Let’s face it. The goal of any good business is to make money whenever they can, and also save money too. This in particular is a delicate balancing act put on by insurance companies. But they do not do this with complete greed in mind, like so many of you would like to believe. Keeping their costs low is huge boon for you the insured as well, because it helps to keep premiums down.
One way insurance companies implement cost cutting measures is by recommending that the people they insure use the direct repair companies with which they are associated. These companies are under contract with the insurance agencies, which allows the agency some perks that they don’t get from a non-contracted repair shop.
The first is the free storage. Let’s face it. Storing a car is expensive, whether it be for an individual or an insurance company. So one of the things in the contract with the direct repairs shops is free storage for the cars they are working on. You may not even realize this, but this storage fee gets worked into the cost you pay for repairs.
Next is another freebie, and it’s towing. If the direct repair shop ends up towing the car that they later get contracted to work on, the chances of the insurance company ending up paying for the tow truck virtually disappear.
You, as the consumer may not realize this, but it’s a good thing for you too. And I say this because somewhere along the line this fee would get buried right along with a bunch of other things that you would ultimately be paying for in the end anyway. So the insurance company’s deal with the direct repair shop saves you money in the end, which is why it’s truly in your best interest to use the repair shops recommended by your insurance provider. They really do have your best interest at heart.
And what’s the point of making a deal with direct repair shops if there are no pricing concessions involved. It would be kind of foolish, don’t you think?
These contracted repair shops offer discounts on parts and labor in some cases, keeping the costs to the insurance company down where in turn they are not required to pay out as much on their claims.
Right now you might be thinking “Wait a minute. Why is it a good thing for the insurance company to have to pay me less money on my claim?” The answer is very simple. They are only paying you less because the company that did the repairs charged must less than their competitor would have. Do you understand now?
The less the insurance company has to pay for repairs, the lower everyone’s premiums will be. This will always be the case, so it can be smart to work with your insurance company instead of against them. It’s just good business sense. So don’t use people outside of the network because you feel like your freedom is being taken away from you. You are only hurting yourself in the long run.
The fairy tale to use DRP’s or non-DRP’s to “save insurance premium dollars” for all of us … is just that … a fairy tale that is far from reality.
By theory one would think and be led to believe that the discounts and what were called “perks” would translate to policy premium costs, but in reality it doesn’t. Take a look at the war that is going on between insurance companies to gain policy holders. You can’t go 15 minutes on any TV channel, or sponsorship of any sporting event to not be bombarded with promotions to switch to the advertising insurance company. Just in 2009, the top 10 insurance companies spent more than 2 billion dollars to convince the vehicle owner to switch !
The current average claim is over 10 years now due to the increased deductibles and economic conditions we are now faced with, yet insurers are pressing collision repair shops to cut corners by reducing what they will pay for and even how to repair the vehicle. This is not good for any one, but the insurers, mainly their stockholders and incentive their officers make in bonuses.
Not all DRP shops are bad, but the pressure directed by the insurer to utilize their “network” is not based on these “perks” and cost savings for the policy holders.
It is critical the vehicle owner makes a very informed decision on who they allow their vehicle to be repaired by, what parts are being used, and the reputation, skill, and training of the repairer. It is their vehicle … their safety … their choice.
The body shop industry has always found a way to shoot itself in the foot. back in the 70’s and 80’s greed and lies and lack of professionalism led to more insurance company interference.
ICAR actually did help to give some conformity and standardization to shops that wanted to “play fair and do right by all.
The pendulum has swung the other way. Lobbyists, greed and lies now “control” our industry through the Insurance Industry. The Direct Control” programs now hold our industry impotent through DRP’s that hold labor rates low due to greed, short cited goals or just ignorance / apathy.
By rolling over and helping the insurance companies establish ubfair and low labor rates, “Direct Control” body shops establish low “Prevailing rates for the entire Industry”
The article “Ever Wonder Why Insurance Companies Use Direct Repair Shops” is just wrong. It’s about Insurance companies profits and bottom line. Do you really believe they “pass on the savings”… Really???… Really!???