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The collision industry is looking to certify shops. Will that impact auto premiums?


September 29, 2020   by Adam Malik


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A push to certify Ontario collision repair shops could impact insurance rates and see premiums come down, says one automotive expert. Whether or not it does, such a move will still positively affect the insurance industry, adds an Insurance Bureau of Canada leader.

A recent webinar hosted by the Automotive Insurance Industries Association of Canada (AIA Canada), the national trade body for the automotive aftermarket, explored certification for collision repair shops and noted that Ontario may be getting close to an agreement.

Certification would create a set of standards for tools, training and business processes for shops to abide by. Given the complexity of newer vehicles, IBC agrees that there needs to be a baseline of standards so that all shops are working from the same minimum playbook.

“That would make the whole repair process safer and more efficient for people whose vehicles have been damaged — and those are the joint customers of the vehicle manufacturers, the insurers and the repair facilities,” said Ryan Stein, executive director of auto insurance policy and innovation at IBC. “We think that proposal has a lot of merit.”

The push for certification came about as the Ontario government looked for ways to reduce auto insurance rates, explained J.F. Champagne, president of AIA Canada, which oversees mechanical and collision repair.

“Our representations to the Ontario government started with the position of the Ford government and the need to address Ontario insurance rates for Ontarians,” he told Canadian Underwriter.

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How would shop certification help with auto insurance rates? “We need to ensure that we are able to continue offering the right repair the first time — fix it right the first time,” Champagne said.

That means a reduction in the likelihood that a repaired vehicle would need to be repaired again — thus reducing costs for repeated fixes. If a certified shop is doing the work, there is confidence that errors would be eliminated and money saved.

However, Champagne made it clear that the impact on insurance rates would not be immediate — meaning shop certification becomes mandatory wouldn’t translate to lower rates on the first day. Instead, it’s a long game because insurers would see cost savings over time as repeated fixes are eliminated from the equation.

“Fixing the car right the first time will definitely lead to cost reduction [in the long term],” he said. “We all agree [immediate cost savings won’t] be the primary effect of shop certification but we’re confident it will have a mid- to long-term positive impact on reducing fraud and making sure vehicles are fixed right the first time.”

For Stein, however, he’s not entirely sure there will be much cost savings to be had that can be passed on the consumer.

While he agrees that cutting down multiple visits to have repairs re-done would lower costs, vehicles still cost a lot of money to fix and shops that do get certified will have to make financial investments in the business — meaning they’ll be looking to recoup those costs.

“I don’t look at this type of certification as a cost-saving proposal; I look at it as a safety proposal and a consumer experience kind of proposal. That’s why we support it,” Stein told Canadian Underwriter, adding that there hasn’t been any analysis done on how much, if any, savings will be available to drivers.

“Maybe it’ll be cost-neutral. But this is about making sure people who were in collisions that when they go to repair their vehicle that they can have the confidence that the vehicle is repaired safely and they can get back to using it as quickly as possible.”

He further stressed that not every change made on the insurance end of things needs to have a cost-savings aspect to it. In the case of certification of repair shops, safe roads and customer satisfaction are what IBC expect to be the biggest outcomes.

“There are other parts of the customer experience that are important and I think this one touches on those other ones,” Stein said.

 

Feature image by iStock.com/GregorBister


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1 Comment » for The collision industry is looking to certify shops. Will that impact auto premiums?
  1. David Marshall says:

    One important aspect of certification is that it comes with regular inspection and adherence to standards (the right tools, trained technicians and proper business practices) which in turn can significantly reduce fraud in auto repair.

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