Wednesday, 13 November 2019 07:07

The Future of DRP: Is There One?

Written by Autobody News Contributor
L to R: Stacey Phillips and Pete Tagliapietra. L to R: Stacey Phillips and Pete Tagliapietra.


With an estimated 22,000 collision repair shops across the country dependent on Direct Repair Programs (DRPs), Pete Tagliapietra of NuGen IT said businesses need to pay close attention to the paradigm shift occurring in the industry related to these programs.

Tagliapietra explored the current status and future outlook of DRPs in his recent SEMA presentation, “The Future of DRP: Is There One?” His talk was part of the Society of Collision Repair Specialists (SCRS) Repairer Driven Education (RDE) Series.


Tagliapietra discussed four main reasons that the number of DRPs have been shrinking for top insurers. They include high administrative costs to run DRP programs, the growth of MSOs, alternative appraisal methods now being deployed and new technologies that are changing shops’ business relationships with insurers.


“Insurance companies are selling a commodity product—it’s all about price,” explained Tagliapietra.


During his presentation, he pointed out that both GEICO and Progressive have had rapid growth in market share over the last several years because both have focused on “price,” while other companies, such as Allstate, Farmers Insurance Group, State Farm and Travelers Insurance have typically sold “service” and as a result, lost market share.


“While these companies focused on service over the years, they lost market share and GEICO and Progressive took it,” he explained. “This is relevant because as those companies shifted and they had their own claims processing models, the number of DRP shops in this country continued to shrink and will continue to shrink.”


In response to changes in the industry and the diminishing number of DRPs, he said top insurers are taking action a number of ways to reduce costs. One of which is striving to reduce Loss Adjustment Expense (LAE). This is the amount that it costs an insurance company to adjust a claim. Tagliapietra said insurance companies are working to reduce their infrastructure by eliminating field and independent appraisers and relying on inside desk appraisers and third-party administrators, such as Snapsheet. They are also reducing management and administrative support and raising prices.


In addition, he said companies are increasingly deploying what he referred to as the “self-service model.”

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