Ok, so, its been while but I feel like writing.
I remember the first time I walked into my dad's bodyshop in Protection KS, I was about 5 years old. There was an insurance adjuster asking him what it would take him to fix the vehicle. He simply replied "Well not sure yet". And so he went on to give the man an "estimate". That was the first point in time I began understanding what exactly it was my father done all day at work.
Flash forward a few years, and I am around 13 or so, and the same thing, I walk into the shop, only this time an insurance company has 8 or so "collision" adjusters "training" along side my father's techs. Man you talk about uncomfortable. But he allowed this in the shop in order to maintain an good business relationship.
A few years go by and the "Direct Repair Programs" began. In the begining their was not a shop in the U.S. that wanted to get into bed with the insurance companies. But slowly and surely it began to happen, shops started to sign onto the programs. Like I said, it was good in the begining, But remember, insurance companies work on greed, they move more money as an industry than just about any other. The profit margins in the begining were fair, from insurance company to the bodyshop. But as I said, insurance companies work on greed. In the early 90's most states adopted a law stating insurance companies of the "at fault" party must provide transportation of the opposite party. Thats where the profit margins began to shift. All of a sudden the insurance company had to pay out a whole lot more money per claim on average. While the bodyshop's profit pretty much stayed the same. I am sure you can see the problem. So, in order to make up these differences, insurance companies began "tweaking" the system. It started with a little less time here, a little less money for material, material caps, "overhaul" time, "adjacent" panel adjustments, I can keep going on and on, but you all know what I am talking about.
As I get to the end of this,I am wanting to make a point. I hope you get it.
These days, bodyshops that decide to "participate" in a DRP (Direct Repair Program) are bullied into completing the entire repair program,from claim to completing all repairs, to setting up the rental car. They have give "priority" to their vehicles, have an estimate with in 24 hours of receiving the vehicle, and then repair it in the alotted amount of time before the rental runs out. And did I mention they have to do all of this for around $2.00 less than the shop rate? Oh yeah, and did I mention that you are forced to stay open after hours if needed, in order to be compliant? Sound like a good program? You tell me.
Oh yeah, most shops that do decide to take on this Monarchy have at least two or more DRPs to make up the difference. And thats where the priority thing sneaks up on shops because they all have the same "rules" you have to comply with. One problem with a part on a unit down, or vehicle the was scheduled in, and you blow the rental car time formula. Then what? Well the shop is the one paying the rental bill. Period.
Thanx. I like what you had to say as well. The catch is the particular market you happen to be in. Mine is small. Therefore I have a little more chips at the bargaining table. Since there are only a handfull of shops on DRPs around here. I am just waiting for the majority of shops to get tired of watching their profits go out the window in order to stay compliant. Then the pendulum shall swing back a little closer to the middle. If there are no shops on DRPs then there are no DRPs.
I had an insurance adjuster in my shop not too long ago that encouraged me to get on their program and he could not grasp why I did not see this as a good thing. I asked him how he would like it if his company saw the DRP theory as such a great thing that they should apply the same logic to their own employees, the ridiculous "Do more for less, you'll make it up in volume." scam. He asked me to elaborate.
I said," How about if your company reduces the amount that they pay you and take away all your benefits, but allow you to work all the hours you want. You could work 7 days a week, 12 hours a day and make even more than you did when you were on salary, you could make up your previous pay in volume." he asked, "Why would I do that?" I said, " You have answered your own question to me."
These are all great replies to the common problem. We as an industry will never move forward in this until we all realize that without good interaction between the shops in an area things will never change. J.R. says that if there are no shops on DRPs than there will be no DRPs. So how do we go about making this a reality? By talking with the other shops in the area and helping to get everybody to understand the effect that undercutting has on the industry. And don't try to kid yourself into thinking that this isn't a form of undercutting. It is. Shops are agreeing to do work for less than others. When the whole area is down to the lowest rate than what do you think the insurance companies are going to do next? Yep that’s right, ask for another discount. You can see how over a few years this can have a negative affect.
The shops part of the contract stays in effect if they are getting a large flow of work or only one or two cars. So when we hit a recession like now and there is not a lot of work out there the make it up in volume idea doesn't work very well. In the end you just end up losing in bulk.
It amazed me that 3 years ago, when the ship that is our economy hit the proverbial rocks, many shop owners thought the way to restore the volume that had vanished was to drop their rates. The secret is that there was no volume to be restored, regardless of the price one charged. I wonder how many folks realize that in retrospect.
