders to court to seek reimbursement, not vice versa.
    Repairers have been fed so much propaganda by the insurers, we are convinced they are the ones in control. Even if they seem to be above the law, it doesn’t mean that they are. Suppose the laws changed and what I imagined above became a reality. What if the tables were turned and repairers were in control again? What if shops across this nation made a stand and we could implement these changes?
    What if the existing reality of the repair world became the insurer’s reality?

To the insurers
Remember the age-old saying: You don’t know what you’ve got ‘til its gone. You cannot continue in the same manner without a nationwide rebellion. Observe that all across the nation, shop owners are speaking out, saying that enough is enough.  Wake up and smell the coffee.  
    Insurers: you need us more than we need you. You don’t create any accidents, you don’t repair cars, and you are nothing more than the third party that pays the bill. It is only because we have given you so much you think that we owe you some underlying gratitude for our success. We are not successful because of you; we are successful in spite of you.
    You have nothing more to gain and everything to lose if you continue in the same direction you have in the past because you are going too far. There is nothing left to give.