For green parts to be used in motor repairs, they need to be accepted by bodyshops and vehicle owners. ATF Professional spoke to Nick Rossiter, Motor Damage Strategy Manager at Allianz, about this double challenge and how the commercial insurer is rising up to it.
Nick has been with Allianz for 13 years, with the last two in his current role focusing on sustainable motor claims. These last few years, vehicle technology has pushed claims costs up. At the same time, businesses have become increasingly interested in measuring and reducing their carbon footprint. In this context, recycled spare parts have emerged as one of the elements that may bring both financial savings and emissions savings. They’re seen as an essential component of a modern claims proposition that inserts itself into a tense supply chain to deliver better customer experience.
To encourage a wider take-up, Nick explains, Allianz is working to make it easier for repairers to source green parts. It is also trying to gain permission to use them from fleet managers earlier in the insurance process. That is how it is tackling the double acceptance challenge.
Working with SYNETIQ
Allianz launched a pilot at the end of 2019 to introduce green parts. It wasn’t the first time. Previous attempts had failed: all Allianz Commercial policies in the UK are sold via brokers, so any negative claim experience has repercussions across the whole portfolio of the affected intermediary – and reticence can grow very rapidly in this distribution model.
However, Nick recalls, with the environmental agenda gaining momentum, Allianz felt it should try again. For this project, Allianz partnered with its salvage provider SYNETIQ, which dismantles its total-loss vehicles. In other words, Allianz supplies the donor vehicle and SYNETIQ supplies the green parts. The two companies have a close relationship and the insurer has full confidence in the provenance of those parts, which matters a lot for its procurement standards. That is why, Nick adds, Allianz is very careful about supplier selection. As demand for green part grows, risk increases that vehicles may be stolen and broken up to resell parts – something motor insurers are very concerned about.
So the pilot was launched with SYNETIQ, and it was mostly successful.
Making the process easy for repairers was crucial, Nick tells us. Otherwise, they wouldn’t have accepted a wider rollout across their network. After vital feedback from repairers, in May 2021, SYNETIQ’s mygreenparts ordering system was integrated with the bodyshop management system used by repairers.
The mygreenparts platform automates the sourcing of green parts. When bodyshops generate an estimate for a vehicle repair, their software automatically notifies SYNETIQ’s stock control system of the parts required and offers them matching parts.
That was for the practical side of things, but it took also some convincing. One of the 12 repairers involved in the pilot had some experience of using green parts on large fleets – and it agreed to play advocate to other repairers, addressing their concerns and explaining the rationale for recycling spare parts.
After getting bodyshops’ buy-in, the second challenge is to persuade customers to consider green parts over new parts.
Persuading fleet managers
One point to consider is how to get customers’ permission to use green parts to repair their vehicles, which may vary between Personal Lines and Commercial Lines. In Personal Lines, permission is often built into policy wordings, whereas in Commercial Lines, insurers tend to prefer explicit permission.
With fleets, it makes more sense to get permission from the customer when they purchase their insurance policy, rather than when they need a vehicle repaired. That is why Allianz is keen to have that conversation as early as possible with its customers and has built mechanisms to do so, Nick says. The insurer already has several large fleet customers signed up to use green parts by default, and it hopes to increase this.
According to Allianz research, 86% of fleet managers are open to using green parts, so Nick expects these early conversations to be positive.
What is more, as a result of a recent upgrade, the mygreenparts platform can provide data on the amount of CO2 saved by using these instead of new spare parts. Nick believes this is a big selling point to customers who increasingly have to quantify their own carbon footprint.
The green parts approach has now been implemented across Allianz’s whole repairer network. The digital platform automating their procurement has helped increase their volumes last year, although they still account for a small proportion of all parts being fitted.
Only a limited amount of green parts available for recent vehicles, Nick explains, and supply presents a massive hurdle. For example, if a car manufacturer has its bonnets on backorder, this affects all insurers. And if it’s a popular vehicle, chances are the green parts supply will run out quickly.
Despite humble beginnings, steady improvements are being made. The process itself is more simple and mindsets are changing – among repairers, among fleet managers and among individuals and companies, in general. The environmental benefits of green parts seem to have met consensus, Nick observes, and if supply was to increase, adoption would follow.
For Allianz, green parts are one of many sustainability initiatives, but it is a very tangible one. It’s a quantifiable way for an insurer to demonstrate its credentials.
When considering the future of green parts, one needs to address the question of electric vehicles and their batteries. This is on the radar of carmakers, the salvage industry but also insurers.
Nick notes that electric vehicles, which will become the norm in a not-so-far-away future, use up huge quantities of natural resources to manufacture and so recycling them will become absolutely important. To create a less wasteful circular economy, vehicle manufacturers could partner with salvage agents to take back the electric battery, fix it if needed, use it to repair a second-hand car or even put it back into the production cycle to build a new car. To reduce the use of raw materials, manufacturers should look to develop vehicles that are more readily repairable.
To make future road transport sustainable, all stakeholders need to find ways of using fewer resources and less energy and cutting waste. Green parts are one of the solutions for insurers, their fleet customers and their repairer partners. They might not be enough on their own but they’re a step in the right direction or a wheel on the right track.