The Fight Within. What Side of the DRP Battle Are You On?

March 10, 2005 by
Filed under: Uncategorized 

You can feel the rumbling. The foundation of our industry is shaking. The cause is deep, deep in the souls of the men and women who run the 40 or 50 thousand body shops across this country. It?s been shaken before, but like the latest complaints from Mount St. Helens, little has come of it. Scientists have no idea when that miserable mountain will explode again. It can?t be predicted. Collision repair industry ?experts? have no idea whether the pressure built up over the decades from the mix of repairers and insurers will find that little crack needed to release energy explosive enough to change the landscape of the collision repair industry.

Whether you are pro DRP, anti DRP or somewhere in between, you cannot ignore that it is a contentious issue. In fact it is dividing our industry like slavery did to our country one hundred and fifty years ago. Many are opposed to the DRP philosophy but are forced to participate to survive. Other shops are willing to prostitute themselves completely for the promise of a full shop. And then there are those shop owners who have held firm and refuse to participate in any program under any circumstances.

For the purpose of disclosure, I?ll tell you that my shop has three DRP?s. They account for less than 10% percent of my work, and most of that work I would get already because the vehicles are the makes that our dealership sells. These companies pay the highest labor rates of all the insurance companies in the area, and they do not allow aftermarket parts. One company, in fact, won?t even allow us to use LKQ parts. These are basically direct pay relationships.

Many would find my active participation in trying to outlaw DRP relationships strange. It?s not at all. I could care less if I had them or not. I wouldn?t lose a dime if they disappeared tomorrow. In fact, my bottom line would fatten faster than Kirstie Alley working in a bakery. Without the signed contracts between the DRP shops in my area and the notoriously stingy insurance companies like Nationwide, Progressive, Allstate, Liberty Mutual (Did I forget anyone?) labor rates would rise. At least in theory, anyway. We?d still have those geniuses, you know, the nominees for the Nobel prize in business, who would post labor rates at or below what the insurance companies think we should be paid.

We?ve all read about the kickback schemes between some large independent insurance agencies and even larger insurance companies. The insurance companies have been secretly paying insurance agents to push a particular policy on their customers. Insurance customers have been paying millions more than they should have paid for their insurance coverage because instead of working for the client, the agent was really working for the insurance company. And even though the insurance company had to pay the agent for the referral, the inflated price of a policy made up the difference. Remember now, even though it appears that the cost to the insurance company in this scheme is more, and that they are sacrificing profit for business, they are actually making higher profits because they don?t have to compete with other insurance companies for the consumer?s business. The agent is being compensated to steer his customer to the insurance company that is the highest bidder. The agent makes more than just a normal commission. The agent also gets that kickback. The insurance company makes more money and the agent makes more money. The consumer, however, gets screwed. Gee, what a surprise. Consumers getting screwed by the insurance industry. I never would have believed it if I hadn?t seen it for myself.

Now let?s analyze the typical Progressive or Nationwide,or any other cheapskate insurance company, DRP relationship with a body shop. It?s much like the payola relationship with the insurance agent, only it?s worse. There are still three parties involved, but this time, only one of the three parties makes money. In the payola scheme both the agent and insurer profited. In the DRP scheme, only the insurer profits. I can hear many of you now. ?That?s crap. We?re a DRP and we make plenty of money!?

Do you really?

In the typical DRP relationship, with one of the big, cheap insurance companies, the repair shop has to give up something. The shop has to offer discounts on parts or labor or both. If the shop owner is sharp enough to get an agreement with one of these insurers without giving discounts, he has to give up his integrity by agreeing to use counterfeit parts. Folks, using the terms ?quality replacement parts,? ?aftermarket parts,? ?non-OEM,? ?alternative replacement parts? or any other euphemism the insurance industry comes up with in the future, does not change that these parts are nothing more than counterfeits.