I looked at the situation in a completely different way. I reasoned that if I could expect my volume to be significantly compromised, it was more sensible for my prices to go up, not down, in order for me to remain profitable. Raise my prices I did and the Earth did not open up and swallow me, customers did not stay away, and I have remained profitable without compromising my prices or standards. "Work more for less" has never made sense to me.
I think everyone has forgotten what the original intent of DRPs. In the begining it was meant to "streamline" the repair process. Meaning less down time waiting on the insurance company to get out,inspect, and approve supplemented items not on the estimate of record. But it has snowballed into a lop sided program that only helps the insurance company. It was intended to speed up the process for the person with a claim, but it now is another way for an insurance company to undercut a shop with a smile.
Here is a prime example of how an insurance company steals money from the customers.
You have to write an estimate, replacing the front fender on a blue metallic car. Gonna need to blend the door,bumper,and hood, right? Well you should,but, when writing an estimate for DRPs, you cannot. Even though you KNOW you are gonna have to blend them to make it match. Why? Because if the person elects to NOT get their vehicle fixed then there is no need to blend right? WRONG! The person is still owed the money to fix the vehicle whether they elect to fix it or not. This is wrong, and just one example of how the insurance companies STEAL from ALL of us.
You make the assumption that the original intent of the DRP concept has changed over the years. Have you ever stopped to consider that this was all by design and very cleverly implemented by the other team? It's not like we haven't been duped and lied to about numerous things for decades. Why would you not consider that this plan was intentionally put in place to accomplish the specific result we now have imposed upon us? Think of the sham "committees" and organizations that are infiltrated and controlled by the insurance industry to their advantage. As and exampleave you ever looked at the credentials of the CAPA board members? Tell me that board isn't stacked to the advantage of aftermarket part suppliers and insurance companies.
Control of our own industry has been taken from us a little at a time and only when people wake up from the DRP trance and either dump them or go out of business will those of us who manage to survive this ever have any hope of taking our industry back.
Ok,considered. I actually work for one of the people who helped come up with the DRPs in the first place. He was there when Allstate needed to train the first "Collision Estimaters" they ever had. I say the things I say because I know first hand. We are on the same side,but, he has all the paperwork to back it up. Did I mention he allowed Nationwide to train as well? We all know it is their program that has set the standard.
You are correct by saying we have not been duped. But, when the DRPs started the pendulum was a lil closer to the middle,instead of where it is today. It started out good, write the estimate,take pics,get the supplement approved,fix the vehicle,get paid. But now the shop does everything during a claim,except sell the policy,which the insurance companies farm out as well. Heck, we even determine if a vehicle is a total or not! All I am sayin' through is just take a look around, DRPs are no good for anyone but the insurance companies.
It sounds like we all agree that DRPs are no good for the industry. So instead of continuing to tell each other that again, let’s start a discussion about how we go about changing it as an industry. What we need are realistic ideas on how to get the shops together as a common team. Not only do we have to discuss it here but also in our own areas. Each market has its own dynamics and should be addressed as such. One thing that needs to happen is that we need to start pushing for more Craftsman associations in each area. Get the Shop owners in one place at one time and start the conversation of how we take back our industry. We need to do it as a whole if it is to succeed.
Gotta watch it! Communication between bodyshops is a little sketchy. There are laws preventing certain subjects from being discussed in a public forrum. Or any "group" meeting. But its ok for them to chat among themselves freely about how to get in our pockets. Its illegal for shops to talk about labor rates for instance. AGAINST the LAW! I agree we all need to take back our industry and its gonna take all of us,but the insurance companies thought of that too. I have laid the easiest solution, stop using the DRPs, but until mega-shops go out of business, its not gonna happen. After all the average number of employees at a DRP facility is around 20. I do the same volume with 5. Office and all. Stressfull? Yes. But thats how a small shop stays in the black.
Craftsman Associations? You mean Labor Unions. No thanks. Besides every state has some sort of Autobody Association. Pay your dues and once a month they meet to have sort of insurance seminar and a 30 minute sales pitch, we all have those but guess what? The are fed by ICAR, what does that mean? ICAR was founded by a well known insurance company to cover theri asses in court. Why is this important? Because it costs up to 75% more to become ICAR certified. So what, right? Well there is the kickback,when your local Autobody Association crams down your throat the "newest" procedures according to ICAR. Thats what funds the Associations, SALESMAN!
When DRPs die, I will stop writing about their corrupt ways!