All posts filed under “Industry Relations and Culture

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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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…but, of course we all want the cars fixed right. …. but, you have to do the correct repair.

Over the last serval months, perhaps going back as far as  a year, every discussion about the challenges and costs of modern vehicle repair ends with  a variation of the phrase  ‘but of course we need correct repairs ‘ . This is said with a tone that suggests;  ‘I have met my obligations because I have mentioned that correct repairs are needed.’  With this phrase and no further investment the speaker imagines or hopes that he has transferred all responsibility to the repairer and is now absolved of all liability or requirement in further investment in that repair.

This phrase is always aimed at the repairer and is always used by anyone who has an opinion on repair procedures and repair cost, but has no hands on responsibility for that real world repair. Insurers really like it and industry commentators, speakers and trainers always close with it.

The beleaguered ‘estimator’ being told to fix the car right is not being paid for looking anything up and in fact will be penalized for doing so.

If the car is fixed that poorly that a serious comeback results then there will be repercussions. However with all metrics centred on severity, cycle time and customer satisfaction an improper repair that gets past the customer will gain higher marks than the correct repair that takes an extra day and costs another $500. There is not a lot of incentive to spend extra time doing something he is not good at if the probable result is lower marks, and a bigger stack of files still on his desk.

With each year the active fleet being repaired gains added complexity and more and more cars requiring research and careful analysis before the repair starts are becoming part of the repair mix. A time will come, not that far in the future where the incorrectly researched repair will fail almost every time. But we are not quite there yet.

Mike Anderson gave a recent presentation about position statements in which he said that even if the manufacturer does not reinforce a procedure in a position statement you still have to follow that procedure.

He is without question correct in this, however he went further by saying that if a repairer does not research the correct procedures it is simply because of laziness.  He did not acknowledge that finding relevant OEM information is not a trivial issue, requiring both an investment in purchasing access and then a very real, and more costly, investment in learning how to use the program properly and efficiently. There are many real world obstacles to getting the right information that would need to be overcome before  ‘laziness’ became a factor.

Referencing back to a July 10 2018 article about a Collision Hub Repair U video,\ 

A part of the discussion was that it took an hour to find the relevant OEM information and ‘more than that to read it and understand it.’  I am going to guess that there were no questions to answer about other files during this time and no significant time pressure to get to the other files waiting.  There is no denying that the procedures advocated in the article are the correct procedures, but there is also no denying that it is very difficult to get paid for these procedures.  Many people are quite good at getting paid but the majority of repairers do get tired of the fight to get paid.  The points made are valid and they do point very clearly to a future that will arrive, but they are not the current reality in most of the collision repair world.  In this same article the suggestion of resolving liability issues by working for free can only be described as a bizarre business model.

Repair report writing, repair procedures and the payment structures around these will have to change. For now, for most people, the old ways are still viable and still the standard.  Unfortunately the industry is waiting for this change to be mandatory before acting on it. There is only a very spotty and ad hoc process of preparing for the change.

‘Of course it needs to be fixed right’ is not preparation

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Safe Repairs Through Regulation

Over the last few weeks I saw an article and a symposium announcement that together showed a possible path to the future.

In this Collision Repair magazine article from mid July; Brad Mewes’ views on the current stage of industry consolidation are discussed and explained with extensive use of quotations. The research and business analysis he draws on is broad based and not specific to collision repair. If what he forecasts comes to pass there will be a very significant shift in power and the collision repair world will look a lot different.

Today the insurance companies have a tremendous advantage over repairers because each one controls a huge volume compared to any of their suppliers. A strong independent at $5MM a year is less than a blip, a good regional MSO at $50mm and even one of the big three or four at $500MM+ are only a fraction of what the insurance company will pay out in a year.  This imbalance gives a significant negotiating strength to the insurer with their ability to play one supplier against the other. They are very happy to put all the problems and issues back to the supplier using the blunt threat of moving their business. With many small players looking for business it is not hard for the insurers to use this as a key part of their cost control model.

In the next phase of consolidation with 3 or 4 large entities controlling the repairer side of the market each will start to approach the scale of the insurers and will be much less vulnerable to threat.

On the one hand this is a good thing for the vehicle owner as there may be some standardization of the repair experience, but on the other hand it may be a problem, because if the repair experience is not great there will not be anywhere easy to complain to. When was the last time you got great service and an excellent result from a call to a cell phone company?

While these big players are controlled to some extent by financial and anti-trust regulations there is currently very little regulation controlling or monitoring the physical repair.

