Monthly archives of “November 2016

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Position Statements from Vehicle Manufacturers

‘Position Statements’ are the current hot topic in the collision repair world, particularly those that deal with electronic code scanning.

Position Statements are written by vehicle manufacturers to summarize and highlight certain aspects of their repair procedures. They are not being written and published to reveal new information; they are reiteration and reinforcement of information that is already in the company’s service and repair information manuals and bulletins. They serve a purpose by gathering information from not easily found locations, summarizing it and putting it forward in a clear format.

The main reason for position statements is not to educate the repair industry but to minimize arguments between progressive repairers and insurance adjusters.  The insurance industry has taken a recent stance that if a manufacturer has not written a position statement on a particular procedure then that procedure does not really need to be done and therefore does not need to be paid for.

A very causal example of a position statement would be

‘that thing on line 12 on page 47; we really mean it and you do have to do it for a complete repair.’

A less flippant example would be one of further explanation or interpretation of a procedure

‘we do mean what we said on line 12 page 47 and it must be applied in all cases where x has occurred. It is also recommended in cases of y and z’

Progressive repairers will in most cases want to follow the recommendations. Most insurers working under their current models will want to interpret ‘recommended’ as ‘unnecessary’ or ‘sometimes’ and will pay for it only on a case by case basis.

The result is an unpredictable application of approvals and procedures, once again resulting in a very wide range of repair quality and integrity.

There are several sites where these position statements have been aggregated and if anyone is interested a search for ‘OEM Position Statements’ will bring up pages of links.

It will be quickly apparent that a level of industry knowledge is needed to navigate, understand and interpret this information.

Once again I can close with my oft repeated theme; ‘we will get there but we are not there yet.’

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Rationalize all you want but… It’s Always About The Money.

To start with myself and the collision repair business I own, my decision has been to invest heavily now in equipment and training in order to be able to stay in the business and repair vehicles 5 years from now. This makes business life more complicated and less short term profitable, but it is about long term survival and profit. Many others have followed this model, but by no means the majority.

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Another group of collision shop owners, after taking an intelligent look at the technology that is coming at them have made the decision to make only maintenance investments and make as much money as they can for the 3 or 4 years remaining under the old model of the collision repair business.

A third group of repair industry people, much larger than it should be, barely has a clue that things have changed; they just keep ‘repairing’ cars like they did 5 years ago and 10 years ago.

Insurance companies market their products primarily on price. They will spend as little as they can on claims so that they can keep their rates as low as possible. The first one to raise rates in order to offer better claim service will lose short term business to competitors who have not raised rates. In legitimate defense of this business model, consumers buy on price and very few (none) of them read the policies they buy and in any case they don’t think about the claim side of the equation.

In further partial defense of the insurance industry the vehicle owner who is paying out of pocket for his own repair is very concerned about price. It is easier to sell him at $1,200 rather than $1,500 if the $1,200 repair looks the same on the surface.

Yesterday I wrote about the lack of regulation in the vehicle repair industry. In many jurisdictions there are no rules (although in many areas of America the hot potato of liability is tossed back and forth) and insurance companies will happily pay less rather than more for a repair. With this lack of regulation the repairer who chooses not to invest in equipment is in an excellent short term position. The cars are going out the door, the insurance company is not being asked to pay for sophisticated repairs, nobody has to think outside of yesterday’s box and the vehicle owner is once again now the wiser.

 

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Standards and Regulation for Vehicle Repairs? Not Much

These three photos probably do not need explanation to most people; an airplane under repair, an open 110V electrical box in a renovation and a late model car partially re-assembled after a collision.

The work depicted in each image requires a level of expertise to be completed safely. Most people would not be surprised to learn that the mechanic working on the plane is government certified and has to sign off on the work with his current certification number before the plane can go back into service. Most people also will not be surprised to know that while a homeowner can do his own electrical work without certification, if the work is being done under a municipal building or renovation permit it has to be completed and signed off by a registered electrician, again with a current certification.

These same people will be surprised to know that in many (most) jurisdictions nobody has to be certified and nobody has to sign off on the car repair. In our jurisdiction of British Columbia there are no government requirements that a person working in the collision repair industry be licensed or have any certification. This then means that there are no regulations or mandated standards on how the work is done. Which then means that standards could be determined or influenced by the repair person, the business owner, the vehicle manufacturer, the insurance company or perhaps the vehicle owner.  These participants are not all motivated by the same result.

In the past, with much less complex vehicles this Wild West environment did not cause more than the occasional anecdotal problem. In the future that is now upon us this unregulated environment exposes vehicle owners to real dangers.

This September 22 article, by John Huetter at Repairer Driven News, suggests that there is a realization of the requirements for regulation and standardization, although it is still in early stages.

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A Current Reality – Correct Repairs are Not Easy

The intent of this site is to inform owners about the current state of vehicle repairs, it is not to pick sides on who is getting it wrong. The insurance companies are working hard to get to the needed new model and until they see the path that they will be taking there will be a lot of incomplete and incorrect repairs.

The repairer side is equally in need of a new business model. They are currently being paid for incomplete repairs and the incentive for better work is limited. Complete Next Accident Ready repairs first require very good research and documentation, which in turn require skills that are not yet widely available to the industry. The physical repair then requires specialized current equipment and the skills to be able to use that equipment; the equipment and training are expensive and not trivial to incorporate into existing workplaces.

Here is an example; this one involving the recalibration of a forward facing camera after a windshield replacement.

  • First we have to know that is a needed step
  • Then we have to ask the insurance company to pay for it, because it is not yet automatically in the system.
  • The equipment to do this calibration is available to the aftermarket, but at a cost of close to $6,000 for the one brand only and we would need the training to use it. We may get to that point but we are not there today.
  • The recalibration can be done by the dealer at a cost of $135; we will get a discount of 15% on this so our margin is $20.25.
  • For this $20.25 we have already made several phone calls and now have to drive the car to the dealership and then go back to pick it up the next day.
  • The customer, who had been hoping for a one day turnaround now needs a service car and an explanation of why the car is not ready.

It is little wonder that not a lot of calibrations are being done, the car will not signal the owner in any way that the camera may be out of calibration and it is easier for most repair shops to simply not know about this needed step, either willingly or through true ignorance. Insurance companies will pay it out as a complete claim and not question why the calibration was not done. The repairer did not have to spend time on a procedure that had no profit and the insurer paid less than it would have. For now these two are happy with the outcome and the owner is none the wiser.

This will change, but it is the current reality.

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OEM Requirements for Vehicle Code Scanning – Tension between Industry Participants

This article from Repairer Driven News reviews a panel discussion last week at the SEMA conference and trade show. I was at the session myself and felt the tension that is hinted at in the article, between manufacturers and insurers with repairers and vehicle owners caught in the middle.

It was clear to me that the instructions for the panel members were that they were only to provide information and not discuss who is to pay for the required actions that flow from this information.  Manufacturers are saying that with modern cars these procedures are needed, but the insurance companies are resisting implementation.

Justin Miller of Nissan took a deep breath and went as far as he could to express his frustration based on his participation in a previous panel at the 2016 NACE conference “some of the insurance partners had mentioned … By saying ‘all,’ we weren’t kind of being clear enough.”

That quote captures the current situation; none of the insurance companies want to be the first to move because then they will be the first to need to increase rates.

This second article is taken from Claims Magazine May 1016 issue. In this article the writer who as an appraiser is one step closer to the insurance industry discusses the importance of scanning.

He is writing in an insurance industry magazine which suggests that the insurance industry is starting to recognize the need for this work. Starting to, but they are not there yet.