Clash of the Titmen: Insurance companies vs. Auto Body Shops

Great Debates
1

Too big of a hijack for here and possibly an interesting (to certain ‘ant-eater-tamers’ such as myself) exposition in its own right.

ASSERTION: “Insurance companies have deals w/ autobody shops. They pay less when the job is not completed on time. So the Ins. CO’s flood the local shop, then starve them, so the auto body shops can’t hire a bigger staff and always run some late…Such has been my experence w/ a autobody shop owner.” –kanicbird

CAVEAT: You’ll want to put a “Some particularly mercenary and unethical…” at the head of your post. At least one major insurer does not bully bodyshops in this way.

REBUTTAL:Bollocks.

REASONING:

  1. Car owners pay insurance companies to have claims handled in a timely manner. This is the #1 most important factor bearing on customer satisfaction.
  2. Customer satisfaction is therefore the most important end to an insurance company because dissatisfaction not only results in reduced income (because customers take their money elsewhere), but benefits the competition (because customers take their money elsewhere).
  3. Generating ill-will with service providers (Body Shops) does nothing to improve the experience of the customer, but may do everything to worsen it. Specifically, the imposed “feast/famine” plot proposed in the ASSERTION can only serve to reduce the capacity of the shop to provide the service promised and guaranteed by the insurance company.
    Yes, there are pricing structure agreements between insurance companies and body shops. None of these agreements are mandatory for any given shop, nor are they enforced by any form of insurance Yakuzah (believe me, I’ve looked into it. If such a department existed I’d definitely post for a position!). The pricing structure is based on the average local price for mechanical, body & paint labor. Repair standards, such as reducing unnecessary delays and use of sound repair techniques are set by the insurer and agreed upon by the shop. In return the shop may realize a higher volume of repairs based on the insurer’s endorsement of the shop as a quality establishment. And even the endorsement is indirect–an insurer MUST allow the customer to make the final decision as to who does the repair, but the insurer gets to say how much $$ will be allowed for the repair, and what procedures it will guaranty. The insurer can do this ETHICALLY because the set prices are reasonably based on local averages, and the supported techniques are of a quality that can be guaranteed by the insurer. Basically, you can always find someone to replace a fender for $1,500, but it’s senseless topay that much when it can be done nearly anyplace else for $1,000. Conversely, you can find someone (Bubba) who will do the same job for $500, but you have no idea if the paint is going to fall off in 16 months, nor even that the fender wasn’t sculpted out of 50 pounds of body filler.

CONCLUSION: Body shops are not paid less for being late on work, but continued unsatisfactory workmanship & unprofessional management may result in that shop being removed from a list of insurer-endorsed firms. And rightfully so if the insurer is to keep customer satisfaction in mind. I suggest that the shop owner referred to in the ASSERTION ha didfficulty maintaining a quality staff, netted lower profits because staff are paid HOURLY and the staff dragged their feet. Customers became dissatisfied with the delays and the shop’s reputation suffered.

2

(relevant but minor hijack):

Inigo, in your experience, are the body shops recommended by the insurance companies generally your best bet? Some people always want to take their car somewhere else, on the theory that the insurance company is going to screw them to some extent with the regular shop. If your car was busted, would you take it to the insurer’s preferred shop, or find your own place?

3

I would and have walk the talk in my OP. I would absolutely consider very strongly working with shops that receive a favorable review by my insurer.

As a claims representative I can tell you that my job is specifically to NOT screw anybody, and to err/interpret to the benefit of the customer wether we insure them or not. The shops on our happy list are inspected regularly for quality repair, management, customer service and billing practices. Repeated failure to measure up to the customer service standards we demand of our own employees frequently results in theire removal from the Happy List. Which isn’t to say that all shops that we don’t endorse suck. There are plenty of excellent firms who prefer to operate without association. We just don’t pay their prices, nor do we guaranty their work.

Of course, it all depends on the business practices of your insurance company and whether or not you trust them. And if you don’t trust them, why give them your money?

4

As I said in the other thread, IAN a body guy, but I have never heard of this practice (paying less for late repairs) in over 30 years of kicking around the car business. If it were wide spread, I am fairly sure I would have heard of it in one bull session or another.
I am in 100% agreement with you Inigo
I am going to need a real good cite for kanicbird to convince me

5

Inigo Montoya Thank you for your defense of “Big Insurance”, who you work for. You don’t state your location, so perhaps it is done differently where you are. My post comes entirely from a friend who owns a auto body shop and that has been his experence (yes a single point of reference). Yes he has deadlines from the insurance co’s, yes he gets paid less for lateness, yes he gets cars in feast then famon patterns from the ins. co’s, NO WAY IN **** am I going to tell you who this is.

(and your right about he doesn’t have to accept the ins co’s work, and about rates set by the book, but that’s not the issue.)

6

Does not!