The Collision Industry Conference (CIC) Industry Relations Committee held a panel discussion this summer centered around a fundamental question: Why is there so often a disconnect between auto body shops and insurance companies during the repair planning stage, particularly when it comes to procedures related to advanced driver assistance systems (ADAS)?
Michael Giarrizzo, CEO of DCR Systems, which operates eight collision repair shops under partnerships with dealers in four Eastern states, sees training as the key issue leading to the frequent lack of alignment 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 increase, but insurance claims personnel often aren’t getting that ongoing technical training. He equated it to a medical insurer questioning a surgeon.
“Someone handling a medical claim may not have that same level of education [as the doctor], but they have trust in that education,” Giarrizzo said. “Whether you’re up to speed with it all or not, there’s got to be a trust level in whoever has gone out and invested in the education.”
Ron Reichen of Precision Body & Paint in Oregon agreed keeping up with vehicle technology is “a challenge for us, and we’re constantly training.” He said collision repairers “trying to get alignment [with insurers], often find ourselves being the educators for the bill-payer.” The shift to virtual claims settlement doesn’t help, he said, because it adds to the challenge of showing or explaining what a vehicle requires.
He said he also sees a “one size fits all” approach that isn’t helpful. The time needed to scan a vehicle and analyze the information and incorporate that into a repair plan might take 45 minutes on one make of vehicle and two hours on another, even on similar hits, Reichen said.
Another panelist, consultant and former insurance executive Roger Wright of Vector Squared, concurred claims personnel often lag in their technical knowledge as vehicle technology evolves.
“In the 1970s, I started out [in the insurance industry] and I went to Vale Tech and became a ‘three-week wonder,’ and realized shortly thereafter I knew nothing,” Wright said. “The collision repair shops trained me for the next 20 years. I went in as an insurance representative or independent appraiser and would listen to what they had to say and learn. I guess we’ve lost that, maybe.”
That said, Wright said he can understand insurance company resistance to what could be seen as blanket position statements or procedures from automakers. Wright said it was 2016 when he first saw an automaker statement calling for all of its vehicles to be scanned after a collision.
“It didn’t designate a year or anything, just that all vehicles are to be scanned,” Wright said. “If we asked everybody in the audience then, how many of those cars that you repaired last week did you scan, it may have been maybe three or four or five or one. Was it necessary to recall all those other cars because we didn’t do it right or safe?
"No, the shop believed they fixed the car properly, to OEM standards, and all of a sudden we have a bulletin that says we have to scan everything. That causes an insurer some consternation. How can that 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 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 subsequent accident.
“As repairers, that looms over us every day,” Reichen said, saying that’s why a shop can’t decide a called-for procedure doesn’t have to be done. “Common sense might say it doesn’t. But we also have to come back and weigh that liability exposure if we don’t do it."
Giarrizzo was among those during the discussion to suggest insurers should voice their concerns about OEM repair procedures to the automakers, not shops.
“I could agree that some of the manufacturers’ guidelines or procedures seem like they are there to cover [the OEM’s] liability, but that’s a discussion between the manufacturer who builds the car and the folks that insure the car,” Giarrizzo said. “As a repairer, you have no choice but to follow those guidelines, period. If those guidelines need to be changed or have some flexibility, that’s a discussion for a room in Detroit or wherever that car is built.”
Wright didn’t disagree.
“We [as insurers] need to trust the shop because they’re the expert. They’re the one repairing the car. They’re the one guaranteeing the repair,” Wright said. “I think the insurers need to work with the OEMs a little more in understanding the engineering behind [the procedures]. Is there really engineering that says we have to replace the rack and pinion on every single car in an accident, even when they don’t define ‘accident’?”
Wright noted insurers worked with GM when the Corvette C6 came out.
“We wanted bolt-on panels. We wanted sectional front and rear rails,” he said. “They wanted a low insurance rate [for the vehicle] so they put those things on that car. We worked together.
"We need to work on getting the insurers and the OEMs in a room together to talk about the engineering rational for doing some of the things they [call for] so we can protect the collision repair shop. They have to fix the car right.”
John Yoswick