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An Unregulated Industry and 10s All Around

On Time, Clean & Tidy, Polite Staff – A Happy Owner

Below Average Severity (Cost) – A Happy Bill Payer

Efficient Repairs and a Good Profit Margin – A Happy Shop Owner

Is the Car Safe and Next Accident Ready?

We Don’t Actually Measure That

There are a lot of cars being repaired and the insurance side of the industry must have a standardized way of measuring the performance of the repairers. These standardized measurements are commonly referred as Key Performance Indicators (KPIs.) In the insurer/ repairer world, the relationship is based almost completely on these numbers with the most important being severity (another word for cost), cycle time (how quickly was it done) and customer satisfaction.

Cost is easy to measure and the lower the better, the time it takes to repair the vehicle is also easy to measure with the quicker the better. But how is quality measured?

Quality of Repair scores are based very much on the vehicle owner’s response. The problem is that the vehicle owner is not qualified to answer questions about safe and correct repairs. They only see the clean shiny painted result and have no way of knowing how the structural repairs, which are not easily visible in the completed vehicle, were done. They may, or may not, notice an issue if the electronic safety and driver assist systems of the car are not properly verified and calibrated.

If there is no licensing of technicians and no physical inspection of the repair, then it is left entirely to the integrity of the repair facility to do the complete correct repair.  There is effectively no one checking. 

Billing for a correct repair will be accepted and paid but so will billing for an incorrect repair and the correct repair will not improve the rating that the repairer receives from the insurance company.  In fact, the correct repair will increase both severity and cycle time, with resulting lower scores.

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The Move to Safe Repairs – Still No Leader

In 2016 there was a 5 year time frame suggested for the changes the industry needed to make to be repairing cars properly. If these changes were not made there could very well be a real crisis in the industry.

In 2021 these changes have not been made, but the crisis has not yet arrived. This does not mean that the 2016 prediction was wrong just that it was off by a year or two. So far, we are still getting away with clean and shiny cars after a repair.

The consumer continues to be busy with all the other concerns in his or her life (in most cases of more immediate urgency) and as a result there has been minimal engagement on the part of the car owning public. In this vacuum the major players in the repair industry are continuing to compete and protect their own positions; they have not yet reached a significant level of collaboration.

It is starting to look like it will be the vehicle manufacturers who will take the lead in educating the vehicle owner about safe repairs and in this they are faced with at least three significant challenges.

The obvious one is working with insurance companies to come to an understanding of safe repairs.

The next is working with their contracted independent dealers to send a unified message. This is not as simple as telling them what is needed. The culture of car dealerships is as older than that of the repair industry and it will take more than a memo to achieve real changes.

The third challenge is also a tough one. Too many of their requirements appear to be driven by their marketing and legal departments rather than safety motivated. They are not providing a functional service if they present economically unrealistic procedures into their repair procedures and then wash their hands of any further responsibility.

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Pre-Estimate Research – Finding the Information

Aspart of the 50-year-old culture of the repair industry the people who write the reports that the technicians use to do their repairs are still called ‘Estimators’ The duties they perform include customer contact, parts ordering, insurance company liaison and scheduling of work. None of this has become easier with time. This worked well enough for many years, but the complexity of modern cars requires specific vehicle research before the repair procedures can be written.

This research is not as simple as clicking a few tabs and printing a few pages. With all the other work the Estimator is expected to do it is unrealistic to give them access to a huge amount of new information and expect them to understand it and know where to find the specific information they need.  

At Tsawwassen Collision we recognized this as a reality over two years ago and created a new role of Pre-Estimate Vehicle Researcher.

This researcher is not distracted by having to order parts, verify prices or maintain contact with the customer, the technicians on the floor and the insurance company. He is able to work in a back office with minimal distractions to determine the relevant features of that vehicle, the structural materials used, and the specific repair instructions provided by the manufacturer. This information is (mostly) all out there but in a form that requires knowledge and experience to interpret. We have found that it can take up to two hours to properly research even a moderate hit on a late model car.

We have developed an in-house system to compile the relevant information in a way that is allows the estimator to write the proper repair report.

The How and What post and the 2016 Honda Civic post provide more background on why this separation of duties is needed to achieve a correct safe repair.

