Industry Insight with John Yoswick
—John Yoswick is a freelance writer based in Portland, Oregon who has been writing about the automotive industry since 1988. He is the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). Contact him by email at jyoswick@SpiritOne.com.
Why Collision Repair Shops, Insurers Often Disagree on Repair Plans
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The Collision Industry Conference Another panelist, consultant and (CIC) Industry Relations Commit- former insurance executive Roger tee held a panel discussion this sum- Wright of Vector Squared, concurred with Ed Attanasio mer centered around a fundamental claims personnel often lag in their question: Why is there so often a technical knowledge as vehicle techdisconnect between auto body shops nology evolves. and insurance companies during the “In the 1970s, I started out [in repair planning stage, particularly the insurance industry] and I went to when it comes to procedures related Vale Tech and became a ‘three-week to advanced driver sys- wonder,’ and realized shortly therewithassistance Ed Attanasio tems (ADAS)? after I knew nothing,” Wright said. Michael Giarrizzo, CEO of “The collision repair shops trained DCR Systems, which operates eight me for the next 20 years. I went in as collision repair shops under partner- an insurance representative or indeships with dealers in four Eastern pendent appraiser and would listen states, sees training as the key issue to what they had to say and learn. I leading to the frequent lack of align- guess we’ve lost that, maybe.” with Ed Attanasio ment on repair plans between shops and insurers. Giarrizzo said OEM-certified shops like his continue to get significant amounts of training as vehicle complexity continues to Attanasio increase, with Ed but insurance claims personnel often aren’t getting that ongoing technical training. He equated it to a medical insurer questioning a surgeon. Oregon shop owner Ron Reichen said one “Someone handling a medical size-fits-all solutions don’t work because the claim may not have that same level time to scan and analyze trouble codes on two of education [as with the doctor], but they Stacey Phillips different brands of vehicles can vary widely have trust in that education,” Giarrizzo said. “Whether you’re up to That said, Wright said he can speed with it all or not, there’s got to understand insurance company rebe a trust level in whoever has gone sistance to what could be seen as out and invested in the education.” blanket position statements or pro Ron Reichen of Precision Body cedures from automakers. Wright with Stacey Phillips & Paint in Oregon agreed keeping said it was 2016 when he first saw up with vehicle technology is “a an automaker statement calling for challenge for us, and we’re con- all of its vehicles to be scanned after stantly training.” He said collision a collision. repairers “trying to get alignment “It didn’t designate a year or [with insurers], often find ourselves anything, just that all vehicles are with Stacey Phillips being the educators for the bill-pay- to be scanned,” Wright said. “If we er.” The shift to virtual claims settle- asked everybody in the audience ment doesn’t help, he said, because then, how many of those cars that it adds to the challenge of showing you repaired last week did you scan, or explaining what a vehicle re- it may have been maybe three or quires. four or five or one. Was it necessary He said he also sees a “one size to recall all those other cars because with Stacey Phillips fits all” approach that isn’t helpful. we didn’t do it right or safe? The time needed to scan a vehicle “No, the shop believed they and analyze the information and fixed the car properly, to OEM stanincorporate that into a repair plan dards, and all of a sudden we have might take 45 minutes on one make a bulletin that says we have to scan of vehicle and two hours on another, everything. That causes an insurer even on similar hits, Reichen said. some consternation. How can that
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be? What happened between yesterday and today?” A seemingly sudden shift by an OEM can have real financial consequences, Wright said. “For even a medium-sized insurer that has 10,000 claims a day, if you throw a number out for pre- and post-scans, you come out with about $2.7 million a day in average increased costs. Per day,” Wright said. “They didn’t price that in. Now, don’t cry for the insurers. They’ll get this all priced in with the next rate increase. But in the meantime, which can be months or years, they’re losing $2.7 million a day. That’s real money to them. “So they push back a little bit, and say, ‘Do we need it on every car? Maybe the Saturn that’s in the parking lot that got hit by a shopping cart doesn’t need to be scanned.’ It’s not that we don’t want to fix a car
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right. But it creates a concern for us.” But Reichen argued neither shops nor insurers should be deciding how to repair a vehicle. “No one knows the vehicle better than the person who built the vehicle, so from a repairer’s position, if the manufacturer says we need to do it…I’m going to follow those repair procedures,” Reichen said. He noted an empty chair is now always placed on the stage at CIC to remind attendees of an important industry constituent not generally represented at the meetings: the consumer. That began after a Texas couple won a $42 million judgment against a dealership auto body shop after a jury found the shop’s failure to follow OEM repair procedures contributed to the couple’s severe injuries in that vehicle in a subseSee Often Disagree, Page 43
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