Andrew Marsh, Engineering Director at ezimethods.com, delves into how the relationships between insurers and repairers could work better if only they could cut out the jargon.
In the beginning…
Way back in the early 1960s, the UK insurance sector had not covered itself in glory with policy mis-selling failing to honour policies and more. The Government decided that the risk of damaging the domestic new-vehicle market was too great and proposed that specifically motor insurance would be totally defined by law – over and above prevailing financial law – or, the sector could self-regulate.
The sector chose to self-regulate, establishing what would become the Association of British Insurers (ABI) to look after policy matters, and out of that, the Motor Insurance Repair Research Centre (MIRRC) which, in 1969, moved from London to the village of Thatcham.
The MIRRC existed to provide a price control mechanism for the sector by benchmarking repair practices as well as researching the effect of technology. MIRRC has been known as ‘Thatcham’ for many years, and famously is associated with testing / approving vehicle security.
Not all insurers are members of ABI – notably Lloyds Market Association (LMA). Furthermore, each insurer is profoundly competitive, so policy formation mostly is either to standardise existing practise or to look into distant issues such as autonomy.
Each insurer is a functional corporate finance company, with all the trappings of corporate behaviour and are very aware that they are the ones paying the bill, to the extent they suggest they have full control of the process from first notification of loss (FNOL) to returning the repaired vehicle to the owner. Oddly these companies have stripped out their resident technical expertise in the past decade, whilst maintaining they know enough about vehicle technology to intervene in the claims process.
As with most sectors, there are some businesses that have a significant forward vision and the majority who stick closer to tradition. The collision repairers are mainly owned by entrepreneurs, who use the same mantra as insurers – ‘my word is my bond’. However, the insurers do not like to talk to many, many individual businesses but prefer to deal with larger groups, and also do not know what to make of ‘family-owned business’. The values of one sector are not understood by the other – English is used to communicate, but the meaning and context are often alien.
The insurers have to use repairers to provide the vehicle restoration service – or to judge if a vehicle is beyond economic repair – but are not comfortable that many of these businesses are not corporate. Meanwhile, the repairers see large scale corporate behaviour as ‘faceless’ and beyond understanding.
The motor insurance sector is driven by stats, and it commoditises every single aspect of risk. The sector is all about managing risk to return a profit whilst providing a service – ‘my word is my bond’. They are immersed in data, but adverse to a discussion about vehicle technology. If, however, such trends are translated to trends with financial impact, one would have their full attention.
Repairers, on the other hand, are usually more comfortable about the intricacy of the repair process, from welding to painting, than the number of units or type of repair. This is part of the source of what ultimately is mistrust between the two sectors. The operational business matters of the repairers – deals on the commodities they buy, return of unwanted parts to dealers at the end of a repair and more – are seen by insurers as ‘theirs’ since they pay for the whole thing.
Not all insurance companies or repairers behave badly, but the upshot is malpractice. If it gives any edge in a highly competitive market, it is quickly adopted – a case of ‘if we don’t adopt this, we will lose out to our competitors’. This mantra leads directly to the discount claw-back web, where no one is quite sure who is getting what.
In essence, anyone feeding the vehicle repair market should be aware of the tensions that exist between repairers, insurers – and for once – the people who pay for policies. Yes, the very people who really do pay for the whole lot, who increasingly do not understand why a small cosmetic repair can take so many working days to turn around…… There’s opportunity out there, if only we could speak the right language.