Think about it. You buy a Rolex from some homeboy in New York City. It works fine. It tells time. Your girlfriend thinks you are so hot now because you wear a Rolex. She thinks it?s the real deal. Do you think she?d be as impressed if you told her it was a counterfeit? It looks as good and works as good as a real Rolex. Don?t you think there?s some value to an item or product actually being what it is presented as. Hey, I?d love to knock off some fifty dollar bills on my Hewlett Packard. They look the same, function the same, what?s the problem? A counterfeit by any other name is still a counterfeit. Car companies have spent years and paid engineers millions developing their products. Bumpers, hoods, fenders all contribute to the brand and its appeal. Then along comes a bunch of little communists who copy these parts (very poorly) and make a fortune flooding the US with counterfeit recycled beer cans.

Shop owners who conspire with insurance companies to steal from car owners by installing inferior counterfeit parts are selling their integrity in return for an empty promise from the insurance companies to keep their bays full of wrecks. So if you are slick enough to get an agreement with the insurance company that doesn?t include discounts, and you just have to keep that percentage of counterfeit parts use at a level they find acceptable, you are still losing.

But it gets worse. Not only do you lose, but you cause the consumer to lose. Are all your customers aware of the commie beer cans pretending to be fenders on their vehicles? If you are a Nationwide DRP you know that they will write counterfeit parts on any vehicle, even if is brand new car with one mile on it. If the part is available, you have to use it. How many consumers would willingly go along with that? How many repairers are cold hearted enough to sleep at night knowing they just put junk parts on someone?s brand new car? The vehicle owner is no longer your customer, the insurance company is. They are also your business manager because you are following the business model they set up for you. Congratulations on your new position.

You damn fools are selling yourselves like a bunch crack addicted ghetto whores. It?s almost comical. It would be a riot if it weren?t screwing up the entire collision repair industry. The insurance industry wiggled some smelly bait in front of your faces and you took it, hook line and sinker. Sure, you have a parking lot full of work. Oh yeah, you?ve just added on and hired and army of office staff to do all the extra paperwork. Look at you! You?re going places. To fall for this is to believe that you need the insurance companies to be successful. They?ve convinced you that you can afford to offer them a volume discount. The insurance industry has relied on your ignorance of business and economics to hoodwink you into selling your soul to satisfy their insatiable appetite for profits.

I have nothing against profits. Profits are great. But where are your profits? Where are your honest, proudly earned profits. I?ll tell you where they are. They are in the accounts of Progressive, Nationwide, Allstate, Met-Life, The Hartford?..

You?re an entrepreneur. You are not supposed to believe in wealth distribution. That?s a socialist?s concept. But by participating in the DRP programs, by being the addicted whores to the profit hungry Progressive Pimps, you are redistributing wealth. You are taking it from your consumer, adding a big chunk of your wealth to the pot and handing it over to the insurance industry. You are participating in a socialist program so the big insurance companies can advertise the lowest rates. You are helping to subsidize the bad drivers. You are helping to fill the pockets of attorneys who make a living suing insurance companies. You are the path of least resistance. The insurers can?t win against the attorneys, so they are picking on you. They are capitalizing on your stupidity.

You must never forget one of the most important concepts in your business. You can not offer a volume discount on labor. Labor can not be stored. It cannot be liquidated. Labor cannot be shipped to another store across the country where it is more in demand. Labor is only consumed in real time. Until collision repair processes can be automated, you cannot produce more with fewer people unless your operation is now run inefficiently. Someday we will be able offer insurers discounts on these processes. Someday there will be machines to do everything and all we?ll have to do is add another machine or run them longer. We have already driven away half of our workforce. Few people want to do what we do for the little we get paid. DRP?s just make it worse.

The DRP only benefits the insurance company. It steals from the shops and it steals from the consumers. Attorneys General across the country are beginning to smell the stink from the DRP pit. Just recently, after working with the Auto Body Association of Connecticut, Attorney General Richard Blumenthal announced that he was calling for the Insurance Commissioner to be an elected official instead of being appointed by the Governor. Between the payola scam he was investigating and the ABAC?s complaints, Blumenthal got a first hand look at the shenanigans in the Insurance Department. He saw a clear bias toward to insurance industry and understands that it is contrary to the department?s mission.

