In the first of two articles related to the claims process, J.R. looks at how the COVID-19 pandemic and market conditions are changing the claims process for collision centres.
There was a time, not too long ago, when collision repairs were largely controlled by insurers. From the initial claim itself to the estimate, repair process, costs, parts used and cycle time, much of it was dictated by what an insurer was willing to pay and provide for a particular vehicle to be fixed and returned to pre-crash condition.
Since then, we’ve seen several changes take place in the industry. Roughly a decade ago, the OEMs began to take a more active interest in the collision repair process, driven, not only by growing vehicle complexity and cost to repair but also by a desire to protect their brand equity.
Added costs and complexity
This challenged the status quo, adding requirements that increased the time, cost and complexity of repair. Specific repair procedures, equipment and training, pre and post-scanning and ADAS calibrations became part and parcel of the repair process. Those insurers that chose to ignore these aspects, or tried to cut costs, did so at their peril.
During the pandemic, many shops saw repair volumes decline significantly due to government lockdowns that kept people at home and off the roads, reducing the risk of collisions. As a result, it led to a reduction in staff counts for many shops, with staff being furloughed, let go, or for more senior members, an acceleration in retirements.
Now, with repair volumes increasing, many collision centres are facing capacity issues when it comes to repairs, meaning there is more work available than there is staff to process and execute it. For both collision centres and insurers this has changed the dynamic of the business.
More work for the shop
Today, in many cases you have a situation where the ratio between estimators and collision technicians is 1:1. We’ve seen door rates increase, but the fact is, a lot of that claims work is now being downloaded to the shop, such as photo-based estimating, parts sourcing, repair updates and communication between the shop and rental car provider.
This means there is more responsibility on the shop with more time and effort required to complete a successful repair. The trouble is, some insurers still see repair volume as the major currency in the marketplace when this is no longer the case.
Today, collision repairers in many cases have gained the upper hand in determining which jobs they take and which they don’t. We’re seeing more and more cases of tows being declined, along with initial estimates, due to already significant backlogs in repairs.
More selective
This situation provides an opportunity for repairers to be more selective in who they work with, allowing them to engage with insurers that are willing to pay them a premium to handle their claims and who aren’t downloading high volumes of administrative duties to the shop.
We’ve seen numerous examples where insurers have upped their repair rates considerably over the last couple of years because they recognize the need for the industry to overcome capacity issues and ensure their customers’ vehicles are fixed promptly and correctly.
And, with labour and parts shortages continuing to pose a problem for our sector and others, this isn’t a situation that’s likely to change any time soon.