Thursday, 26 July 2012 11:52

With Estimates, Insurers See the Emperor’s Underwear

Written by insurance insider

Emperors and underwear? Referencing royalty’s skivvies in an article about body shops? Everyone in the kingdom thinks that the shops represent the peasants, while insurers are the heirs to the throne. Rumor has it that a CEO from one of the top three insurance carriers in the U.S. is a second-cousin to the Queen of England.

If that’s true, as royalty, there are privileges that we insurers are entitled to that quite frankly shops aren’t. What is it exactly that us royals get that most of my readers don’t? I’m not talking about “money,” although I suppose there may be some merit in that response.


What insurers get is tons and tons of data. If we don’t have it, we can get it. Just like that gentleman in the red suit who is recognized by his “Ho, ho ho,” we know if you’ve been naughty or nice. We also know who writes a good estimate and who doesn’t.

We also see the Emperor’s Underwear. That’s right, we see your BVDs, Fruit of the Looms, or whatever your brand of choice is. We see and know what you don’t want us to know. We know that the customer matters—and I’m not referring to customer service. I am referring to the fact that the customer matters when you write an estimate.

I know that the estimate is the one thing that shops claim is more holy and pure than the Pope himself. Shops often say, “The damage is the damage,” “The estimate is the estimate,” “The cost to repair is the cost to repair.” I say that the royal underwear is in need of cleaning.

The customer dictates the cost to repair. It’s conceivable that we could have a dozen different estimates from the same shop with different bottom lines to repair the same car. Sadly, you know that I’m right. I also know that Santa Claus isn’t real and the Wizard of Oz is a phony. I looked behind the curtain. I’ve seen. We’ve seen. We all know.

Here’s why you know I’m right. If the shop participates in a direct repair program, the labor rate is going to be $x in accordance with the contract. The shop writes x hours to repair a given panel, x to cover the car, and x to blend the adjacent panel.

If the shop isn’t on a direct repair program, the labor rate, labor hours, cover car, blend time and P-pages will all be inserted into the estimate at a different amount, say, x + y.
If the shop is working with an independent appraiser and it’s someone they know, it may be x + y + z.
If the shop is doing work for a fleet account, such as rental car company, it will be x – y – y - y.
If the customer is paying for the work out of their own pocket and the shop is slow, it’s going to be x – y. If the shop is busy and doesn’t need the work, it’s back to x.
If the customer happens to be a neighbor or friend, it’s going to be x – y – z.
And if the customer is your mother-in-law, it’s going to be x + y – z, plus a free detail.

I could continue, but the point is made. The customer matters. But in case it’s still not clear, let me drive it home faster than a body man priming a 10-hour repair on a quarter panel after the shop has been notified that an adjuster is coming out to see the vehicle.

That “8-hour repair” on a quarter panel becomes five hours for the rental car company, two hours for you mother-in-law, six hours to your friend, nine hours if an independent appraiser comes to your shop, 10 hours if the insurance company is reducing the refinish time on a repaired panel, 11 hours if you know the reinspector from the insurance company is going to hack the estimate, and seven hours if it’s a customer-pay job.

How do we know this? Data, and lots of it. Almost every decision you make when writing an estimate is decided by who is paying the bill. This is the sad reality of the business. The damage is never just the damage. That’s the “Emperor’s Underwear” in this industry that nobody is supposed to see.

And the actual cost to repair that vehicle? “Well, it all depends.”