Almost across the board, insurers believe that the formula used in the industry to calculate refinish materials isn’t an accurate or effective tool.
That was among the findings of a new study examining the viewpoints of top auto claims personnel, and reported on at the Collision Industry Conference (CIC) in Las Vegas in November.
“I hope everybody gets this first point: Insurers think the refinish material formula is broken. Period,” Mike Condon of Condon Consulting, one of two firms hired by BASF to conduct the insurer survey, told those at CIC.
Condon said the goal of the survey was to identify “common-ground issues” from the insurers’ perspectives that could help move the industry forward. Rather than a formal written survey, the study involved 22 hours of freestyle interviews on 13 topics with top claims management at nine insurance companies (that combined, account for about 50 percent of the collision repair market). The insurers’ comments and information are reported anonymously. The study was somewhat of a follow-up to a 2006 study that BASF also sponsored to document shops' concerns with insurer direct repair programs (DRPs).
Among some of the study findings reported at CIC:
- Condon said perhaps the No. 1 concern voiced by many insurers was whether the industry has enough information and training on new vehicle materials and structures, comparing the current change in the industry to that of the shift to unibody vehicles 30 years ago.
- Condon said that with the exception of one insurer, all had what he called “lower-than-expected” rates of DRP use. One insurer said more than 50 percent of its claims were handled through its DRP, but most of the others said between 65 and 75 percent of its claims were processed outside of their DRPs.
- One direct quote that Condon reported from an insurer with regard to DRPs was, “I’m amazed that repairers tolerate all these requirements.” Some said they were growing tired of “steering issues,” and “believe that customer education is an essential part of their service, and DRP is part of the educational process,” Condon said. They expressed surprise that shops in their DRPs don’t stand up more to defend the value of the programs.
- Insurers said they continue to see too much “work billed but not performed” to develop the trust and self-managed DRPs they would prefer. They view the DRP liaison within a shop as a critical role, and would like to see steps taken to reduce turnover in that role; some suggested that shops should notify the insurer—and perhaps take some sort of penalty—when turnover in that role occurs.
- Several insurers said they would be open to the idea of making their company’s internal customer service training available to shops within its program.
- Condon said insurers share some of the same dissatisfaction and concerns regarding the industry’s estimating systems as those expressed by CIC committee and repairer groups, suggesting an area where the two sides could work more closely together.
"I would suggest the worst thing in an information provider’s life is to have the insurers and repairers join together (on these issues)," Condon said.
A 66-page report on the study can be downloaded from the “News Releases” section of the BASF automotive refinish website (www.BASFrefinish.com).
Committee continues to press for changes
Also in Las Vegas, CIC’s “Database Committee,” which includes representatives from three of the national repairer associations, provided an update on the laundry list of changes it has been pushing the industry’s estimating system providers to make.
Committee Coordinator Lou DiLisio, for example, said Audatex, CCC Information Services, Motor Information Systems, and Mitchell International have done a “tremendous job” in adding more information to the systems about what types of metals are used in various parts of particular vehicles. One example of when such information can be critical is when automakers made changes to the composition of inner structure—with perhaps no other visual changes to the exterior of the vehicle—in order to meet changing roof-crush standards.
Now the committee is pushing for even greater detail in the systems, DiLisio said, such as links to more detailed repair procedures.
He said some but not all of the information providers have moved to identify more of the operations needed to prepare a salvage part for use; to assign labor values currently missing for some parts in the systems; and to identify more non-reusable parts as well as flexible parts that are shipped raw from the manufacturer.
In other areas, the committee has been less successful inpressing for changes, such as automation of operations such as “feather, prime and block.”
“It’s very disappointing to stand here three-plus years after this was identified, by a different committee of this body, as a necessary operation, and yet not one of the information providers has done anything to include it in their system,” DiLisio said. “There’s no reason for some of the things like this not taking place that have been on this list for three years. This is ridiculous.”
DiLisio reiterated that he has seen some progress by all the information providers, but not nearly enough in some areas.
“They should allow us to help them prioritize what they work on, and that’s one of the things we have asked for,” DiLisio said, drawing applause from CIC attendees.
Among the new topics the committee plans to address in the future are data privacy concerns as the information providers shift toward systems that store shop estimates and even management system data on the vendor’s computers rather than the shop’s. “The information they can capture through a Web-based system is pretty scary,” DiLisio said, adding the privacy concerns impact shops, insurers, vendors and consumers. “I personally don’t want my information, about whether I had an accident, out there. It’s nobody’s business but mine.”
DiLisio said this was a topic he’d like to see several CIC committees work on in 2010.
