Insurers discuss vehicle scanning, DRP training requirements, predictive estimating
Anaheim, Calif.—From scanning vehicles to OEM shop certifications, predictive estimating and direct repair programs, a panel of insurers recently discussed some of the key issues for collision repairers.
The panel discussion was part of the half-day “MSO Symposium” during NACE in Anaheim, Calif. The event was open to multi-shop operators (MSOs), but also larger single-location shops (those with annual sales in excess of $3 million), as well.
The topic of pre- and post-repair scanning of vehicles was a frequent topic throughout NACE, and the MSO Symposium was no exception. State Farm’s Russ Hoffbauer was perhaps the most cagey about his company’s willingness to pay for the procedures.
“It’s not whether it needs to be done. The debate right now is who pays for it,” Hoffbauer said. “Is it something payable under the insurance contract? Is it a diagnostic versus a repair process? Should it be bundled in and covered that way? I think that’s the confusion right now with it.”
Gerry Poirier, a strategy manager and technical advisor for Farmers Insurance, agreed with other speakers who called for more information in the estimating systems from the automakers about which specific vehicles and parts require scans and recalibrations. If a mirror includes sensors, for example, the time to recalibrate those sensors should be included in the labor time for that mirror, Poirier suggested, or a footnote in the estimating system should note the need for recalibration.
“It’s that sort of specific information on each individual vehicle that will save time for all of us,” he said.
In a related discussion, Clint Marlow of Allstate said the vehicle telematics information insurers are increasingly looking to capture could do more than assist with first-notice-of-loss after a collision.
“You start thinking about what it would look like if we shared the most pertinent data from the OBD-II with our repair facility partner on assignment,” Marlow said. “You would know that the airbags deployed. You would know there’s a trouble-code set around the anti-lock brakes. You would know if there was a passenger in the vehicle. It certainly could be very powerful. Think about if the vehicle pre-scan [information] almost comes with the assignment because the data is coming out of the OBD-II.”
The insurer representatives all acknowledged the growing role automakers and dealers play in consumers’ selection of a collision repair facility.
“You’re going to see more of the work shift into that channel,” Chris Andreoli of Progressive Insurance said.
That raises potential challenges for OEM-certified collision repairers on direct repair programs that face insurer requirements for alternative parts usage along with OEM-warranty-requirements that mandate the use of OEM parts only.
“I don’t really have a great way to sugar-coat it, but you may not be able to serve both parties in that,” Marlow said. “You may not be able to do both.”
Poirier said that consumer education by shops and agents may be the key.
“We sell an OEM endorsement for all OEM parts,” Poirier said. “If this is an issue for repairers, try to educate your customer base on who does sell this [sort of policy endorsement].”
Training requirements and benefits
The panel was asked if the investment shops make in OEM certification will change the way they are compensated by insurers.
“It really comes down to supply and demand, and what does the market call for,” State Farm’s Hoffbauer said.
Marlow said some of that investment might be just the “inherent costs of doing business” or “staying viable” as a business.
“Those that don’t invest simply won’t be around to be your competition,” Marlow said.
He compared it to the new skills technicians have had to add in recent years just to remain employed.
“I don’t know if we’ve seen wholesale changes in the way that they are compensated,” Marlow said of technicians. “We’ve seen incremental change, year over year, probably tied closer to the consumer price index.”
Marlow said shops similarly will need to have reasonable expectations over how long it will take to achieve a return on their investment in OEM certification.
“You’re not going to get a [return] back on a $250,000 investment for specialty vehicles within months,” he said. “It needs to amortized over a reasonable amount of repairs.”
None of the insurers predicted wholesale changes to their direct repair programs, with all four companies saying that although they may add or delete some shops in some markets, overall their DRP shop counts are appropriate given their customers’ needs.
They also were asked about the ongoing training requirements for shops on those programs. Andreoli said his company has a “strong preference” for I-CAR Gold Class shops, but doesn’t require it as part of the program because if it did, it wouldn’t have the number of shops in the locations it needs.
Poirier said Farmers is considering adding a Gold Class requirement to its program.
“Because cars are getting so complex,” Poirier said, “we need to make sure the shops that we’re sending our customers to have the knowledge and ability to fix that car correctly the first time.”
Marlow said Allstate does require Gold Class but also is realizing that some other training should be equally recognized.
“A classic example is if a high-end European vehicle dealer has spent a enormous amount of money sending their folks over to Europe to be trained,” Marlow said. “That probably needs to be recognized so there’s kind of an exception process for that. What we’re looking for is that ongoing, strong commitment to continuing education.”
Hoffbauer said State Farm continues to encourage its direct repair shops to seek ongoing training, but doesn’t have any specific requirements.
“We really believe that if a shop doesn't continue to train, it will show in the quality and that will show in their scores, and they may not be on the program for a long time because their quality drops,” Hoffbauer said.
Predictive estimating comes closer
The panel also seemed to agree that “predictive estimating” – using some combination of vehicle telematics information combined with claims history data in order to estimate repair costs upfront – isn’t far off.
“I think it’s going to come pretty quickly, actually,” Hoffbauer said. “I think there’s several entities working on this, and actually have some prototypes out there right now. Once they figure out all the analytics and the algorithms, they could add vehicles pretty quickly.”
“There are a bunch of bright people looking at it,” Marlow agreed. “Is it a year out? Is it two years out? Somewhere in that time frame. It probably makes most sense on vehicles that are drivable.”