THE INSURANCE “DIVIDE AND RULE” PRINCIPLE IS ALIVE AND WELL
The sudden onset from a raft of local short-term insurance providers to sign and return the annual service level agreements renewals just a few days before the December shutdown can almost be seen as an act of bad faith.
At that stage of the game, body shops were up to their necks tying up loose ends, finishing urgent jobs and getting everyone paid. Within this chaos, a “sign it or fail to get approved as a service provider” ultimatum landed on the desk of many shop owners to contend with.
The devil is in the detail, and amongst the fine print in some agreements was a dismal approximate 5% cost of living increase for most of the repair concerns. A deadline of a meagre four days to accept the contract was given. Remember that contracts would be enforced for the next 36 months and also cover a MIBCO component of annual wage increases. How is that enough time to consult lawyers, associations, read through absolutely everything with a fine-tooth comb and get the opinion of your peers?
Set against some 17% increase in electricity bills and other operating overheads for shops and declining procurement direction for unknown reasons, this could be called a perfect storm. Top-down micro-management from our short-term insurance “process partners” continues to be dubious at best.
Coupled to this bad business opportunity comes the normal body shop set of apathy that the market sees on an ongoing basis. Insurance profitability is all too often able to publish profits in double digit numbers, while the people who do all the hard work are left with less than 5% net profit all too often. The need for one prominent voice from repairers has never been in such high demand, but it’s very questionable about any drastic change that could emanate here in 2025.
All charge for AI technology
One thing is certain about the future of the collision repair trade: the rapid evolution of safer, smarter AI-driven technologies. These advancements are happening at a much quicker pace than expected, and they will require technicians to have access to the right tools and methodologies to perform first-time, right repairs.
The options facing the industry are coming thick and fast as tomorrow’s vehicle technology rolls into our shops. The prediction is that ever more technical advances will be manufactured and installed in the next five years, which is much more than all the innovations seen in the last decade. These developments are set to challenge many established protocols, forcing the industry to adapt faster than ever before to a new path of profitability.
These changes require our OEM partners to now open doors for better collaboration with the importance of accredited appointed repair facilities. A possible quick win would be to substantially reduce audit fees, but still charge the same and direct it towards skills training. This would assure the consumer of effective working of all installed devices within their vehicle. It’s definitely food for thought and a speedy answer to a weighty question and need in the aftermarket industry.
By Steve Kessel, Director Operations, Collision Repair Association of SA
