Neil Joslin – Chief Operating Officer [COO] from e2e Total Loss Vehicle Management provided his views on why reclaimed parts is the way forward not only for the benefit of businesses but for a sustainable future.
There continues to be much talk across the industry when it comes to reclaimed parts and whether the ‘tipping point’ has been reached whereby insurers and the general public are ready to embrace the possibilities presented by recycled vehicle parts.
It is true that insurers are more open to the possibilities presented by high quality, warranty assured reclaimed parts. This can be aligned in part to rising motor repair costs and ongoing concerns over delays in the procurement of parts from Europe, with the Brexit uncertainties still at play. The customer experience advantages are also now acknowledged particularly in relation to the option to avert a total loss claim. The UK motor insurance market remains one of, if not the most, competitive in the world; insurers work hard to attract a new customer – why not then do all they can to retain that customer? Public attitudes to recycled parts have begun to improve with education around environmental, speed and future policy cost benefits.
Operationally, insurers are most likely to apply the reclaimed parts option to make the repair of a border line total loss vehicle economically viable. But this is by no means the case in every instance. If insurers’ costing tools included prices for reclaimed parts, how many more borderline total loss vehicles might have the option to be repaired, and how many customers might happily continue to drive their repaired vehicle and insure it with their existing insurer? For commercial policyholders this could also mean getting their vehicle back on the road quicker and earning for the business. Less customer churn, lower potential credit hire costs and greater customer satisfaction. All achieved in an environmentally friendly way. I can see a future where insurers typically adopt this approach to borderline total loss claims and where any lingering consumer fears surrounding the use of second hand parts have been allayed through education.
But for me, the tipping point is when an insurer wants to adopt a reclaimed parts policy and apply it as a genuine option on all motor claims, not just borderline total loss vehicles. And therein lies the challenge. For insurers to fully embrace reclaimed parts in this way the proposition needs to be sustainable; it requires scale and proper engagement and there needs to be exceptional governance of the supply chain, including matching parts by vehicle VIN. Body shops are working on very tight margins and need to be brought into the equation to see and realise the benefits of working with reclaimed parts, in part linked to speed and efficiency for their businesses. Ongoing consumer education will also be necessary to reassure that reclaimed parts are safe and to promote their benefits.
It is true that insurance companies in the UK have traditionally fitted new for old when repairing an accident damaged vehicle. We can learn from the experiences of other countries. The French implemented “Energy Transition for Green Growth” in January 2017. This law sees all professionals involved in vehicle maintenance and repair required to offer consumers recycled or remanufactured parts. The USA also advocates the use of recycled parts sourced from vehicles either the same age or newer. It can be done successfully and I believe industry wide collaboration will be key.
At e2e, we are working to collaborate with the industry to design a sustainable reclaimed parts proposition fit for purpose, both now and in the future. We see reclaimed parts being part of the additional value delivered by a salvage contract partnership, consistent with our ambition to redefine how a salvage partner is viewed. We have engaged with Thatcham and we are canvassing insurers and body shops about their requirements to include ease of searching/identifying and selecting parts, stock availability, transit and logistics and quality control. We are also part of a steering group working to create a kitemark for reclaimed parts sold – an initiative sponsored by eBay. For the industry as a whole there is much work to be done to change mindsets, re-engineer business processes, revise motor claims strategies and build a viable reclaimed parts infrastructure, but the business case is clear and the effort will be rewarded tenfold; and the planet will thank us all.
If you would like to find out more about e2e Total Loss Vehicle Management, then visit their website at www.e2etotalloss.com