I?m happy to say that a bill has made it out of legislative committee that would require the Insurance Commissioner to an elected official, answerable only to the citizens of Connecticut. There is also a bill making its way through the legislature that would outlaw DRP?s in Connecticut. The same bill puts auto damage appraisers under the watch of Connecticut?s Consumer Protection office. Appraisers would be held accountable for their actions, and hopefully, they would become ?independent? like they are supposed to be.

Unfortunately, the slimeballs ruling from the insurance castle in Hartford have introduced their own bill. It?s a doozey too. Essentially, it makes the insurance company the customer and takes all control of the repair from the vehicle owner. Shops would have to turn over all invoices and paperwork related to the repair for the insurers? inspection. Repairers could only repair a vehicle by the insurance estimate, and the vehicle owner would be obligated to have all repairs done. Shops would have to allow reinspections by insurers at the shop during the repair. The bill is ridiculous. But we are taking no chances. We are working hard to ensure this bill becomes recyclable material.

The battle is on. Three Connecticut shops have filed a class action lawsuit against The Hartford for steering work to their many DRP shops. Many Hartford DRP shops have been served with papers and ordered to produce piles of records. The Associated Press is working on an article about the ABAC?s fight with the almighty, powerful insurance industry. DRP shops are defending their choice to prostitute themselves. And the Connecticut Automotive Retailers Association has decided to fight the ABAC and oppose the anti-steering, ant-DRP bill now making its way through the legislature. Interestingly, CARA?s Legislative Chairman is Ken Crowley, owner of a large chain of dealerships and one of the biggest DRP whores in the state. Go figure.

How?s the battle in your state? Are you doing anything, or are you just complaining.

Print Friendly, PDF & Email

Tell a Friend

Comments

16 Comments on The Fight Within. What Side of the DRP Battle Are You On?

    I agree with you and I am writing my own radio commercials and hammering DRP’s and Insurer recomended repair facilities. I recieved an anonymous phone call from a male voice stating that since I did not like working for Insurance companies he would make sure I did not get anymore Insurance work! I wrote an ad just for him. I hope he cringes every time it runs.

  1. FRANK MARLER on Thu, 10th Mar 2005 10:50 am
  2. Whats wrong with writing ests. the way they should be writen? Repairing vehicles the way they should be repaired!!!!We are the experts not the insurance co.If you do quality & timely repairs by ICAR standards you can demand the money needed.You dont need reinspectors or someone looking over your shoulder. The faster we can do the repairs the more money we can make!!!!! My shop has been a DRP for 16 years and we love it.

  3. Sergio Lewis on Fri, 11th Mar 2005 12:21 pm
  4. It’s interesting that the auto collision repair industry has become a prostitute to the Insurance company’s. Furthermore, if the Insurance companys continue to get their way… then eventually the consumer will loose their freedom of choice, and ultimately the collision repair industry will be influenced by a dictatorship type control, and free enterprise in this market will die.

  5. gtolovedaddy on Fri, 11th Mar 2005 2:15 pm
  6. RIGHT ON JOHN!
    This whole deal with DRPs is should be considered a violation of the fair trades act. It unfairly restricts trade as well as creats a unfair markett advantage for the DRP shops. Not every one is allowed to participate in the DRP programs so that is initself discrimination. or bouy cotting independents shops. It places unfair expectations on the backs of the Independed shops. plus some of the franchise out fits like Far-star charges the shop to participate in exchange they are promised referals from insurance co.s that is rackettering why should we have to pay to have work? think about it. how can a franchise or conglomerate promise you work from the insurance company? are they spin off companys in disguise of a corporate business set apart from the mother company, Kind of like the insuance companys dennied being associated with Capa untill someone squealed. thar is so much corruption going on its discusting. the lobyist pockett are being lined by the insurance companys to pass biast legislation by any other decription would be considerd bribery. like what the hell is going on in Texas latly? they need to be impeached and Imprisoned for life along with the coluding insurance companys. If it wasnt for all of the wasted dollars being spent in dirty polititions pockett the could afford to fairly compensate their policy holders. in summery
    two words
    ORGANIZED CRIME.

