Every Tuesday, GEICO insurance adjuster Jeff Keys wedges himself into a corner of the tiny office at Conner Brothers Body Shop in the 2800 block of Hull Street in Richmond, Va.
On a recent visit, he plopped a stack of car-repair manuals on the floor, flipped open his attache case and popped up the screen of the portable computer inside.
When he grabbed the manual for Ford cars and a bar code reader the size of a TV remote from in his case, Keys was ready for the first of a half-dozen wrecked cars that body shop owner Doug Conner had lined up for him.
Conner, like body shop owners across the country, has learned to fit in with the new ways insurance companies are doing business.
In Virginia, for more and more body shops, it means signing up as a so- called “direct repair” facility for insurance companies, which means getting referrals from insurance companies if the body shop agrees to meet standards the insurer sets.
Among big insurers, Allstate, USAA and GEICO have such programs. State Farm is experimenting with the program in other states; Erie Insurance Group is thinking about starting a Virginia direct repair program such as the one it is trying in Maryland.
The key driver in the trend is insurers’ desire to hold down costs. Insurers don’t have to send adjusters to direct repair shops, relying instead on the body shop to do an estimate according to the insurers’ standards.
Richard Glidden, regional auto damage director for GEICO, said the system speeds repairs and saves money by cutting the need for adjusters.
An adjuster can see three to four cars a day if he has to drive to see each one; an adjuster at a drive-in facility can handle up to a dozen, said Glidden.
Some insurers, though not GEICO, delegate virtually all the work adjusters do to direct repair shops. For GEICO, having direct repair shops that can do adjusters’ work when the flow is heavy is a big cost savings, Glidden said.
Glidden said the direct repair programs also help manage costs by allowing an insurer to set standards for the type of parts used and work done.
John Wormsley, a spokesman for USAA, said his company also can bring down costs by negotiating discounts with body shops. The idea is to get a price break in return for the volume the insurer directs to the body shop.
A large part of what insurance companies call cost, of course, is what body men like Conner call income.
Conner, unlike many body shop owners, said he doesn’t feel it is worthwhile trying to squeeze every last dime out of insurers for the work he does.
“For every car that comes into the shop, I don’t try to maximize my profits. . . . I’d rather use the time to work on another car,” Conner said.
But other body shop owners say insurers are pushing too hard.
“The insurance company way of fixing cars and our way of fixing cars are two different things,” said Paul “Bruce” Hutchins, who owns Bruce’s Super Body Shops in the Richmond area.
The problem, Hutchins said, is buried deep in the computers that adjusters such as Keys are lugging around.
The basics of what Keys does are what adjusters have always done: inspect cars hit in accidents to see where, and how badly, they were damaged. The end result is a decision on whether the car should be replaced or repaired, and, if Keys decides the car can be fixed, an estimate of the cost.
But some things are different. The floppy, spiral-bound manual Keys uses is full of bar codes that describe parts and damage and the amount of time a body man should need to fix them.
When he sees, for instance, that a quarter panel is damaged, he runs his reader over the applicable bar code; if he spotted damage to the wheel well, he’d run the reader over another bar code. The manual is standard; several insurance companies use it.
When Keys plugs his reader into his portable computer, the information he has collected is run through a program that spits out an estimated cost of the parts and labor needed to fix the car, even calculating the sales tax.
The problem, Hutchins argues, is that the program specifies only relatively low-cost parts and procedures will be used.
Hutchins argues that direct repair shops are under pressure to use cheaper parts and reduce the amount of time they spend on jobs.
If, Hutchins said, a body shop owner routinely insists on using brand-name parts instead of generics, he or she risks losing the direct repair link and the large amount of business it can represent.
“It’s such a one-sided affair,” said Hutchins. “They’re not required to do anything.”
Direct repair agreements usually specify when generic parts must be used. One agreement Hutchins recently reviewed requires some generic parts after a car is a year old.
Insurers often set caps on how much the body shop can spend on certain procedures or material; the same agreement Hutchins reviewed capped painting expense at $14 an hour, up to $300. Body work labor rates in Richmond are $26 an hour, and mechanical labor rates exceed $50.
The same agreement also says the body shop owner should not estimate hidden damages, but should appraise such damage only after the parts obscuring it are removed, a practice Hutchins argues will slow repair work and lead some shops to leave the hidden damage unrepaired.
The problem with all these requirements, Hutchins says, is that they leave the consumer out.
“When he and me work out a deal without the third party,” said Hutchins, referring to agreements between insurers and body shops, “it seems to me that’s not a good way of doing business.”
Though the agreements specify how body shops should operate, they leave the shops on the hook if those specifications result in a bad job, Hutchins said.
That’s because the agreements usually say the body shop will indemnify the insurer if the insurer is sued over the repair. What that means, said Hutchins, is if a generic part doesn’t fit and the customer complains, the body shop is responsible, though it was following the insurer’s guidelines.
Usually, though, things don’t go that far, Hutchins said. He argues that the real cost to consumers often doesn’t emerge for several years.
Insurers and some other body shop owners said Hutchins’ objections are overdone.
Conner also disagrees with Hutchins about insurance company pressure. His shop is a direct repair facility for GEICO and CNA. Thoug he has to keep the insurers happy to get the business they steer his way, Conner said that’s no big deal. He tries to do good work and gives a warranty.
“I have a fellow coming in something we fixed seven years ago,” Conner said. But the man’s paint job is separating, and Conner gave his word that it wouldn’t as long as the customer owned the car.
