Insurance processes are increasing operating costs for Manitoba collision repair centres: report

Insurance-related business processes – including supplemental estimates and parts procurement – are extending repair times and driving up operating costs for Manitoba’s collision repair industry, according to the January 2010 Manitoba Collision Repair Industry Study.
Meyers Norris Penny, an accounting firm, prepared the report for Manitoba Public Insurance, the Automotive Trades Association of Manitoba and the Manitoba Dealers Association.
The results of the study were presented at the Canadian Collision Industry Forum (CCIF), held in Toronto on Jan. 29.
The study listed a number of challenges facing the province’s collision repair industry, including the fact that 60% of the province’s shops received MPI payments of less than $500,000 (in 2008).
It also noted significant recruitment and retention issues.
One complicating factor in succession planning is that potential collision repair shop buyers are wary about dealing with what they see as complex insurance processes, citing this as a reason why they might not choose to acquire a collision centre in the future.
“Insurance-related business processes are driving operating costs and extending repair times,” the study concludes. “Supplemental estimating and parts procurement processes require manual documentation and significant administrative handling, extending the cycle time and driving unrecoverable costs to collision repair businesses.
“There are opportunities to improve relationships with the industry, reduce costs, improve customer service and the overall image of the collision repair industry by addressing these processes.”  
The report notes supplemental estimates happened with an 81% frequency in 2006 (based on supplements to created estimates), a 77% frequency in 2007 and with a 67% frequency in 2008.
Mitchell reports that 33% of all original estimates prepared by Canadian Mitchell-equipped estimators were supplemented one or more times between 2006-08.
Collision repair shops were asked to estimate the number of hours they spent each week on estimating, parts procurement and account reconciliation.
Respondents said they spent 24 hours per week on estimates, 19 hours per week on parts procurement and 16 hours per week on account reconciliation. The times varied according to the size of the business.
The full report: Manitoba Collision Repair Industry Study Final Report  can be found at:
http://mpipartners.ca/NoticesToTrade.html or PDF directly: http://bit.ly/MPIreport