  7. George A. Moore on Sun, 13th Mar 2005 10:48 am
  8. I have been in the collision repair business as an owner, teacher, manager and appraiser
    for over 25 years. At first I
    supported the fact that as a DRP
    we could have customers "delivered"
    to the shop by a simple referral from their insurers. But, as the programs became more invasive to my business, I realized that the
    control of my business was being
    given away to the insurance companies. They have no regard for your customers safety, quality or
    loyalty. Only that you perform the cheapest possible repair without concern to anything but their profits. The worst of these DRP Insurance companies is Nationwide.
    They have without regard to anyone but themselves driven the collision repair process the lowest possible quality with their insistance on used parts even on great safety concerns such as suspension parts.
    Unfortunately some Senator`s kid
    will probably have to get killed
    by a car repaired at a Blue Ribbon shop before anything is done about the problem.

  9. Lisa on Thu, 17th Mar 2005 10:15 am
  10. A little off topic here, but in California, Allstate has been trying to make us take 5% off the list prices of parts- and we’re not a DRP for them. They argue that if our dealer isn’t willing to take that add’l 5% off, then there are dealers that are willing to- despite the fact that we are very loyal to the people we deal with now, and that it is a huge hassel to have to call around different dealerships just because they want us to, plus the additional time it takes just to order parts from these other dealers, and have to write a check to them, instead of having a charge account like what we have with other dealers. Insureds have the right to repair their car whereever they want- don’t we have the right to buy parts at which dealership we want?

  11. TLC on Thu, 31st Mar 2005 12:03 pm
  12. I strongly believe that consumer awareness must be our greatest concern. After all, legislation has been passed in states that have strong clear language about stearing and other critical concerns in our industry. Only to have the insurance companies ignor the law and continue their foul and devious practices. Complaints have been brought to these state’s insurance comissioners by the body shop industry and their responce is "the only complaints are comming fron the body shops."
    If you think about it this sounds reasonable. The average consumer just wants his car repaired without a hassel and as the saying goes "beauty is only skin deep"
    It seams that most consumers think their cars are repaired at DRP shops they are steered to
    do a job to a quality that really just gets by. BUT, the consumer does not realize that he has most likely been screwed by the use of junk parts, aftermarket parts , repairs when replacements should have been, made and let alone the labor discount the body man is trying to make up for buy pushing the job thru using as many short cuts as he can.
    THE GENERAL PUBLIC IS NOT AWARE!!!!!!!!!!!!
    Each shop owner must
    deside if they want to continue to to "stick ther heads in a place where the sun does not shine" and be screwed or make ever effort to EDUCATE THE CONSUMER!! Body shop associations should get involved in persuing a long term campaign,
    sponcered and backed buy their members and other shop owners willing to participate, with the focus on a type of marketing program put in to place to gain public support. Support in influencing their state legislators and politicians. The public has the right to know just what the almighty insurance companies and their lobiest are really doing.
    The politicians want the votes at election time. They only hear what the insurance companies overpaid lobiest and their bottom feeding lawyers say and ignor the "poor little bodyshop owners" com pliants ,because the body shops did not put them in positions the have. THE VOTERS DID!
    We need the help of the public . I feel we can only get the help thru a grassroots beginning of consumer awareness campaigns promoted by
    strong autobody associtions and their members getting a backbone and giving some time and money to support it.
    The strenght in numbers could make this effort a cheep price a to pay for the clear advantages we could gain in our industry and fairness for the shop and the consumer.

  13. comments on Thu, 7th Apr 2005 7:19 am
  14. I may be a whore, but I certainly do appreciate the added revenue that DRP’s give my shop. If I have a problem with an aftermarket piece of junk, I call the ins. company and tell them. 99.9% of the time, it’s ok to use OEM. It just doesn’t seem that difficult.

  15. Frank LaPorte on Tue, 19th Jul 2005 6:12 am
  16. The main problem, as I see it, is that there have been few problems with aftercrap parts and DRP’s. Now before you get your feathers ruffled, allow me to explain.

