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Qualification and Certification

Until around early 2019 the collision repair industry did not have a very clear vision of Certification and worked on the assumption that Certified meant Qualified and that Uncertified meant Unqualified.

The two quite different things of Qualification and Certification had been mixed into the same category.

Qualification is based on the capabilities of a repair facility, its equipment and people. A qualified facility has the right current equipment, the right current training and the right systems in place.   Qualification in itself does not have to be conferred by an outside party.  An outside party however is needed, because, to protect consumers,  there does need to be verification of that qualification.

Qualification should be verified by a ‘disinterested party’. Disinterested does not mean uninterested or uncaring. It means that the party has no stake in the outcome. The outcome will be fair, but the granting authority has no financial or competitive stake in the granting, or not, of the qualification.

A good example can be found in electrical services.  A very important difference between electrical work and collision repair is that all commercial electrical work requires technician licensing. A company cannot present themselves as Electrical Contractors without having government licensed electricians on staff. The designation or license for the contractor is provided by a ‘disinterested’ government agency. There is not a lot of confusion among  consumers about the legitimacy of the contractors work as he has been licensed by the only authority allowed to provide that license.

Private companies can then choose to certify any of these licensed electrical contractors to work with their products.  Staying with electrical as an example Eaton has an Eaton Certified Contractor Network.  Eaton has not issued licenses that are an alternative to mandatory government licensing but has selected companies and individuals from within the existing licensed pool. This inclusion in the network will likely imply that these electricians may be more efficient with Eaton products, or it may be more of a marketing or administrative function.  The electrician with Eaton certification may have technical, or marketing, or administrative advantages, but there is nothing in that certification that diminishes or takes away from the electrician who has chosen not to join the Eaton network.

In Canada, this is where the CCIAP (Canadian Collision Industry Accreditation Program) could serve the same purpose as government licensing.  The program is administered by the AIA, but the AIA does not profit by more or fewer shops, it has no stake in where those shops are, and it has no business affiliation with qualified shops.  A consumer will know that a CCIAP facility is operating within industry standards, with current equipment, well trained staff and a proper business structure.

Certification by OEMs or insurance companies is a different thing entirely; the basis for certification by an OEM has a tremendous amount of marketing included and there are a range of financial interests in that certification.

Vehicle owners are bombarded with information about the virtues of the OEM Certified or insurer approved facility but are not told what criteria were used for including a facility in the program or leaving it out.  For example a facility cannot be certified by Toyota without a sponsorship from the dealer in their market area. If that dealer has its own repair faculty it will not sponsor an outside facility, even if that facility is better qualified.

If insurers and OEM certification programs selected only from the qualified pool of shops in the CCIAP system the consumer would know that these choices have reached a high base level and will be able to do the right repairs. But they will also know that the CCIAP shop without outside OEM or insurer certification will also be able to provide fully capable and professional repair.

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Losing Ground and Dornbusch’s Law

The first posts to RFINA were made in 2015, focusing on the level of technological change we would see in vehicles in the next 5 years and what the industry may have to do to prepare for these changes. The suggestion at that time was that the greatest obstacle to making these changes was the industry culture that had been built up in the previous 50 years of not very much change.

Now, five years later, after a few days of webinars and videos at SEMA360 it appears that not only has the collective industry not made the changes needed but has lost ground. The industry made some moves in the right direction, but technology moved much faster and the manufacturers have been unable to bring repairers and insurers along. We are farther behind than we were 5 years ago.                                 

  • In 2021 mainstream vehicles will have electronics, for example hands off highway driving capabilities, well beyond anything we have seen before in these vehicles. Meanwhile, insurers and repairers are still talking about Pre and Post Scans and are they really needed.
  • The types of materials used and the number of different materials in a single vehicle continues to grow steadily. Meanwhile, repairers are upset at having to buy something as basic as a spot welder because ‘it will just sit in the corner.’
  • Manufacturers are showing significant lists of components that need to be checked after an accident and then standing back as repairers and insurers either argue about these checklists or simply ignore them.
  • I-CAR redesigned their courses along with slightly more rigorous requirements for their Gold and Platinum levels while providing a two-year lead time to adjust to these requirements. Repairers responded by ignoring the changes for most of the two years and then complaining that it was too expensive and too hard to get their techs to take these courses. Certification organizations responded by diluting their training standards.

Economists recognize that there is a lot more to finance than just numbers and many of their principles apply to a very broad range of circumstances and behaviour.   

Rudi Dornbusch was an economist who worked at several prestigious American universities from the 70s to the early 2000s. Students of international macroeconomics are fond of quoting “Dornbusch’s Law.” 

“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

He could have been talking about the 2020 collision repair industry when he wrote this.

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Current Estimating Systems – Following the Money

I have not written for over a year but I had been thinking about getting back at it for many months. The very serious COVID-19 pandemic and shutdown has affected everyone, but we are starting to see attention being paid to the business of repairing cars.

This morning in RDN, John Huetter has an article about SCRS and Audatex feather, prime and block that then went on to discuss other issues with Audatex.