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Why is there still no Regulation in the Collision Repair Industry

The collision repair industry has to date largely avoided attracting the attention of regulators. The main reason why this lack of regulation exists is the public has not needed the protection. Competition kept the prices down and for 50 years cars evolved in a manageable way. This manageable evolution meant that skills and work habits from one year could still be used the next, with minor tweaks and updated versions of equipment.  Problems were created, but these were more anecdotal than systemic.

Poor repairs did compromise the car, but two significant factors kept these compromised cars from being very real problems.

The first was the structure of the car. A car made primarily from mild steel did not change too much in strength and safety after that metal was repaired with heat or pulling.  Today’s cars, made of far more sophisticated materials demand specific and accurate repair or replacement methods, otherwise their strength and safety are very much affected.

The second was that the control system of the car was 98% the driver and the driver was not affected by the repair. 

The changes that have occurred in mass market vehicle technology should be enough for regulatory oversight.  But for many valid reasons, across many industries, regulation does not happen until after the lack of regulation starts to cause problems. It then takes years to catch up and become effective.

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Not Accepted through to Accepted and then to Expected

As vehicles get more and more complex there are a growing number of situations   that are not covered by the rules or standards used by repairers and insurance companies. The first reaction to one of these new situations is that it is a Not Accepted procedure and will not be paid.

But the procedure is needed so what happens?

An intelligent, researched explanation on why a procedure is needed, backed by a reputation for integrity and honesty will, with some repetition, move the procedure from Not Accepted toward Accepted.  With each Acceptance, less explanation is needed and at some point, the procedure becomes Expected, and no explanation is needed.

The work to move a procedure from Not Accepted to Accepted is time consuming and relatively thankless and is done by progressive operators who have an interest in keeping the safety standards of industry moving forward to keep up with vehicle changes.  There is no financial gain to that operator during the move toward Accepted.

As time goes on the direction taken is seen by the broader industry as the correct one. With this understanding there is a general movement toward the better and more rigorous procedures, and they become Expected. There is some return here for the progressive operators, as the lessons learned in the early stages allow them to work efficiently with these procedures, which for them are not new.

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Money and Operators Behavior

The collision repair industry for many years had a reputation of having more than its share of scruffy, low skilled and unscrupulous operators. The bad ones looked the part, and the consumer stood some chance of avoiding these based on appearance. Now there is a different owner of potential concern. These new players in the industry do not give themselves away by outward scruffiness, but they may be just as dangerous.

At the same time that the industry is grappling with unprecedented technological change there is another significant change with a tremendous amount of outside money coming into the industry. The collision repair industry is now seen by private equity firms as an opportunity, made more attractive by the lack of regulation. To these new operators the better repair is the one that generates the most profit. In many cases this may be the safer repair, but if this safe repair is not mandatory and does not generate more profit then it will not be the first objective.

A recent trend of very large multi shop operators is contractual agreements with insurance companies (more in America than Canada to this point) that reward performance through rebates for good performance or penalties for poor performance, with good being lower costs for the insurance company and poor being higher costs.  It is seldom that a good repair will result in a lower cost than a ‘good enough’ repair. In an unregulated industry good enough is a very vague standard.

The front end of the operation will look bright and clean, the advertising and corporate image will be good, but if no one is seriously verifying the integrity and correctness of the repair then ‘good enough’ becomes the core of the business model.

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The How and What of Repair

Many people in the repair industry still believe that the repair tech knows both the How and What of a repair. This belief should have ended around 2010, but discouragingly it is still prevalent in the industry in 2020.

In facilities that still hold to this outdated model the technician is assigned a repair and given only the estimate as information. In most cases that information was only whether to repair or replace a part and the time that was allotted to the task. Based on prior experience he would be expected to know what to do. If he had repaired a bent frame rail many times in the past, then the bent frame rail he was dealing with now could be repaired using that knowledge. Until around 2010, with most cars using the same frame material and manufacturing techniques this prior knowledge was usually sufficient.

Now, a vehicle structure can be made of many different types of steel and other materials, each of which have a specific design purpose and specific techniques for repair or replacement. All of this metal looks very similar and if the tech is not given full information about the materials used in the damaged area, he will not be able to repair the car to Next Accident Ready condition.