    I have heard of aftercrap hoods falling apart. Also, I have heard that countless numbers of chopped up vehicles repaired by DRP’s have been found. However, there have not been enough problems compared to how many aftercrap parts have been sold and repairs made by DRP’s.

    But the questions that need to be asked are:

    How many of those ill-repaired vehicles have been in a subsequent accident?

    Of those that were in another accident, did the parts fail? Did the repairs fail?

    Obviously, if any of the above did happen, it’s not being publicized. Therein lies the problem. If the motoring public is not aware of any problems, why should they be concerned about aftercrap parts or DRP’s? Add the fact that the insurance companies cover up the mistakes very well.

    Then again, if the public is made aware of those problems, will they actually make a stand against the insurance companies if they are told that their rates will be increased or worse, dropped?

    Probably not.

  17. STOP FIGHTING WITH INSURACE COMPAINES on Fri, 3rd Mar 2006 9:28 am
  18. I AM TIRED OF LISTENING TO ALL SHOP OWNERES SAYING WHAT THEY SHOULD AND SHOULDN’T GET FROM INSURANCE COMPAINIES. WHEN WAS THE LAST TIME YOUR DENTIST OR DOCTOR CALLED THE INSURANCE TO NEGOIATE RATES ON YOUR BEHALF. LABOR RATES HAVE GONE UP 10 DOLLARS AN HOUR IN THE LAST 20 YEARS AND HEALTH INSURACE HAS GONE UP 45% IN THE LAST YEAR. DO YOU THINK THAT THE INSURANCE COMPAINIES ARE GOING TO CHANGE THE RATES – NO WAY. BOTTOM LINE AS A SHOP OWNER YOU SHOULD BE EDUCATING YOUR CUSTOMER NOT TRYING TO CHANGE RATES WITH INSURANCE COMPANIES. YOUR CUSTOMER IS RESPONSIBLE FOR THEIR DEDUCTIBLE AND THATS IT. AT THE END OF REPAIR ASSUMING THAT YOUR A FAIR SHOP WORKING AT A RESONABLE RATE TELL YOUR CUSTOMER TO SUBMIT THE DIFFERENCE TO THEIR INSURANCE COMPANY. CHANCES ARE THEY WILL GET PAID FOR IT. YOU WILL SPENDING LESS TIME ARGUING WITH INSURANCE COMPANIES. THERE WILL ALWAYS BE SCAB SHOPS DOING SUSPECT WORK AT CHEAP RATES AS LONG AS THATS GOING ON INSURANCE COMPANIES WILL NEVER RAISE THEIR RATES. DO A GOOD JOB AT A FAIR PRICE AND LET THE CUSTOMER DEAL WITH THEIR INSURANCE FOR ANY ADDTIONAL MONIES NOT PAID FOR ON THE ESTIMATE.

  19. Scott Kearny on Tue, 20th Mar 2007 11:01 am
  20. I have been in this business for 25 years and have owned my own shop for the past 5 years. We are a small shop built on quality repairs,and rapid turn around. I have been trying to get on with a few DRP programs for years but have had little success. All of the appraisers that come to my shop know our quality, and I have a nearly 100% customer satisfaction. With having said all that what are the steps needed to be taking to get on with a few GOOD insurance companies. This business is controlled, for the most part, buy the insurance companies,Just like health care, I figure you either join them or get into another type of business. Any answers I am all ears..Thanks for listening…

  21. Walter Russell on Thu, 12th Jul 2007 4:07 pm
  22. THE BIG FLAW
    I currently have only three DRP’s and have no problems with the way insurance companies operate the DRP, we are very insurance friendly. I always go with the flow and keep current with modern technologies. The only big flaw is the insurance company’s body shop selection process. I would like to have additional DRP’s but have been turned downed repeatedly by most of the big insurance companies. I have the same qualifications, equipment, certifications and modern state of the art facility as the shops selected. I am told by the insurance company “We do not need additional body shops in the program”. The result of not being in network could be financially catastrophic to some shops. Unless you have been on Mars for the last few years, you know the work is being steered to the in network shops. Our shop very seldom repairs vehicles for customers insured by these insurance companies. As a result our numbers have steadily gone down and down year after year. In the past we relied on our goodwill, customer service, craftsmanship and good reputation to retain our customers. What is the world coming to when these values no longer count for anything? The big flaw is we are not on a level playing any more, the naive consumers will eventfully wise up. The body shop that is a business segregation casualty will most likely disappear along with there values. What is next you might ask?? If the terrorist don’t get us first, insurance company owns all shops in the nation?, or better yet why not sent all the repairs to China. Even better let’s all move to China they are way ahead of us when it come to poor quality and no values; that way we don’t have to wait so long for the future, we could have it all today !!!

