Insurance Insider

Shops repair vehicles and insurance companies reimburse insureds for their loss. That is a simple explanation as to what happens after an accident. So how is it possible that something so simple can be so confusing, challenging and rife with accusations of impropriety?

How often have you heard the expression Time is Money?

It wasn’t so long ago that all shops were created equal. If you had tools, four walls and a sign, you could be a body shop. Actually, I should remove “four walls” from the list; there were many “shops” repairing cars that didn’t have one wall, let alone four.

I received a fair amount of feedback from devout readers about a previous column on parts and materials. For those who didn’t read (or don’t recall) that column, I addressed shops’ profit centers. I said shops need to quit whining about State Farm and PartsTrader and instead focus on the profit centers they do have control over. 

Every insurance company knows that their profitability and loss cost expense relative to auto claims has many independent variables. We often have no control over them. For an obvious example, we can’t ask Mother Nature to reduce the number of hurricanes that ravage areas bordering the ocean. And we have no control over the number of accidents that our policyholders are involved in.

Body shops continue to wring their hands over insurance companies imposing their will on their business and profit margins. Shops contend that insurance companies have no right meddling in their business. I can understand shops wanting to protect their profit margins on parts. And who wants anyone telling them what to do and how to do it? For those of you who are married, you know what I am talking about.

There is enough controversy in the industry today to write three or four different stories on the hot topics. I will not contribute to the proliferation of propaganda and conspiracy theories by discussing parts or insurance company direct repair programs. I have another controversy for shops to rally around.

I wrote an article a few months ago focusing on inefficiency within body shops. That is, inefficiencies that are most commonly associated with the repair process. If it takes you seven days to repair a vehicle and the shop down the street could have done it in five days, you’ve just cost everyone money.

The industry has been inundated with news about consolidators buying new locations and expanding into markets where they have not traditionally had a presence. To be honest, it’s happening at such a rapid pace that most of us in the insurance industry were caught off guard. In an economy that has struggled, the last thing we expected was capital investment firms plunking down large sums of money to purchase consolidators and then provide capital for aggressive growth. Existing large consolidators investing their own money to buy additional locations was even more surprising to insurers.

Training…What is it good for? Absolutely nothing. Say it again.

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