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.
MSO Symposium Looks at What Lies Ahead for Auto Insurance Claims, Consolidation
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Vince Romans of The Romans more in annual sales control about Group consulting firm has been 43 percent of the total market. monitoring the growth of multi-shop Romans predicts that will rise to with Ed Attanasio operations (MSO) in the collision re- nearly 49 percent by 2025; he also pair industry for more than 15 years, shared a more aggressive forecast and at the “MSO Symposium” held showing their market share potenin Las Vegas in early November, he tially exceeding 61 percent by that said even the pandemic didn’t halt year, though he acknowledged “that consolidation within the industry. could or may not happen.” In fact, he said,with the recent growth Another mainstay speaker at the Ed Attanasio of MSOs has been “as aggressive MSO Symposium, Susanna Gotsch as almost any year that we’ve been of CCC Intelligent Solutions, oftracking this.” fered her annual look at where In 2020, Romans said, there were things stand in terms of auto insur26 MSOs (each with two or more lo- ance claims, and what may lie ahead as the nation continues to move with Ed Attanasio through the pandemic. Gotsch said that through the first three quarters of this year, overall claims counts are up about 9 percent – but still remain down a significant 15 percent compared to 2019. with Ed Attanasio The rebound varies widely by state. Non-comprehensive claims are up 13.4 percent through the third quarter of 2021 in Illinois, 15.2 percent in Ohio, 15.5 percent in Nebraska and 16.4 percent in Iowa – yet only 1.1 percent in North Dakota, 3.6 perSusanna Gotsch of CCC Intelligent Solutions cent in Minnesota, and 4 percent in Stacey Phillips said with 30 percent with to 40 percent of workers likely to continue working at home at least Colorado. one day a week, congestion – and resulting Gotsch noted a variety of changaccidents – during traditional commute times es in driving patterns have taken will not fully rebound next year place during the pandemic. Overall cations) that were acquired by other miles driven are up so far this year – chains; those acquired MSOs had a not surprisingly after the pandemic with Stacey Phillips total of 311 locations and $801 mil- shut-downs of 2020 – and in some lion in combined sales. This year is months are approaching 2019 levon pace to potentially match that, els. But recovery in urban road sysRomans said. Through the first 10 tems is substantially slower than in months of the year, 38 MSOs with rural road systems, and even inter254 locations and $698 million in state miles show substantially larger with Stacey Phillips growth in truck miles versus passencombined sales have been acquired. Romans said there are currently ger miles. 14 private equity firms with investMost critically, Gotsch said, is the ments in collision repair businesses. continued significant drop in traffic Of those he noted, not one was in- congestion during the morning and volved in the industry when the first afternoon traditional commute times MSO Symposium was Stacey held a decade that disproportionately contribute to with Phillips ago. Today, those MSOs have com- claims counts. Looking ahead, she bined annual sales of $9.1 billion, a said, a key factor will be the degree market share of about 26 percent of to which the 30 percent to 40 percent the entire collision repair market. of workers still working remotely Looking at the industry more return to offices. She foresees many broadly, all the collision repair busi- businesses offering more flexibility, nesses that each have $10 million or with employees across many indus-
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tries allowed to continue to work from home at least one day a week. On the other hand, she doesn’t foresee a sudden drop in the increased distracted driving and speeding that has taken root during the pandemic. “People do not unlearn bad driv-
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Vincent Romans of The Romans Group consulting firm said multi-shop operators (MSOs) have been “just as aggressive” about acquisitions during the pandemic as before
ing habits quickly,” Gotsch said. “They learn them quickly, but they do not unlearn them quickly.” Overall, she said, she thinks it’s likely that claim counts in 2022 will remain down from what they were in 2019. “But we expect we will continue to see steady growth, month over month, so by 2023, we will likely be more on par with where we were in 2019,” she said. She said overall cost of repairs has increased “way above anything I have seen historically.” One reason: the cost of parts. CCC data shows that the average cost per part – across all part types – has been fairly stable over the past couple of decades, typically rising 1 percent or 2 percent a year. That’s changed in 2021, however, with the average cost per part being around $130, up 7 percent so far this year, the largest
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