  23. paint tech on Tue, 17th Jul 2007 9:07 pm
  24. paint and labor times are being slashed terribly by insurance companies. when you get one hour for a repaired panel that you have to prime and do all the proper procedures to its not worth even doing. you get told its about volume with these drps. there is so much volume you can do before you fall over dead. the ones that are getting hurt the most are the techs and helpers in this buisness. this buisness is not considered a trade anymore.

  25. Scott Wallace on Wed, 25th Mar 2009 4:24 am
  26. We all know that the DRP System is in need of a major overhaul, however the bigger shops all participate (90%). That shows us that if our states do not get involved this system will continue to be run and managed by the insurance companies. I think that if a shop is licensed by their state and select to become a DRP with any company they should be allowed. This would force insurance companies to allow the customer to choose a shop that they are comfortable with. I own a small shop and realize that the only shops in my area that are busy, on a regular basis, are the shops that have several DRP relationships. I have had my customers steered to other shops and their repairs are no better than mine.The Main Problem with theese DRPs are that Insurance Companies are FORCING CUSTOMERS TO USE “THEIR” SHOPS!!! This is a violation of fair trade, and illegal…..Try to complain to your state…see what happens…NOTHING…….

  27. Scott Wallace on Thu, 26th Mar 2009 4:29 am
  28. ONE MORE THING, What if we all post ads on Craigslist to air our concerns? Would the word get out? This forum is read by very few people that can do anything. I feel our concers are falling on Deaf Ears. What category to post in will get the most response? Any Ideas?? Should we keep bitching?? I just want to keep busy and make an HONEST Living without Screwing anyone. Is that psooible??? Bernie Couldn’t Do…..WE CAN!!!!!!!!!!!!!!!!!!!!!!!!

  29. Scott on Sat, 31st Oct 2015 9:48 am
  30. The one thing i have seen over the past few years is a staffing problem there are techs.leaving the buisness . When talking with them they tell me that the shop they worked for was bought by an mso and they start preaching cycle time and cheaper faster repairs because thats what the insurance company wants and i have to say that being a tech. for 20 years and working as an appraiser and now a shop manager at a dealer owned shop with drps i can say i have seen this as being true when i have to go out into the shop and tell a tech something that the insurance wants done that i know if i was the tech would make me question the ethics behind it and with the drps feeding the mso shops the techs. cant leave one shop to work at another across town because its owned by the same mso and techs are getting fed up with the push from the mso shops they work for about cycle time so in short i think the drp programs have lead to more mso shops and also a shortage of good techs.

Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!





  • Recent Comments

    Bob Isham: Jessica, use you own insurance to repair the truck...
    Jessica: I was rear-ended by a guy not paying attention in ...
    Manny prado: I'm glad I don't have a manager like this at my sh...
    Justin Petty: Calculating diminished value is no different than ...
    Wayne Toloso: John, I have to say you are the FIRST person I ...
    Christie: How can I get the newest Estimate for Total Loss t...
    Ralph: State farm is a corrupt company who lost a billion...
    Jason: So all these horror stories of how bad Progressive...
    Ding: really surprise for the real-life fraud by repaire...
    Kent miles: The industry is finished . Big insurance companies...
  • Archives

    • [—]2019 (2)
    • [+]2011 (3)
    • [+]2010 (3)
    • [+]2009 (8)
    • [+]2008 (11)
    • [+]2007 (20)
    • [+]2006 (14)
    • [+]2005 (14)
    • [+]2004 (22)
    • [+]2003 (12)