Continued growth of network management

The top 10 and bottom 10 states with the largest and smallest increases in repairable claim counts Q1 2015 versus Q1 2014 are included in the table.[3]  Worth noting is that despite declines year-over-year  in Q1 2015 vs Q1 2014, volume in all but one of the 'bottom 10' states is still up from Q1 2013.

With employment up, miles driven in the U.S. increasing, and continued strong new vehicle sales, the collision repair industry is in store for another healthy year in 2015.

Collision Repair Industry Changes

Almost every week there is an acquisition announcement made within the collision repair arena.  According to data from Focus Investment Banking, acquisitions representing $800 million in revenue were made in 2014 by the big four MSOs.[4]  Many of these acquisitions were of smaller regional MSOs with estimated total revenues of approximately $1.5 billion.  And the pace of acquisition continued in the first quarter of 2015.[5]

Comparison of the volume share of DRP appraisal counts uploaded to CCC reveal growth of MSO's.  Over the last 5 years, MSOs grew in volume share by more than 25 percent, growing to 36 percent of CCC's total DRP appraisal count.[6]

Analysis of CCC appraisal counts where the assignment is an open shop[7] assignment point to a similar trend, although the share written by an Independent shop is over 80 percent of the overall open shop assignment count.

However, optimism in the industry appears to be strong across shops of all sizes.  The Q4 2014 "CollisionWeek Collision Repair Industry Business Conditions" survey showed 57.3 percent of respondents reported higher sales.[8]  Additionally, the four-quarter moving average for the percent of survey respondents reporting higher sales had been trending flat or up since Q1 2013, and is now experiencing its highest increases since 2006 for shops of all sizes ('<1 million'; '1-2 million', and '>2 million').[9]

Technology Drives Network Use and Transformation

Fifty percent of all appraisalsthat CCC examines in 2014 were appraisals written by repair facilities on behalf of insurance companies.[10]  This includes traditional DRP assignments, open shop assignments or a service center model.   As of first quarter 2015, there are even some insurance companies who are processing over seventy percent of their appraisals through a DRP shop.[11]   Advancements in insurance and collision repair technologies have been instrumental in supporting these shop networks.  Electronic appraisal reviews and shared guidelines provide insurance companies with the information needed to fulfill work in a transparent, compliant, and complete manner.  Collision repairers have also benefited from greater use of technology – whether through the ability to update the vehicle owner with the status of a repair through updates via text or mobile digital devices such as iPhone® and Android® devices.  These changes have worked to help streamline communication between all parties. 

As repairers and insurance companies jointly manage cycle time from the date the loss is initially reported, through appraisal and vehicle drop-off, to ultimately vehicle pickup, the industry benefits from better productivity and customer satisfaction.  Measuring the overall number of days for the vehicle repair and the overall number of days the vehicle is in the shop by total labor hours enables repairers and insurers to understand opportunities to reduce down-time where consumers are waiting for their vehicles to be returned. 

The ability to segment these key productivity metrics by variables such as the age of the vehicle, complexity of the repair, driveable versus non-driveable status, and overall repair cost provides the opportunity to help identify where there is room for improvement.

More and more DRP programs are moving to a more holistic view of performance, where both the carrier and the repairer take responsibility for claim cycle time and customer satisfaction.  This practice started with reports and dashboards that provided carriers and shops benchmarks versus industry performers and has grown into scorecards with a more dynamic view into performance.

With claim counts returning to pre-recession levels, technology is playing a key role in management of network partners, building transparency and leading to a better customer experience overall.

The information and opinions in this publication are for general information only, are subject to change and are not intended to provide specific recommendations for any individual or entity. Although information contained herein has been obtained from sources believed to be reliable, CCC does not guarantee its accuracy and it may be incomplete or condensed. CCC is not liable for any typographical errors, incorrect data and/or any actions taken in reliance on the information and opinions contained in this publication. Note: Where CCC Information Services Inc. is cited as source, the data provided is an aggregation of industry data collected from electronic appraisals communicated via CCC's electronic network or from total loss valuations processed by CCC.