Insurers and Collision Shops: Driving Partnerships Forwar

Insurers and bodyshop owners working together to solve a puzzle. It was an exercise in communication carried out at the recently held 3rd annual CARSTAR Industry Conference in Alliston, Ontario. It was also a metaphor for a new relationship participants hope to see develop between these once adversarial industries. The tension that has existed between collision repair shops and insurance companies, as insurers struggle to keep claims costs down and bodyshops fight to make a profit, might have made such a conference implausible in the past. And the effect trickled down to customers, caught in a tug of war throughout the claims process. Keeping that “common customer” happy has to be the top priority, both sides say.

New partnerships aimed at keeping repair costs down and providing a solid volume of business to shops represent a win-win scenario. More importantly, through these partnerships, both industries hope to gain competitive advantage by making the claims process as painless as possible.

Choose your partner

A new agreement inked between CGU Group and CARSTAR earlier this year is indicative of the “partnering” trend. Recognizing that about 40% of CGU’s 250,000 projected claims for this year will be collisions, the agreement juxtaposes CARSTAR’s promise to keep average repair costs down with CGU’s promise to forward a volume of business to the bodyshop franchise. “You need to have a win-win relationship with vendors, or the relationship won’t survive,” says Greg Somerville, senior vice president of claims for CGU. Failure to form partnerships will put both insurers and bodyshops at a competitive disadvantage, asserts Dan McTavish, vice president of claims for Liberty Insurance. “If you don’t do it, your competition will.”

Brand name game

CARSTAR’s ability to give its local franchisees a “national presence” makes it a natural fit for a large insurer like CGU. The heavy acquisition activity of CGU recently has increased the insurer’s reach and marketshare. By bringing repair shops under one brand name through the CARSTAR franchise, the repair chain is aiming for the same expanded market.

Part of today’s business environment is the quest to cover more territory, and one way for even the smallest players to achieve a national presence is through partnering, notes McTavish. But agreements must be carefully arranged, he adds, with partners chosen well. “Not every step can be handled by a claims manager, they can’t fix the car”, so repair shops become an integral part of the claims process and a reflection of the insurer’s customer service capabilities. “Strategic partnerships aren’t just outsourcing, they’re not just a quick, easy purchase of services. We’re looking for partnerships where there is a value that is apparent to the customer.” That value is an increased profile and positive definition for the company’s brand.

Somerville agrees that vendors are as much a part of how customers view an insurance company as the insurer’s claims department. “In the eyes of the customer, they see ‘your [the insurer’s] bodyshop’,” and that bodyshop’s service levels directly impact the insurer’s brand. “When we send somebody to your shop, you are us, and vice versa.”

CARSTAR’s franchises “know we represent CGU” and other industry partners, says Sam Malatesta, vice president of marketing and insurance relations for the bodyshop chain. By improving turnaround times and keeping customers happy, repair shops can create “apostles” who will sell both CARSTAR’s and the insurer’s brand through word-of-mouth.

Beyond satisfaction

Achieving better customer service through partnerships is more than good public relations, it’s a necessity for insurers in a time of intense competition and soft rates. Although pricing may seem to be a driver for customers, there isn’t a great deal of difference in rates between insurers, notes McTavish. Speed and ease of claims handling is “an opportunity” for insurers to distinguish themselves from the competition, says Somerville. A recent customer focus survey conducted by CGU finds that 72% of respondents think service levels vary among p&c insurers. The survey also reveals that service levels during the claims process are a key part of customer retention. While just 39% of customers who found their claims experience satisfactory are likely to renew their policies, 88% of those very satisfied with the process say they would renew.

Traditional thinking was that claims service only had to be satisfactory, that is was about cost and not a differentiator among insurers. This way of thinking is outmoded. “We have to go beyond satisfaction,” says Somerville of the results. “We have to knock their socks off.” McTavish agrees that consumers today expect more, both from insurance companies and their vendors. Customer satisfaction surveys by the Financial Services Commission of Ontario (FSCO), for example, are being taken seriously by insurers. “Every insurer wants to be in the top 10 in satisfaction [on the FSCO surveys], just being in the middle is not enough.”

This new focus on customer service means that relationships with repair shops are more crucial than before, and insurers are going to be paying attention to shops who can give them the edge in keeping claimants happy and customer retention high.

Claims go online

CGU’s survey also reveals that speed is of the essence in claims satisfaction. “Do whatever you’re going to do to me, as fast as possible,” is what customers are asking for, says Somerville. One of the routes being taken by many insurers is the use of technology to streamline claims, including Internet claims service. Repair shops will soon feel the push to get online and to become associated with online claims handling. The growing Internet audience needs to be responded to, notes Glenn Penny, vice president of claims for RBC Insurance, but Internet claims service is “more of an advantage for those [insurers] with inefficient processes now”.

As more and more technology solutions aimed at claims handling come on the market, insurers need to invest carefully, says Wendy Hillier, vice president of claims for CGU. “We don’t just want to get everything that’s on the shelf.” McTavish agrees that insurers should be wary of hanging their hopes on expensive technology solutions, which will be difficult to integrate with industry partners’ systems. It will be a time-consuming process that may only be realized “two to three years down the road”.