Leveraging Insurer's Needs
and Pressures

Posted 11/11/2010
By Rachael J. Mercer

Give and take. Push and pull. Conformity and profitability. The constant tug-of-war that many collision shop owners and managers experience when handling their relationships with insurers is certainly common. Without some level of compromise and conformity, the pressure that a collision shop owner might feel from an insurer can be burdensome. But what if a collision shop owner took the time to fully understand the needs of the insurers with whom he has a relationship? Would this understanding of the insurers' needs lead to less pressure, more profitability and a better relationship? Possibly - so no more tug-of-war stalemates! Let's look at leveraging these needs and pressures and gaining an advantage for your business.

Check Your Footing

No one wants to play tug-of-war in quicksand. Even if you win the game, that quicksand is hard to get out of. Before getting involved with the game, most players would check their footing. Collision shop owners should do the same. Entering into an agreement with an insurer is a big deal - an important decision - and collision shop owners should thoroughly read the agreement and understand its wording and meanings before signing.

"We recommend that shops thoroughly read the DRP agreements they are considering signing. And not just when they are considering signing for the first time," said Stacy Bartnik, assistant vice president of Field Services for CARSTAR Franchise Systems. "Owners can't read their agreements often enough. And anything you don't understand about the agreement - question it!" Bartnik explained that understanding the DRP agreements is the first step toward understanding the needs and pressures of an insurer, and in turn, leveraging those needs and pressures to your advantage.

Understanding the Parameters: Don't Cross the Line!

Picture a tug-of-war game in action. The goal of the game is to keep your team on your side of the "x" in the middle. Cross over that line and you lose. In many ways, it is important to stay within certain parameters when working with insurers. Understanding why an insurer's needs exist is important. For example, have you ever asked an insurer why the process must be done in a certain way?

"Although most insurer's needs and expectations are clear, sometimes we don't understand them," explained Bartnik. "It is important for us to determine within our shops exactly what is being expected of us." Once an insurer has made its expectations clear (sometimes with extra explanation), she continued, it is much easier for technicians, managers and owners to work within those parameters.

"It's very important to understand where the insurer is coming from," said Mike LeVasseur, vice president and COO of Keenan Auto Body Inc. in Clifton Heights, Pa. "If a [business] understands the needs of the insurer they're dealing with, they will be successful in the DRP market."

Specific Needs and Pressures

So what are specific needs and pressures from insurers? Well, they vary with each insurer, although many insurers expect the same things from collision repair shops. LeVasseur said, "It's important for shops to be on their game. Overall, insurers are looking for proper equipment, sources of information at the fingertips of shop employees, and a high CSI, or customer satisfaction index."

"Lean processes are also important to insurers these days," said LeVasseur. "So shops should look at what they're doing, the results they're getting, and figure out how to do those same things better and faster."

Steve Tomaszewski, president of Alpine Collision Center in Grand Rapids, Mich., explained some of the needs and pressures of insurers: "Many insurers now want collision shops to provide a 24-hour call center or give their clients a way to contact them in case of a loss after hours. Lean processes require that we operate quickly and efficiently, and correctly. Cycle times are watched by insurers. Keeping those low helps us successfully meet their needs."

Some insurers encourage shops with whom they do business to meet certain "green" standards regarding recycling and other green initiatives in addition to meeting federal and state regulations such as those concerning waterborne paint and other vehicle fluid disposal. At Keenan Auto Body, the green initiative became a priority for one of its locations, and now it has become a way to market the shop to new customers as well as meet the pressures of certain insurers.

"At one of our locations, we installed solar panels. Our return on investment was fairly quick, as there were state and federal grants we took advantage of," said LeVasseur. But he explained the other benefits to this simple change: "We have already seen a 60 percent to 65 percent savings on our electric bills, and we receive the recognition of being a green shop."

According to LeVasseur, many customers come in and comment on the solar panels. "It makes us happy to fulfill green standards while at the same time drawing in new customers. And, now we have something extra to market to insurers."

Providing rental cars is another need that some insurers require of their DRP shops. For some businesses, this option is feasible, but for many, providing rental cars for each repair is not. "Whether or not to join a DRP with this need is up to the repairer, of course," said Bartnik. "To provide a free loaner [vehicle] for each repair can hurt profitability in some cases."

Mobile estimating is another pressure, or requirement, that some insurance companies expect from their DRP shops. "Our shop has the ability for mobile estimating," said Tomaszewski. "When a vehicle is damaged and is unable to be driven to the shop for an estimate, we are able to come to them."

"We market this capability to our agents, and even if the customer doesn't choose our business to make the repair, we have had a chance to show them a unique facet of our business - something that everyone else doesn't offer - and this will hopefully generate some business for us from them in the future," he added.

Who else is pulling?

No one wants to play tug-of-war alone. Up against a team, the solitary player would lose quickly. So most players would be sure they have a good team behind them. The team involved in assessing a repair, completing the repair and ensuring the customer is satisfied is a big one. It includes your staff, your insurance adjuster, and even a reinspector.

LeVasseur encourages shops to know their reinspector. "The reinspector represents the insurance company, and reviews files and vehicles and their repairs," he said. "One of our DRP reinspectors covers 20 of our shops, and monitors our performance through key point indicators." LeVasseur explained that as the needs and pressures of insurers become more clear and common, shops that succeed in meeting these needs will see a difference in their businesses.

"At Keenan Auto Body we have found that the bigger insurers like performance-based DRP agreements, which can affect the volume our business receives," said LeVasseur. "If our company succeeds in meeting these performance standards (while fulfilling the needs of an insurer), the insurer is more likely to send more business."

On the Winning Side

Ultimately, the goal of tug-of-war is to move your opponents across the "x" onto your side of the field. Insurers have a goal, too. "Insurers are looking for policy retention," said LeVasseur. "Their goal is to keep their clients - the customers. If they lose their clients, that usually occurs because of a bad experience during a repair process. It is important for shops to be 'on their game' when dealing with their customers, who are the insurer's clients."

Tomaszewski agreed. "In many situations, I have found that an insurer's needs, if unmet, become a pressure. Insurers want to deliver a higher level of service to policy holders, which sometimes puts shop owners under the gun.

"Ultimately, an insurer is concerned with the level of satisfaction its customers have during the repair process, which means that highly satisfied customers renew their policies and the insurer retains its client," he added.

Bartnik reiterated this point by saying, "The ultimate goal is for the customer to be satisfied with a quality repair in a timely manner, but both parties (repairers and insurers) must realize that repairers are in business to make a profit, and insurers still need to watch costs."

So before you become overwhelmed with needs and pressures of insurers, or the terminology involved, take a step back. Know that you can question methods and processes, so you have a full understanding of what is being required of you. Then, take steps to meet the needs of your insurers, knowing their main goal is to meet the needs of their own clients.

You know that momentum you get when your side of the tug-of-war rope is beginning to win? You'll feel that momentum as you produce happy customers and happy insurers - and hopefully boost your own business' success as you leverage the needs and pressures placed upon you and your technicians!

Rachael J. Mercer is a freelance writer based in McDonough, Ga. She can be reached at mercerfreelancing@gmail.com.

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