I had drafted most of the following last week for an internal discussion, but when I saw John’s article I realized that it was topical and relevant

Money has a lot to do with almost everything.

An account rep for an estimating platform will sell very few (maybe zero) programs to repair facilities based on the virtues of his program. He will sell many copies of that program if it has been accepted and mandated by an insurance company. In fact he will, with very little effort, be able to sell a mediocre program to a repair facility if he has first convinced an insurance company to use that program.

The money is between the insurance company and the estimating platform company and it would be naïve to think that as the seller in the relationship the estimating company does not pay close attention to what the insurance company wants.

There is an example from motorcycle training that the total traction demand on a front tire cannot exceed 100%. If 80% is being used for braking only 20% is left for cornering; if 100% is needed for braking there had best not be a corner in the equation. Following this analogy if the estimating company puts 80% of its energy into making a sale to the insurance company they have only 20% left for the repair facilities. As the sale to the insurance company will guarantee the sale to the repair facility 80% may be a low number. With the sale to the insurance company the amount of effort left for the repair facility is acceptable as that operator will have little choice about buying the program.

The repair side has to know that the program has been influenced by a group that would rather pay less than more. This means that the program will pay for the minimum required to get an acceptable repair. In many jurisdictions outside regulation is minimal so the rules of repair are effectively set by the buyer of that repair.

What does this mean for where we are now and the theme of this site, which is correct repairs? Proper repairs can be done, and they will be paid for, but the repairer who wants to do these proper repairs and get paid for them will have to present facts in a very clear and honest way. This takes time and for most of the industry it will be easier and more profitable to follow the procedures as presented, do what they are asked to do and get on with the next repair.

Movement will not come from the overall mass of the industry insisting on a better result, but from some number of progressive operators who have the knowledge and are willing to put in the effort to expand the circle of what is needed.  These operators will not be thanked for most of their work, but they will move procedures first to the accepted category and then to the expected. At that point they may see a monetary return, as they will be ready to do the expected, with proper equipment, staff and company culture while others are scrambling to catch up.

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How Do We Get To Correct Repairs?

We need to get there, within 18 months correct repairs will not be optional and inadequate repairs will be very hard to hide. It will still be possible to hide incorrect structural repairs, but it is the ADAS systems that will force everything into the open. The owner cannot see the frame rail that should have been replaced or the improperly welded door post. But they will very quickly notice that the camera is giving wrong information or the lane departure is not working as it should. $25,000 cars have had these systems for two years now and by next year a lot of people will be driving them.

What is keeping the collective collision repair industry from getting there?

Repairers would have us think that if it was left up to them all cars would be fixed properly and safely, and everyone would be happy. The picture painted is that they cannot fix cars properly because insurance companies are interested in nothing other than profits and are preventing good, honest and contentious repairers from doing the right work.

The insurer’s message is, not surprisingly, different. In our jurisdiction of British Columbia ICBC has added at least 50 estimators province wide. In a June 18thBC Government press release the reason alluded to for this increase in staff was not to make sure that cars are repaired properly and safety, but to make sure that over-billing concerns were addressed.

In March of this year Aviva in Ontario set up a sting operation to catch fraudulent repairs and this was covered by W5 on CTV

From the repairer side the messaging is that the insurance companies are getting in the way. From the insurer side the message is that they are protecting themselves and their customers from dishonest repairers.  Neither of these positons are coming from a place of trust and collaboration.

If the insurance industry does more messaging about fraud and overbilling prevention than it does into quality control it is sending a negative, but planned, message to its customers. If the industry side continues to harp about the insurance companies preventing them from doing good work the message they are sending to their clients is that the insurance companies are who they need to be protected from. The vehicle owner will tune out both sides and make decisions on who knows what criteria.

Why is This Happening?

A very real problem that insurers face is that the repair industry is not a monolithic body made up of only one type of operator. The repair industry participants run the gamut from fully equipped, well trained and ethical to a small number who are outright dishonest. Between these two there is a range that includes both ‘sincere but not there yet’ as well as the ‘what worked last year will work today’ crowd. In this middle there are thousands of repair facilities operating with inadequate equipment and incomplete training plans for their technicians.

There has been a resistance from the industry to certification and tiering of shop capabilities. This resistance does not come from those operators who have chosen to invest and stay current. I saw a comment posted after a recent conference that ‘mom and pop’ shops need to be protected from insurance companies and backroom deals by the banner companies. The contracts between the banner companies and insurers probably should be exposed to the light of day more than they are but ‘mom and pop’ shops also have to face the reality that today’s cars cannot be repaired in under equipped facilities with untrained staff.  We once were, but we are no longer a ‘mom and pop’ industry

The banner operators are not as on side with correct repair procedures as they would like us to believe. At another conference a few weeks ago there were two comments from the banner operators that spoke to the truth. On the one hand they talked loudly about the importance of safety and training, but when asked about equipment they admitted that they license shops to carry their banner but they do not buy equipment. This means that they are delivering a product without a brand standard; there are around 600 Canadian shops flying the banners with a far broader range of capabilities and standards than the head offices would like to admit. They will get to the right standard quicker than 600 completely unaffiliated shops, but they are not there yet.

