Are We Insane?

by Lucky Papageorg, AASP/MA Executive Director

Over the years, at one time or another, all of us in the collision repair industry have asked ourselves, “Am I out of my mind for doing what I do for a living?” You open your doors every day to provide a service – which has become increasingly more challenging to accomplish – for a diminishing return on your investment, all the while increasing your liability.

You ask yourself, “Why did I go into business in the first place?” Rather than being able to control your independent business, you seem to be corralled at every turn. You wanted to be your own boss and be able to provide for your family and the families of those who work for you. You know you are providing a much-needed service to those in the time of need, much like a doctor, a lawyer, an electrician, a plumber or any other skilled profession or trade. What makes you different from these professionals when it comes to being properly compensated for your knowledge and skill or those of your technicians and staff? 

Simply put, YOU ARE THE DIFFERENCE! Those other professions listed and all others elect to charge and collect based on the costs of doing business, levels of expertise, equipment and training while making a reasonable return on their investment. They stick steadfast to their decision, charge accordingly and do not let others dictate to them. As collision repairers, we may not want to admit it, but it is the truth. WE are why we are in the “fix” we are in. The insanity lies in the fact we have the power and ability to make the decision to make a change for the better. Far too many do not want to face that truth. Just like the line from A Few Good Men states, “You can’t handle the truth!” That’s right! As an industry, all we need to do is look in the mirror, and realize we are the problem. There are many who have already done so and have not liked what they have seen. They are sick and tired of being “employees” within their own “independent” businesses. As their frustration level has risen, they have decided to make the changes needed to regain control. They have been working wholeheartedly towards “Breaking Free in ‘23.” As ‘23 closes out, they are moving their focus to “Doing and Making More in ‘24.” Rather than waste valuable time and energy on complaining and pointing fingers at others for the plight of the collision repair industry, they are taking the necessary steps to guarantee their success and profitability into the future.

You are reading this message after what will have been the third in our series of General Membership meetings which have provided our attendees with the basic information and tools they will need moving forward. The decision to implement and use the tools provided is up to each individual to weigh out the benefits and realize the long-term potential they have before them. Seeing and hearing from their colleagues regarding the success they have experienced in a relatively short period of time has given more individuals the confidence to move to true independence, an independence that leads to a better work environment where the business and its employees are all doing better and are better able to serve their true customers – the vehicle owner – and not the insurance industry seeking to insert itself in the business of collision repair. The insurance industry inserts itself into a business that it needs, but rather than destroying it, insurers should be looking long term and seeking to work to facilitate success on behalf of their insureds.

Part of the reason to question our own sanity comes from business decisions made more than 30 years ago as this trade was evolving from body men doing what they love (fixing collision damaged cars) to business owners and highly skilled technicians working on highly technical vehicles which rival the rockets and satellites sent into outer space today. The business decision made by some shop owners in the late 80s and early 90s to allow insurers into our industry through the front door of our independent businesses is of course, the “referral” contracts brought on by the “Insurance Reform Act of 1988” and the subsequent bastardization of those contracts leading to “program” shop contracts. As an association, we do not condemn those business decisions from over 30 years ago, as our position statement declares, “AASP/MA is a pro-consumer association representing all collision and mechanical repair shops, regardless of their insurance affiliation. However, it is our firm belief that restrictive and suppressive insurance referral and ‘program’ contracts are a detriment to our industry and could create a liability risk for vehicle owners and collision repairers.” Therein lies the “truth” and why we are struggling as an industry to thrive and attract new blood. 

More and more shops over the years, and notably in the recent past, have been taking steps to break away from these restrictive contractual arrangements. By doing so, they have been able to implement procedures within their business to cover the increasing costs associated with collision repair from the training required to the additional equipment and facility costs. They have realized that only truly independent collision repairers will survive and thrive. It has been reported that shops and even some MSOs have not only elected to remove themselves from insurers’ contracts; in some instances, they have made the independent business decision to not do business with those insurers that are not fair and reasonable to work with in regard to reimbursement rate and the payment of recommended and required procedures. The great news is that these same shops are successful and continue to have a backlog of work while getting paid properly for their efforts and expertise in the collision repair process.

Part of the process of severing ties with insurers is knowing the steps you must take. All too often, shops are surprised that they are on referral lists. Some shop owners think that they are not a referral shop because they have not signed to renew a contract. Understand that the contracts are perpetual; the insurer is NOT obligated to have you renew your “commitment” in any fashion. If you signed a contract 30 years ago and have not taken the steps to formally notify the insurer and the Division of Insurance that you want to be removed, you are STILL a referral shop. This allows insurers to continue setting an artificially suppressed labor reimbursement rate. Why? Because they are able to show that they have at least five shops in a conveniently located “geographical area” (whatever that means) to the claimant. The insurer then claims these shops will do work for a specific labor rate and for the estimate they have written. Further, they take the position that ALL shops must also do the same. 

Suffice it to say, if you believe you are “independent” because you think you are not on a referral list, it would be wise to check for yourself…you may very well be surprised that you are actually on a referral list! The sanity of anyone may be questioned if they think that a 30-year-old, a 15-year-old or even a year-old contract covers and has kept up with the changes in technology of today’s vehicles. If you want to be sure you are not unintentionally adding to the problems we are facing as an industry, please read Attorney Sean Preston’s article on page 38. 

I hope you were able to join us at our October General Membership meeting. If not, please contact our office directly to find out how you can get a video copy of the presentation and thumb drive containing the forms and documentation provided at the event. 

Taking steps towards greater independence could lead to greater peace and assured sanity, by creating greater success and profitability. 

Want more? Check out the November 2023 issue of New England Automotive Report!