Study Identifies Insurer Concerns with Collision Repair

Mike Condon shares some of his thoughts on what he learned through more than 22 hours of candid interviews with insurance company leadership about the collision repair industry.

As a follow up to a repair facility opinion study sponsored by BASF in 2005, a new study, completed at the end of 2009, sought to paint a perspective of the collision repair industry from the insurance companies' point of view.

Michael Condon of Condon Consulting, one of two firms hired by BASF to conduct the research project, said the goal of the survey was to identify common-ground issues from the insurers' perspectives that could help move the industry forward.

"This study was meant to be a follow up and allow the insurers the opportunity to speak to the issues of the inter-industry in a fashion that was a little more comfortable," explained Condon.

Rather than a formal written survey, the study conducted by Condon Consulting along with Square One Systems, Inc., involved 22 hours of freestyle interviews on 13 topics with top claims management at nine major insurance companies (that combined, account for about 50 percent of the $30 billion U.S. collision repair market). The insurers' comments were aggregated and reported anonymously in the report: Finding Common Ground: A Claims Perspective.

In an interview with CollisionWeek, Condon discussed the study and some of the thoughts and discoveries he had while working on the study.

"It was a really good learning experience," Condon noted. "The biggest surprise, that I got out of this study, was that there was almost a plea for innovation within the industry. The insurers, in almost every case, were looking for new, imaginative ideas on a whole series of topics," Condon said. "But at the same time what happened, is that they were resigned, so to speak, to the status quo. Realizing that if there was no innovation, the status quo would remain and they were comfortable with that too."

"For those that think insurers are proprietary and insular, they were looking for outsiders to innovate the various processes within collision repair," Condon said.

Condon noted that most of the insurers in the study, had DRP utilization rates that were lower than might be expected- only between 25 and 35 percent. "What this means," said Condon, "and you have to think about this a little bit, is that 65 to 70 percent of the claims they handle are not handled in a DRP environment. They are handled in a typical collision repairer-insurer relationship and some of the best and some of the worst in the marketplace come to the top."

"What scares them most," Condon revealed, "are the new materials and the repairability in today's collision repair world. Almost every carrier, every insurer, mentioned that as THE major issue for them."

"There's very little difference between the needs and wants of the repairer and the insurer in terms of technology," Condon found. "The reason for this is we all strive for an efficient process. We want accurate information, we want good communications, we want good process support [because] we are all remote to the repair of the vehicle."

"Most communication has to be done in some technological fashion and the industry really hasn't evolved passed providing that in a DRP environment. What we need to do is take those technology solutions and move them from not only a DRP environment [but] to 100 percent," he said. "The process improvements would be vast," Condon concludes.

A 66-page report on the study results can be downloaded from the "News Releases" section of the BASF automotive refinish website (www.BASFrefinish.com).

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