Wednesday, 31 May 2006 10:00

Industry pros must strive for more equitable working relationship

Written by Lee Amaradio, Jr.

I started my auto collision business in 1979, because I wanted to be my own boss, and I've been fortunate enough to survive for over twenty-seven years. I can even remember when I still knew how to repair cars. Now twenty-seven years later, you would think I knew little or nothing about repairing cars or running a business. 

For the first time I feel like I have a boss - someone tells me how to do everything. I could lose a multimillion dollar account if I repair a vehicle the way I think it should be repaired. Every available method must be exhausted to cut costs to a bare minimum for the insurance company, but how does my company benefit? Where is my share of the profit?

To accommodate the insurance companies, shop owners throw away dollars to save pennies. I need to do at least three LKQ part searches, check for aftermarket parts usage, and then document and photograph everything, I answer three or four e-mails explaining why we needed to do everything to some person looking at a photograph, who knows little or nothing about the actual repair process. All this extra work ends up making money for someone else!

Take a look at guaranteed cycle time. There is no reward for delivering a vehicle ahead of time, but I'm penalized if it's late. I'm still able to repair 90% of vehicles faster than the insurance companies can process the payment, making me feel more like an employee than a business owner - being unable to reap the profits for all of this extra labor. I'm kept so busy saving the insurance company money that I have little time left to check and see if I'm making any. It hasn't always been this way, but it keeps getting worse.

Matter of survival

How can a business survive if it's concerned for someone else's bottom line above its own? How many employees would work for me if payday came and I told them I didn't like their performance the previous week so I cut their paychecks. My boss - the insurance company - does this to me all of the time, and then tells me how lucky I am to have a job.

The insurance's company's profit is in direct conflict to mine. If I make more money, they make less. We are not and never can be partners; it's a conflict of interest, it always will be. We aren't even in the same industry. They sell policies, we repair cars. We can work together as professionals but we are far from teammates.

Repair shops have become mini-claim centers, assuming administrative costs while the insurance companies substantially reduce their costs. We are helping them make larger profits, while our profits go from bad to worse. The insurance companies have trained us to process their claims. We can end up working harder at saving them money than we do at earning money for ourselves. I have yet to meet an independent adjuster that processes claims for free.

Who should pay for processing claims?

Shouldn't the insurance company pay us a fee for processing their claims? We follow all of their guidelines and do everything they ask. Why do we do so much for free? Because the insurance companies have become our bosses, and we are afraid of losing our jobs!

After we do all of their claims processing for free, they act like we are the lucky ones. They have eliminated their staff while we have increased ours. They are closing claims offices because it saves them big money. They are making more profits because the DRP programs work well for them. We need to remember back when the discounts and concessions were minimal. This system started out fine but now it has become one-sided. The pressure is constantly on to see how far shop owners will allow the insurance companies to push us.

I want to work with the insurance companies as equals - to be treated like clients. I'm not one of their employees. I understand they have a profit-driven business to run, but we also have profit-driven businesses. There must be a mutual respect between us. If I wanted to be pushed around by a boss, I would have applied for a job, and not gone into business; at least then I would have benefits and a retirement fund.

It is time for insurance companies to open their eyes and see they have a good thing going and they are about to ruin it. Do we want to repair cars for less and less profit and have a boss to boot? Why can't the insurance companies share the savings related to administering their claims process? They used to pay for it entirely.

What if our industry stuck together and started to charge a fee for processing a claim? Would they hire thousands of adjusters and reopen claim centers or would they pay us? We would get paid, because we still save them billions of dollars. I want to be my own boss again, I know what its like to make a profit and turn out a quality product. I'm tired of being threatened, reprimanded and having money deducted from my paycheck. They have become my boss. I don't know about you but I don't like it very much.

Negotiate v. demand

Business people negotiate with one another, these bosses demand! We need to unite as an industry to take a stand that will force the insurance industry to create an easier standardized DRP profile and processes for handling their claims that are less demanding, and less time consuming. At least they should pay us a fee for processing their claims - it's their job!

We need to make changes. Since the insurance companies now have very few adjusters, we should give them back their DRPs nationwide. Would this get their attention? They would be forced to spend billions of dollars to reopen claim centers, and hire thousands of employees; it would have a devastating effect on them. Then the collision industry and insurance companies together would be able to restructure the entire DRP process nationwide with a standard profile and process that works for both of us.

Remember the insurance companies need us as much as we need them. They would respect what we have to say and treat us like the collision business professionals we are, and not like one of their employees. Who's your boss?


In business for 26 years, Lee Amaradio, Jr. is the president and owner of "Faith" Quality Auto Body Inc. in Murrieta, California. With 65 employees, he attributes his success to surrounding himself with good help, claiming to have some of the best office staff and techs in our industry. Amaradio has been in this industry long enough to see the handwriting on the wall. He feels that now is the time for us to unite as an industry before it's to late. He can be reached by e-mail at lee@faithqualityautobody.com.