In the 1960s, the concept of a direct repair program took several twists and turns before it got to the model we recognize today. Here are a few variations of that theme.
In the early 1960s, dealer-owned body shops were at odds with independent shops. Dealers saw the phenomenal growth of independent shops and felt threatened. In Tulsa, OK, in the early part of 1961, the area dealers decided to corner the market. A group of dealer-owned shops got together to offer insurance companies discounts on parts and labor if they sent more cars to their shops.
The local insurance agents loved it and established what was then known as the “Approved Garage Plan,” or an early form of a DRP arrangement. Insurance agents and adjusters began telling claimants that they could bring their car to a non-preferred shop if they liked, but the vehicle would probably be “held up” because the insurance company did not have a “check bid” with the non-approved shops. This deepened the rift between independents and dealers.
Independents thought the dealers had an unfair advantage because it was thought that 1.) the dealer could handle a lower profit made from body work because they also had profits from their service departments and new cars sales, and 2.) because the dealer bought the parts from the car maker, they could sell them to the insurance company at the same price as what the shop would pay for them. In this particular case, a then-current trade magazine noted that one Tulsa shop owner decided he would rather get out of the business than succumb to insurance companies' and dealer body shops' tactics, so he sold his shop and opened a salvage yard.
One of the earliest forms of a DRP network emerged in 1961, but it was way different from what is known today, over 50 years later. In 1909, Grinnell Mutual Reinsurance Company was founded in Grinnell, IA. By 1961, it was serving customers in eight states and had a network of about 100 dealer-owned and independent shops to which they sent policyholder’s vehicles for repair.