While the insurance companies do take advantage of their market control they also have a significant issue in that they have no way of knowing who they are dealing with. An unregulated industry cannot be counted on to deliver anything close to standardized predictable work. With minimal or nonexistent outside penalties for poor work the insurance companies have little choice other than to make their own rules. This can easily look like the fox guarding the chicken coop.

Looking at the above paragraphs it appears that I am putting the problem on the repair side of the industry more than the insurance side. In fact it is the solution that is being presented to the repair side. Collectively they have a lot of control and can affect real change in the overall industry.

One Solution

The concept of a self-regulated industry has been gaining traction in the last year. Self-regulation means just that; it is not certification by manufacturers or insurers but by the industry itself. Many models are available as templates or guides.

For the collision repair industry CCIAP (Canadian Collision Industry Accreditation Program) managed by the AIA nationally and the ARA in BC can serve as the nucleus for this self-regulation.

However for this self-regulation to work there needs to be some initial momentum and here is where the insurance companies can cooperate; with repairers and each other. If they all insist that as a base level all facilities repairing their cars have to have CCIAP certification they have moved together and one of them has not put themselves at a monetary disadvantage by moving ahead of peers and competitors.

Manitoba can be looked at as an example. MPI controls most of insurance in that province and has let the repair industry know that I-CAR Gold status is required to work for MPI. Of the roughly 450 Gold Class shops in Canada about 240 are in Manitoba. CCIAP is similar in spirit and objective to I-CAR Gold Class. If there were a requirement for CCIAP accreditation to do business with an insurance company many facilities would take the steps.

This help from the insurance companies works very well for them in the long run as well. They, along with the manufacturers, will continue to have a say in repair procedures and the discussions becomes a far more efficient, collaborative and open process with communications managed through a central body.

This boost from the insurance companies will allow the development of the needed critical mass. The hard work for the repairers will be to make sure that is truly industry self-regulation, run by repairers with the insurance companies kept at a distance (foxes and chicken coops again.)

Another huge advantage of an industry program is that regulation of the complex repairs we are doing is inevitable, with government safety agencies soon enough seeing the need for enforceable standards. If they see strong voluntary progress on the part of the industry, they will be far more likely to add credibility to that effort than to expend the energy and money to build their own regulatory system. The models for this relationship are also out there now.

 

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Non Payment for Electronic Diagnosis – Industry Culture Overrides Logic

One of the first steps in understanding the damage caused by an accident (and a mandatory step in determining the repair needed) is the pre-repair electronic scan of the vehicle’s systems and modules.

Many insurance companies take the position that they will pay for this step if any damage codes are found, but will not pay if there are no codes that can be attributed to the accident.

When I describe this stance on payment to anyone outside of the collision repair industry they are amazed and find it very hard to understand the logic. If you go to the doctor with a health complaint; the doctor sends you for a blood test or other diagnostic and the tests come back negative. That is probably good news but you wouldn’t expect to not be charged for the test. So why would it make sense to anybody to not pay for a diagnostic test on a car because the test results show no damage.

The answer lies in the culture of the repair industry, which has been built up over 50 years and still serves many participants well. That culture is that payment is made only for actual physical repair; nothing else is paid for. This worked well enough when diagnosis involved little more than looking at the damage and making a few quick guesses on what was needed for the repair.

When electronic measuring became an accepted part of the repairer’s tool kit the time spent on this measurement was not paid for. However, if damage was found set up time could be charged, which would cover the time spent on diagnosis. This worked reasonably well because in most cases it was possible to see that some damage existed and measuring was needed to confirm what was very likely to be there.

It started to work less well as cars began to be built more accurately and needed equally accurate repairs. Visual inspection did not always reveal damage; the repairer was now at risk of spending time on diagnostics and not getting paid if he could not find damage.

This is the background and current reality; nothing gets paid for other than actual repair. Electronic issues are invisible and can be caused by a very wide range of incidents or events; there is no visual check to determine if it is needed or not. Not checking before the repair starts compromises the repair.  Despite what the sellers of equipment claim in their promotional material this diagnostic work cannot be left to the least experienced and lowest paid staff member. The equipment costs money, the software licensing costs money and the analysis of the results requires a high level of skill.

The insurance companies are not paying for it because they are clinging to a model that is outdated.  As long as they have power over the repair side, based on asymmetric size and market control they will not be in any hurry to change this model.

They will change when they have to but not before. The ‘have to change ‘will come when the problems caused by the old model become too expensive.  However, this ‘have to change’ recognition will not come when the change is needed, but sometime after it should have been implemented.  It will then be implemented with some urgency and hit a repair industry that is not well prepared (the repair side is stuck in the same old culture.)  By refusing to accept the need for change and allowing it to be introduced gradually we are setting up for another long, inefficient and expensive transition