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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

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