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Why Collision Repair Shops, Insurers Often Disagree on Repair Plans

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

Shop Showcase right. But it creates a concern for us.” with Ed Attanasio 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 veSocial Media for Shops hicle, so from a repairer’s position, if the manufacturer says we need to with Ed Attanasio 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 SEMA Show Goes On industry constituent not generally represented at the meetings: the with Ed Attanasio 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 Media and Publicity for Shops to follow OEM repair procedures contributed to the couple’s severe with Ed Attanasio injuries in that vehicle in a subseShop 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

Oregon shop owner Ron Reichen said onesize-fits-all solutions don’t work because the time to scan and analyze trouble codes on two different brands of vehicles can vary widely See Often Disagree, Page 37

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