Estimating Systems & Database Information

[Tim]

Please post your comments, questions, answers and information here regarding estimating and database providers.

[Roy Smalley]

Quite simply, while they do provide some useable information in the form of parts prices and diagrams, the overarching effect of the systems is to allow control of pricing by a party external to the contract for repair between the car owner and the repairer, to the detriment of both and to some extent, the insurer.

They exist because repairers continue to use them, or to join together to force the providers to change.

The industry, with the estimating providers being a major building block in pricing and costing of repair service, is based on an ill-conceived and inefficient business model that have direct costs that we are familiar with, but indirect costs that are just as substantial.

The insurance industry, rather than rely upon a free market interplay to prune out inefficiency, decided long ago to provide barriers in the form of price (estimating providers), market allocation (steering), and production controls (direct repair programs). These barriers do provide a lower priced end product but the before-the-fact barriers have resulted in an inefficient control mechanism in the insurance industry, which is the estimating and adjusting interface, their support structure and other expenses that come from a system that eventually is bound to fail.

The repair and support industry is likewise inefficient due to the effect of barriers to economic interplay, and ultimately the consuming public pays for all of the inefficient results directly in poorly repaired vehicles and indirectly for the insurance inefficiencies through premiums.

Of course, the insurance industry will argue that without these barriers to prevent rampant overcharging that as the payer would be at the mercy of unscrupulous service providers, ultimately the consumer would have to pay more for the repairs without an increase in quality. Certainly with the amount of the consuming public resources these programs have absorbed, this defense should be no surprise.


With free market forces in effect, poor performing shops would ultimately be weeded out rather than what we see today when the installed barriers weed out the good and bad indiscriminately and disproportionally and the interplay of the remaining repairers would eventually equalize the costs with quality results, saving everyone from excessive outlay and poor results.

In many ways, these barriers are like the financial industry and the stock market. Rather than follow a free market strategy, the free market system has been bastardized by powerful interests focused on short term, but ill-conceived goals, with no regard or perhaps understanding of the ultimate price the consuming public will pay.

But, repairers can force this issue one shop at a time by refusing to play the game. I had a long conversation last night with a very successful shop owner who is growing more frustrated with what he sees in these controls. He is smart and on top of his business, but he spends an inordinate amount of his resources working within the barrier system.

My suggestion to him was to stop recognizing, accepting the estimate provided by the insurer. Rather than take the inordinate amount of time dealing with what that brings, write and repair based on his estimate as quickly as his ability will allow.

Insurers are not part of the contract for repair and that is how they should be treated by repairers.