PRESIDENT’S MESSAGE
Locking the Fence to Keep Honest People Out As consumers, each of us must purchase vehicle insurance. It’s mandated by law. The law also establishes rules and regulations to monitor insurers’ actions, but insurers constantly step over that line in the sand; they’re always pushing the envelope to lower costs - and they often do it by limiting the reimbursement amount they pay to the body shops repairing our mutual customers’ vehicles. Insurers believe they’re entitled to a fair and reasonable wage for the work they do, yet they refuse to provide adequate compensation to those of us who break our backs every day to perform the actual repairs because they’ve turned the claims center into a profit center. (If you haven’t read Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It by Jay M. Feinman, I highly recommend it.) Still, many body shops expect insurers to play fair! Repairers want to think that the insurance appraiser is their friend - and sure, they may throw you a bone every now and then, but at the end of the day, how much meat is left on that bone? If you don’t have any problems with insurance companies, I’d hazard a guess that you’re giving stuff away; they aren’t going to push back on you when they’re winning. Trusting another industry to look out for ours is like installing a lock…It only keeps honest people out. It’s a dog eat dog world, and collision repairers need to recognize that we are the professionals in charge of restoring that customer’s vehicle to its pre-accident condition, and ultimately, we own that repair for the rest of that car’s life. If we all started to take control of our businesses by determining our cost of doing business and establishing prices based on those actual costs, our industry would make positive strides toward collecting a fair Labor Rate. We’ve seen it happen in other parts of the country where shops have gotten involved and stood up for what’s right, and now, they’re collecting $15 or $20 more per hour - unlike the lousy $1 raise we recently got from insurers in the tri-state market.
12 | New Jersey Automotive | May 2022
by JERRY MCNEE
Those shops established different rates for various operations because shops finally put their foot down. They realized they can’t afford to continue offering insurance companies the same deals at a low rate because they’re bleeding money. After evaluating their costs, they increased their rates and posted those new rates at the door. And that’s what they’re collecting. Our first step has to be recognizing what insurers do, and then we need to combat their unjust actions with facts and data. And an important fact is that a body shop is a business and should be run like a business. I recently talked to an investment guy, and he asked me about the profit margins in body shops. He guessed it to be 70-80 percent; he was appalled when I told him the best shops average 20 percent with the majority only profiting in the single digits. Listen, identify all your expenses and add them up - that’s your true cost of doing business monthly. There isn’t a single insurance company out there that doesn’t know their KPIs, but unfortunately, most shops can’t tell you what their KPI amount is…and if you can’t, how the hell are you going to run a business? Your bills need to be paid, and you need to know how much is needed to make sure that money is available. We can’t afford to assume or guess, and if you’re waiting for your accountant to tell you whether you made money at the end of the year, you’re making a grave mistake, the kind of mistake that will bury your business. Whose money is it, and who’s controlling it? From ADAS to EVs to photo estimating, the entire landscape of the industry is changing, and unless you’re paying attention to what’s really going on, you’re going to have problems. We’ve reached a pivotal point, and it’s time to decide how you’ll combat this dilemma. I can offer my opinions, but ultimately, it’s a decision you’ll have to make for yourself and your business. How far are you willing to go to stand up for what’s right? NJA
