Collision repair centres ‘caught in the middle’ between insurers, vehicle manufacturers

A slight majority of attendees at a meeting last Saturday of automotive repair professionals indicated insurer relations was one of their top three priorities, while speakers suggested that the industry faces conflicting demands from automobile manufacturers and insurance carriers.

At the Canadian Collision Industry Forum (CCIF), held Jan. 26 in Toronto, attendees were polled on their top three priorities. They were asked to select three from eight priorities listed on a presentation slide. The priority with the greatest number of responses – identified by 54% of audience members – was insurer relations, programs and consolidation.

Gross margins and profitability was identified by 47% of respondents while attracting retaining and training employees was identified by 42%. Respondents were only asked to identify three and were not asked to rank them.

The poll, in which attendees were asked to indicate their responses by pressing buttons on wireless transmitters, was taken by Matthew Ohrnstein, managing director of Irvine, Calif.-based Symphony Advisors LLC, who spoke at CCIF.

In his presentation, titled “The Collision Repair Industry: North American Landscape”, Ohrnstein said vehicle manufacturers’ certification programs are more prevalent in the U.S. than in Canada, but sometimes “there is some potential conflict” between those programs and the insurance firms’ direct repair programs (DRPs).

“One very clear example is one certain OE (vehicle manufactuer) program, they require you to use their paint, which is in a can with the logo of that OE on it,” Ohrnstein said to an audience of about 300 at the Toronto Airport Marriott. He did not name the OE.

“It’s probably the same product made by another manufacturer that sells (the same product) at a fraction of the cost. But if you want to be a certified shop for that OE, you have to buy that paint that has their logo on it, pay for more it and charge the insurance company for it. That’s a conflict that we need to work through.”

Conflicts between insurers and collision repair centres was also a topic of discussion at a panel discussion Ohrnstein moderated at CCIF. Three panelists acknowledged there is sometimes conflict but emphasized the importance of working with insurers.

“A lot of times, the shops are faced with different repair procedures that are not traditional,” said Flavio Battilana, chief operating officer of CSN Collision & Glass. “Sometimes what happens is, the needs and the wants of the OE in protecting the brand, the vehicle quality, the customer’s expectations and experience, and the insurance partner trying to manage costs, sometimes the shop gets caught in the middle and sometimes we get stuck with a bill.”

Michael Macaluso, chief operating officer of CARSTAR Automotive Canada, said repair shops need to work with insurers to figure out how to make a profit and still get vehicles fixed more quickly, with better quality and with a lower repair bill.

“The changing dynamic on the insurance side, with the procurement models, partnering with parts vendors, paint, whatever the case may be ….  it’s just enabling the conversation (for collision centre executives) to say (to insurers), ‘We understand your strategy, we want to be at the table, how do we work together for continuous improvement?'”

Another panelist was Paul Prochilo, general manager of Prochilo Brothers Auto Collision, which runs three auto repair facilities in Toronto.

“When you’re talking about insurance relations, if you’re in a comfort zone, you’ve got to get out of your comfort zone and get out there and collaborate with your insurance partners,” Prochilo said. “Do we always agree with them? I believe that conflict is the oxygen of creativity. You say ‘yes,’ I say ‘no,’ we discuss it and we create an added-value solution. If the engagement and the dialogue not there … you’re probably not going to be a part of that program for too long.”

Battilana suggested corporate culture is also a factor.

“I don’t believe in a relationship of fighting,” he said. “You have an industry full of entrepreneurs that are wired in a certain way and you have a customer that is a Canadian corporation or a multinational corporation that has governance, shareholders, expectations, et cetera, and it’s a bit of an oil and water type of relationship, but I think at the end of the day, what we try to live by is, ‘Who is your customer? The person who signs the cheque.'”

CCIF holds three meetings per year. Its next meeting is scheduled May 25 in St. John’s, Nfld. and the third is scheduled Sept. 28 in Edmonton.