BMW April 2022

An array of new service level agreements (SLAs) were introduced late last year which require – in our opinion – major consideration before a collision repairer accepts some of the claims on management of content and its terms and conditions. As a contract, which is supposed to benefit both parties, surely the reflection when viewed against real world profitability and extra discounts in some ways seems to fly in the face of the Insurer stated policies of growing companies in a mutual partnership style of activity.

We are induced to talk of a clear win-win relationship for body shop repairers. But like always, the devil is in the detail and the CRA feel and wish to inform the membership of some of the clearly punitive points that are surfacing with request for signature on new contracts – so here are some of our observations of what commercial terms are offered. What is expected in return is quality repairs and thorough safety standards.

Duration of the life is reported in cases as up to a three-year contract. Yes, there is an annual escalation, but, with notice/negotiation period and no transparent basis for calculation. For most members, this will rely on their apathy and this rate that you signed for now, will be for three years. CRA are aware of lower than sustainable labour rates. We are now in 2018, accredited and quality repair provision must be rewarded. Returns earned on parts and outwork are discussed below.

– The rates on offer are little more than we were getting in 2014 and these SLAs have been so long in coming that we haven’t had a real increase in the last year. We were then asked for confirmation and signature in the height of the industry shutdown.

– The trend of appointing an assessment partner, which in some instances is attached in relationship and structure to your competitor, and thus sharing of confidential financial information on a horizontal platform which is anti-competitive by nature and regardless of what you signed for. You will have to accept their commercial terms – however much lower that may be. The competition will now have all of the industry stats and be able to re-negotiate procurement at a level we can never compete against. The demise of free and fair democracy and broad based competition.

– Now that you have employed at least one other staff member to take control of all the Insurer requisites on multiple platforms, let him just forget to notify an assessor that the one door arrived, damaged and needed to be replaced. You will be paying for the extra car hire. This excludes waiting for ever and a day in receiving authorisation for additionals or unseen damage where the risk exists of service provision for free due to disregard of contractual terms at the time of audit. Ensure specified time frames are recorded with escalation process during the repair focus.

– The claims to allowing their own parts sourcing and in instances offering higher percentage mark-up has never been a success and the incentive on support of cash flow must be understood clearly.

– We are not even going to mention towing. Any reference in the MBR space should be removed for contact directly with the towing service provider. Further hereto the industry norm on free storage is set at five days and charge thereafter must be enforced on a united front. The MBR industry is not in the storage business and space costs money.

– Outwork allowances are being set with rates which have become static and unreasonable. We quote some examples noted:

*15% on alternate spares

*10% on air con repairs

*Appointed glass fitment without allowance for consumables used

*10% on diagnostics

*10% on electrical repairs

*You get nothing for electronic measurement

*15% on mag wheel repairs with a max of R650

*10% on wheel alignment or R250. I guess that the vehicle must get there and back on its own

*And finally, you give the Insurer 5% for the pleasure of working for them.

Whilst you are having fun working for them, you will be monitored by a balanced score card measuring Key Results Area.

Having done a final costing on your management system, and then a final costing on Abuntex, you are still subjected to the time-consuming task of preparing for an audit which you can’t charge for and where the request for payment submission must include every conceivable piece of evidence acquired during the repair. They have the evidence, why is it then necessary to recheck or has trust and relationship not materialised.

Heaven forbid that you missed an item on the initial assessment, as this will be an extra that might be allowed. Forget the fact that the assessor missed it as well. The process expected and to be followed on authorisation doubles the time needed for repair completion.

Pre-ordering of parts before the vehicle arrives is recommended but should the client not arrive you can simply “return all the spares for a full credit?” What planet are the authors of these contracts living on? Industry norms do not allow for return without payment of handling fees and in some instances on special order or electrical parts that are not returnable. Repairers cannot be held accountable for these costs.

As a final little bonus, should the client not be able to afford their excess, the repairer is required to give them a “grace period.” Forget the fact, from the time the client signed their policy, they knew that there was an excess payable.

So, what do you get in return for these wonderful offerings, other than they are under no obligation to use the services provided by the supplier!

It is clear that our members must first renegotiate or cross off some of the more contentious points despite the fact that it is openly stated that terms may be negotiated, so get a good overall view of just what you are giving away before you sign up with any service level agreement – or you could be left kicking yourself for the next 36 months.

Red tape revelation

Recent surveys conducted internationally show that repair times could be reduced by up to a third if insurers reduce unnecessary red tape. The results show an average repair cycle time remains at approximately six days but an additional third of that period is taken up by insurance claim processes and protocol.

The big issue remains that there is no industry standard covering the array of documentation required for any insurance claim and many insurers are regularly making demands and requests for ongoing additional information, with resultant increase in claim cost that the MBR funds through lower rates and enforced discounts and ever increasing administration burden.

Currently the estimate is submitted digitally by a repairer but sadly the largest insurers with the largest administration departments are often the slowest and seem somewhat bureaucratic. So, slowly some sort of radical change is needed in standardisation at the claims authorisation procedure of the repair cycle.