This is an announcement about the Technology and Telematics Forum on August 8th at NACE.

Most of the topics listed should be familiar to progressive industry participants. Of interest however, is the 30 minute slot about Government Intervention and the possible need for legislation around repairs. My belief is that this intervention will have to happen and when it does insurers, consolidators, flat rate techs and the last independents standing will face a very different world with repairs that have to signed off by a qualified technician holding a valid license. Aviation industry regulation provides a very good model for the safe repair of today’s complex cars.

The 2017 car can be repaired without regulation today but planes (and the dog) need licensed technicians signing off on repairs

Government regulation is very hard to apply to a very large number of independent facilities as enforcement would be unworkable. Large suppliers could be mandated to provide very thorough reporting and auditing on their repairs and operations and they could afford to do this. A compliance office overseeing 500 locations would be a manageable cost per location while the compliance burden could well be the final straw for an independent.

The consolidators that Brad describes are probably already in the concept planning stages of their Compliance Departments.

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Qualification and Certification

At the May meeting of CCIF in Toronto there was the start of a revival of the discussion around Certification. It was not on the agenda and the conversation started in the halls but it did make its way into one of the panel discussions. The discussion did not go into much depth but the most important step was the acknowledgement that there was an elephant in the room.

To this point we have been mixing the two quite different things of Qualification and Certification into the same category. Qualification is based on the capability a repair facility, its equipment and people. It can be earned based on the right current equipment, the right current training, the right systems in place and the right demonstration of customer service. Qualification should be given by, to use my favorite word of this week, a ‘disinterested party’. Disinterested does not mean uninterested or uncaring. It means that 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.

Looking outside the collision repair industry 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. No outside agency or business can provide this licensing or qualification.  It is provided by a ‘disinterested’ government agency and without this license an electrician cannot work.  There is not a lot of confusion among the consumers about the legitimacy of his 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. 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.  The choice of facilities that an insurer would prefer to work with is also very market and administratively driven.

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.

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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Safety, Competition, and Money

As I have stated before in these pages, and countless other people have said in the past, money drives everything. This does not at all mean that actions with an eye on the dollar are unethical. What it does mean is that money is a mandatory component of all business activity and actions taken have to be based on that reality.

Awareness of and readiness for the right things is mandatory for long-run success but a rush to those right things, moving too quickly ahead of your competitors, can be very financially damaging. The balancing act in timing actions requires skill and nerve.

Going to my favorite source, John Heuter at RDN, there was an article on March 27th about the Boyd Group and its investment in equipment.

Brock Bulbuck, Boyd CEO and a solid and well-respected member of the collision repair industry, was quoted as saying “These proactive investments will position us to meet anticipated market needs.”

An analysis of the numbers spent based on the number of locations suggests that they are spending a good amount of money, probably more than most of their competitors.  Boyd recognizes the rapidly changing environment and the importance of safe repairs. The next day Bulbuck was wearing a seemingly very different hat.

In this article, he is talking to investors and explaining the performance of Boyd over the last year.

He stated that insurance company relations were very important to Boyd and they had maintained excellent relations with their DRP connected insurers. Insurers care about metrics and Bulbuck said the three most important are cycle time, CSI and severity. Reducing these terms to honest language, the faster and cheaper you can get it done the higher points you will score with the insurance company.  If you keep the customer happy you will score more points. None of these metrics give any weight to safety; cycle time and severity will suffer from the time and cost of these repairs.

A dealer calibration will add a few hundred dollars and a day or two to cycle time. The correct OEM mandated replacement of a damaged rail section will add hundreds of dollars of cost, and another hit to cycle time. The car owner doesn’t know much about how their car was built and how it should be repaired so if they get it back clean, shiny and as scheduled they assume it has been fixed right and on time they are happy. This uninformed happiness is a poor substitute for true quality control.

So why is Boyd buying the equipment if all it seems to do is get in the way of the important metrics? The answer to this is in Bulbuck’s quote with the words ‘proactive’ and ‘anticipated.’ Boyd is very aware of the need for safe repairs and they are in line with many other progressive operators in rapidly moving toward these safe repairs. It will not be, for Boyd or anyone else, a one day switch from past practice to best future practice.

For the best operators, it will be an honest and accelerating transition to these best repairs.  Progressive and intelligent operators know that they are to some extent ahead of current metrics but they also know the metrics will shift and the hard work of preparing of this needed change will pay off.  Balancing this with the need to stay alive in current market conditions is the skill and nerve part.

The participation of a large operator like Boyd in this move to best repair practices is a positive sign and will help all progressive operators…