Perhaps you haven’t been taking much notice of my vigorous sounding off about the poor state of our insurers’ labour rates being awarded to collision repairers across the country. This year I have spent an awesome amount of time ranting on about this very subject. It is still a depressingly familiar situation of almost no increases for half a decade.
In my opinion you can dismiss the 7% increase of September as it is nowhere near keeping up with our unpublished rate of motor inflation which rarely comes under 15% annually. I feel so strongly about this matter that I made public utterances at the government enquiry to say that what insurers are paying body shops for labour rates is an utter disgrace. These words fell on a stoney group of approximately 120 companies who operate insurance cover for motor vehicles. Not one of them has yet fully realised that the repair business is changing before their very eyes.
Insurers have for all too long hidden behind their published numbers which appear to be rigged to show returns not uncommonly of just 5%. So let us blow that away once and for all. With an average of just 6% of drivers who are insured and claiming on their polices each year, there are only 30% of drivers who get cover from an insurer. But this leaves an insurer, with my maths, of some 94% premium profit income. So ask the question, how do they attain such marginal profit levels?. Take a look at a recently published costs paid out claims in the UK to see accident damage costs are hovering at around just 20% of the total payout of premium income. I’m using these statistics because to my knowledge South Africa doesn’t have any published details like these results but I did ask one direct insurance house about these figures only to be told surprisingly that their figure was around 3% of motorists who claim locally on their policy cover per year. Now there is a surprise!
So in my talk at the CRA conference in September recently I calmly told insurers that the nicer-the-nice the bigger the price. How can mechanical labour charge out rates from OEM franchise dealers run from R450 for Tata right up to the top charge which was Audi of over R900 per hour. So when you build in settlement figures and bulk discounts sought by insurers against body shop repair centres who are dealing with ever more complex vehicles, where are we going?
Doing the same thing for three decades won’t help all the role players in this trade for much longer either. Insurers seem to have lost touch with the technological game of all change that lies before us. Hopefully it won’t take another decade to wake up to the fact that insurers and body shops will need to engage in a process partnership to keep the show on the road. The problem of an unfair labour rate never seems to end though.
It took around 25 years for me to crack an invite to the SAIA and NAAMSA breakfast, which I must say was a great session of what the future holds. The OEMs displayed some of the all new radar technology, most of which is mandated for inclusion into new cars entering Europe in just a couple of years time. It was a considerably optimistic day out.
The Automechanika SA show was where the industry was on its best behaviour, with many new products to see and a great meeting place for all. It was wonderful for the Automtoive Refinisher magazine team to meet some of our readers who came out to the show to take part in the fun of the fair. It was a fine exhibition and it showed the good state of health that collision repair is enjoying.
Lastly, it’s that time of the year again, when we all enjoy a rest after a long year of hard slog. 2017 has been a year of great upsets politically – locally and internationally – and it’s left most of us wondeirng what on earth is going on with the amount of lies, deceit and embezzlement that hog our daily headlines. But as a nation, South African’s are unbelievably resilient and we can adapt to adversity with skill. Make sure to keep your eyes focused on managing your “space” as best you can, enjoy a “tjop & dop” around the braai with your loved ones, take some time out, and let’s see what 2018 has in store. Maybe we should all just adopt the surfers code and just enjoy the waves as they come. Certainly looks like more fun that fretting on the beach getting a dose of sunburn.
Thank you to our readers, advertiser and contributors, without whom, this magazine would not be the success that it is. Be safe wherever you find yourselves. Merry Christmas and a Happy New Year to you all!