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Collision Repair Industry Trend Data Shows Need for Changes to Insurer DRP Metrics
Collision repairers have for some time been saying changes they are seeing within their business point to a need for insurers to adjust their key performance indicators (KPIs) metrics for direct repair claims.
Recent industry data from CCC Intelligent Solutions support the trends shops are reporting.
Average repair costs, for example, rose 8% in 2021, about one percentage point higher than U.S. inflation overall; the average part cost across all part types—OEM and aftermarket—was also up 8% last year, the “largest annual increase we have seen” since CCC began reporting that data in 1997, according to CCC’s Susanna Gotsch.
“Moving forward, most analysts expect that we’ve seen most of the increase in parts costs that we are going to see,” Gotsch said. “We’re not likely to see part prices reverse substantially, but the largest increases that we experienced in 2021 are not likely to be repeated in 2022. Where most analysists are predicting [the industry] will see the most pressure in 2022 will be on wages.”
Average total labor hours per repairable non-comprehensive claim grew slowly from 2011 (23 hours per claim) through 2019 (23.9 hours), but then jumped to 24.7 hours in 2020, and to 25.8 hours last year. Gotsch said the pre-pandemic growth was related to vehicle complexity, but the larger increase in the last two years is based in part on the increase in the percentage of non-drivable claims.
Compared to 2019, there was more than a full percentage point jump in DRP claims with repair costs above $10,000 in 2021, and a 2.5 percentage point jump in claims between $5,000 and $10,000. That results in longer cycle times, Gotsch said.
“For each $1,000 increment, we essentially see an additional two full days in the overall repair time, or keys to keys time,” she said. “Industry wide, DRP repairs are now taking over 12 days, two full days above where they were in 2020, and a little less than two full days longer than they were in 2019. By the time we get to a $10,000 or higher repair, the average repair time exceeds 35 days. “Subsequently, we hear more carriers saying their customers are running out of allocated rental days, and many carriers have said they are looking at…their policies to determine if those [limits] should be adjusted.”
Another data point of note from CCC’s recently-released annual Crash Course Report: The national average body rate in 2021 ($52.86) was up just 1% from the prior year, the smallest percentage increase since 2011, in a year when overall inflation in the country was 4.7%.
CCC reports overall claim counts were up nearly 10% in 2021 compared to the prior year, but still down more than 13% from 2019.
“Month-by-month comparisons, however, show volumes have been steadily rebuilding,” CCC said in the report. For example, overall claim counts in January 2021 were down 19% versus January 2019, but by December 2021, overall claim counts were down just 5.9% compared to December 2019.
One statistic in the CCC report will be of little surprise to shops: The percentage of claims with supplements continues to increase. Back in 2001, more than 50% of DRP claims did not have a supplement, according to CCC. Today, it’s just over 30%. The percentage involving two, three or four supplements has nearly tripled over that time span to more than 30%.
“In addition, the share of the overall repair cost added during
Shop Showcase supplements has also grown, where over 35% of the overall repair cost is with Ed Attanasio added during supplements for those claims with four or more supplements,” the report said. Another interesting statistic for DRP shops concerned about the Social Media for Shops metrics insurers are using to measure their performance: The decline with Ed Attanasio in labor hours per day that has been occurring since 2017 only accelerated in 2021. Direct repair shops were producing about 2.5 labor hours per repair day on drivable vehicles in the SEMA Show Goes On second half of 2021, down from just over three hours during the same pewith Ed Attanasio riod in 2020, and down from more than 3.5 hours in 2016 and 2017. For non-drivable cars, shops were producing about two labor Media and Publicity for Shops hours per day during the second half of 2021, down from above 2.5 in with Ed Attanasio 2018 and 2019, and about three in 2017. Shop Strategies with Stacey Phillips Body Shops Giving Back with Stacey Phillips Tips for Busy Body Shops with Stacey Phillips My SEMA with Stacey Phillips Shop Strategies with Victoria Antonelli
With more larger repair jobs during the pandemic, cycle time across the industry has risen
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CCC cites such factors as the technician shortage and the increased number of non-drivable repairs as the likely cause of the change. But a number of shops said they would point to other causes.
“For us, it’s absolutely the parts shortage,” one shop owner said. “It’s got us stopping and starting on jobs going to continue because of the ever-increasing vehicle complexity.
CCC data shows labor hours produced per day for DRP claims has been declining since 2017
like never before, and spending way too much time shuffling cars around in the shop and back lot.”
Two other collision repairers said they think the decline is only Still another had what he acknowledged was just a theory.
“A lot of CCC’s data reflects only DRP claims,” he said. “Many of the top independent shops have cut way back or eliminated DRP agreements in recent years, like we have. Not to knock the big MSOs, but even some people I know who work at them say they’re not as productive as shops with an owner on-site. They can help contain costs, but it’s not usually through better productivity. I think the CCC data reflects more DRP claims going through those MSOs.”
MSOs with 25 or more shop locations last year accounted for 43% of uploaded DRP appraisals, according to CCC, a percentage that has grown nearly four-fold since 2008.
Whatever the cause, even CCC acknowledged labor hours produced per day isn’t likely to rebound soon.
“With many repairers seeing repair volumes grow while still unable to find the technicians needed, we expect we will continue to see labor hours per repair day remain below where it was pre-pandemic,” Gotsch said.
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The distribution of repair cost dollars has changed little over the last 20+ years, the timeframe in which CCC tracked this information. In 2021, the increase in both the share of overall dollars spent on replacement parts and sublet/miscellaneous operations continued. The average price paid per replacement part had historically experienced only moderate increases at an aggregate level. However, supply chain issues in 2021 drove prices up sharply.
At the close of 2021, the industry’s share of replacement part dollars was split at 64.4% OEM versus 35.6% non-OEM. Between 2001 and 2021, the average number of replacement parts per non-comprehensive appraisals increased from 5.1 parts to 9.1 parts for driveable vehicles; from 18 parts to 22.3 parts for non-driveable vehicles; and from 8.0 parts to 12.1 parts for the combined driveable and non-driveable claims.
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