OEM Certifications And Insurance DRP Programs

The insurance industry uses Direct Repair Programs (DRP) to direct their customers to their preferred vendors. Despite what they say about quality of work and standing behind repairs, these preferences are based on efficiency and cost savings, not safety or true quality of repairs (see our previous article An Unregulated Industry And 10s All Around). To them good enough is still good enough.

There was an article last week about a panel at the July 15th meeting of the Collision Industry Conference (membership is almost exclusively US based) discussing whether OEM Certification Programs can co-exist with DRPs. The responses from the panelists were refreshing. While being polite, they quite clearly said that the two concepts have conflicting agendas, and a repair facility cannot be a high performer in both programs.

In BC ICBC does not have a DRP program as such but is in reality one big DRP program. Their DRP like requirements are very clearly different from the requirements of OEM certification programs. Strangely ICBC will list OEM certification of the shops in their repair network, in doing this they are appearing to give a nod of approval to their qualifications. At the same time their own rules preclude adherence to OEM procedures.

The best progressive operators get very good at interpreting the rules of each to ensure that the car is repaired properly. This can be done and there are good shops doing this, but it is not easy. As one example, that known high quality OEM part will cost more than the aftermarket non-OEM part which is, with rare exception, of lower quality. Insurance companies like less expensive parts. and track the ratio of aftermarket parts to OEM parts, with an expected level of use of these aftermarket parts. The OEM certification requirements outright forbid the use of these parts.

Again, a good, honest, and well experienced facility can provide a safe repair, but they do this by being, to some extent, offside on the certification requirements and dancing on the edge of the rules and ratios that the insurance companies set.

This does not leave the car owner in a good place. That owner should not have to rely on the good intentions of the progressive shop to get a safe repair. The system should be set up such that the safe repair is the minimum standard.

Unfortunately, in 2021 there is still too much outdated culture and fixation on cost for this to be possible.

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 has to have a standardized way of measuring the performance of the repairers. These standardized measurements are commonly referred to 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?

There Is Effectively No One Checking

It has improved somewhat since 2016, with progress being made but 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.

Why Is There Still No Regulation In The Collision Repair Industry?

To date, the collision repair industry has largely avoided attracting the attention of regulators. The main reason for this lack of regulation is because the public has not needed the protection. For 50 years cars evolved in a manageable way, with this manageable evolution allowing skills and work habits to be used from one year to 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.

1. 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.

2. The control system of the car. This was once 98% the driver and the driver was not affected by the repair. With the significant changes in vehicle technology over the last 5 years the car is getting to the point where it has as much control as does the driver. An incorrect repair will have a very real negative effect on the function of the vehicle, with serious safety implications.

These two issues of advanced material construction and active control systems should be enough for regulatory oversight.  But for many valid reasons, across many industries, regulation does not happens until after the lack of regulation starts to cause problems. It then takes years to catch up and become effective.

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.

What is Qualification?

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 contractor’s work as he has been licensed by the only authority allowed to provide that license.

“…there is nothing in that certification that diminishes or takes away from the electrician who has chosen not to join the Eaton network.”

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 Canadian Collision Industry Accreditation Program (CCIAP) could serve the same purpose as government licensing.  The program is administered by the Automotive Industries Association of Canada (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.

What is Certification?

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.

Certification – Safety, Customer Service And Business Style

A significant component of repair facility certification by non OEM aligned certifying bodies (CCIAP is the national example in Canada) is customer service and the appearance of customer areas. Pictures of the customer washroom are always asked for.

In 2021, this is missing the point. These organizations should be verifying the important things that car owners cannot see or be expected to understand. They can all see the office and decide if they like it, none of them can see the spot welder and know what the gun pressure is. The certification should be verifying the ability to perform correct repairs and leave judgement of customer satisfaction and business style to the marketplace. It is unlikely that a facility that can meet the requirements for safe repairs will have a scruffy looking front office and impolite staff. If they do the potential customer can see that and will probably not do business there. Or maybe it will not bother them, and they will stay. 

“The objective of accreditation is … to provide a safe repair.”

There is also the 2021 reality of Online Reviews. This is where potential customers will look for insight on how other people feel about the facility. Customer service, in all its aspects will be well covered in these reviews.

The objective of accreditation is not to standardize the overall experience to the customer, but to provide a safe repair. With demonstrated ability to provide that safe repair as a base the business owner should be free to participate in the market with whatever style they chose.

OEM certifications are not the same as a non-aligned certifying organization and these OEM certifications often have a strong overlay of marketing in these programs. Just as a manufacturer will have service and appearance standards for their dealerships they may have these types of standards for their certified repair facilities. 

Industry Self-Regulation

The concept of a self-regulated industry has been gaining some traction in the last year. Regulations are set and controlled by governments but they would rather not do all the work in verifying and enforcing compliance. 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.

Regulation of the complex repairs now required for a safe vehicle 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.