This is no criticism of a conscientious and qualified repair technician. There is a tremendous amount of skill and knowledge in How to do a repair but What to do can only come from information provided by others. The Pre-Estimate Vehicle researcher can verify the material used and the Estimator can use that information as part of his repair report. It is this repair report that the technician uses as the What information needed for the correct repair.

An analogy is the relationship between the surgeon and the support team he works with. The highly trained surgeon cannot do much with a sedated patient on the operating table if he is not given specific information.  He has the highly skilled How, but he needs the What information from the support team to properly use apply that highly skilled How.

The following post, with photos of a cutaway 2016 Honda Civic model, provides an example of how the How and What come together for successful repair.

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OEM Requirements – Are they Realistic?

There has been tension for several years between vehicle manufacturers and insurers (and repairers) about the repair requirements set the manufacturers. In most cases the manufacturers are correct in specifying certain procedures. But there are some that are hard to accept, with parts use being one of the most contentious. 

Most manufacturers have a policy of All New OEM Parts on All Repairs. Meanwhile the repair side of the industry and the paying end users, whether insurance companies or vehicle owners continue to use many used parts.

A hood with a small dent at the front edge is often removed to facilitate the repair and paint process as it is more efficient than dealing with the entire vehicle through the repair process. If that repainted hood is re-installed (paying attention to the possibility of one time use parts such as washer nozzles or mounting bolts) the entire repair process has been done in an OEM approved manner. A hood has been removed, inspected, repaired, repainted and installed.

If the damage is something that cannot be repaired the correct OEM repair would be to buy a new hood for perhaps $900. However, if a used OEM hood from the same year vehicle were available this could be bought for $450 or 500. The work required to ready either the new or used part for installation would be very similar, with perhaps an additional 15 minutes to clean the used part.

As a business owner with 30 years’ experience, I would not be able to offer my customer any good reason why they should pay $400 or $500 more for the new hood. Both hoods were made to the same specification and originally sold by the same company. If I was to say that the manufacturer insists on new parts the next question would be why and my only answer would be ‘because they said so.’

If the replaced part is a welded panel, I have no difficulty using a new OEM part and defending the use of that part with a valid technical explanation of why it is needed.

There are many, with an upper-case M, cases where OEM procedures are truly critical in the safe repair of a vehicle and OEMs are right in keeping the pressure on to insist that these procedures be followed. Unfortunately, by mixing non-essential requirements, such as all new OEM parts all the time, with the truly important ones they are weakening the credibility of those truly important requirements.

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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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The Present and the Future

By 2016 it was becoming clear to progressive repairers that cars were changing rapidly, and correct repairs would require good current equipment, well trained staff and disciplined adherence to correct, vehicle specific repair procedures.

These progressive repairers were making significant investments in equipment and training in order to be able repair vehicles properly then and in the future. This made business life more complicated and less short term profitable, with the expectation that there would be long term survival and profit.

Many others have followed this model, but a significant majority of the repair industry just kept ‘repairing’ cars with few changes from 5 or 10 years before. The cars were going out the door, the insurance company was not being asked to pay for sophisticated repairs and nobody had to think outside of yesterday’s box.

Where is the Repair Industry Now?

In 2021 the progressive repairers are ready for a future of correct repairs. Many other operators are hoping it will not arrive.

Here are a few observations from Canada.

In Saskatchewan SGI wants cars to be repaired better and operators will have to show that they have the right equipment to do the repairs. In January of 2020 they were told they would have to have some key pieces of equipment by March 2021. And if they don’t, they will still be allowed to repair cars for SGI, they just won’t get paid as much.

ICBC in BC has a new collision repair program to encourage operators to become properly equipped and trained. One equipment supplier asked me how often we use our electronic measuring equipment (we have had it for over 12 years and use it many times each week) as he had customers asking him why they would need to buy that equipment just so it could gather dust in the corner. Or the other one telling him that he didn’t need a resistance spot welder (which is the only equipment that can be used to weld light weight high strength steel properly) because his technicians could weld anything they came across now with the equipment they had.

A young estimator was at a job interview in 2019 and asked the operator how they accessed the correct repair procedure was told ‘We don’t do any of that. Cars are easy to fix, and we know how.’

In America, Jeff Peevey, a knowledgeable industry participant talked about being underwater at a presentation in early 2020. His point was that what had been described as a tsunami of change a few years ago was in fact not a tsunami, it was a sea level change, and most repairers are still on the old beach, underwater.