Recently, I attended a Bodyshop magazine conference. The hot topics? Courtesy cars, estimating systems, costs and insurer relationships. Has so little changed in six years that the accident repair industry is still discussing the same issues?
In fairness, one topic seemed to have less prominence – labour rates. Here the discussion has moved on from low rates to changing rates; that is, the moves by some insurers towards labour-only schemes, offering higher rates of pay in return for removing the opportunity for repairers to make money on parts and paint mark-ups.
So why has so little changed? It’s perhaps an indictment on the trade associations which are charged with negotiating a better deal with the work providers and lobbying Government over issues such as VAT-exemption labour for insurer-owned bodyshops. Certainly the views on website chatrooms suggests a high degree of dissatisfaction with the performance of the RMI, VBRA and MVRA (no longer an association, of course).
Many of the bodyshops in attendance were the ones dominating the repair industry six years ago. In contrast, many of the insurance companies had new managers at the helm. New relationships, but the same old problems.
The perception offered up was that of an industry unable to develop and progress. But that is unfair view – lots has changed, especially in the upper tiers of the industry where hi-tech premises are commonplace. New technologies like Boran steel and the increasing use of aluminium in car bodies has seen new repair techniques, skills and equipment.
The title of the conference was ‘breaking the mould’. One insurer seems to be doing just that, although its voice struggles to be heard among the general chatter of mistrust. Royal & Sun Alliance’s (RSA) ‘cost-plus’ programme – the company is keen to stress that it’s not a labour-only scheme – is genuinely changing relationships with bodyshops. The insurer is negotiating individual contracts with its partners basing its rates of pay on each company’s efficiency levels and overheads. The idea being, the more efficient you are, the better paid you will be.
RSA insists that this arrangement is better for bodyshops – it claims that its own costs will rise in the short to medium term as a result of changing to this programme. The advice to bodyshops is to ensure that the deal to get tomorrow is as good as the deal you are offered today on the new cost-plus scheme.
It’s a shame that more insurers can’t break the habits of the past 20 years where policies are sold on price, not service.
Insurers could consider two options: first have a tiered pricing structure, rising from an entry-level ‘no-frills’ price for a basic repair and no add-ons up to a top service, full premium option which includes courtesy cars, collection/delivery, air fresheners, etc.
The second suggestion would counter the belief held by consumers that insurance premiums are too high, and still rising. In fact, as a proportion of total income, rates are steadily falling. So, why don’t insurers send their customers a copy of the invoice? Tell them that their £400 premium just covered a repair bill totalling 10 times as much, and they might realise the value of the service.