The “3-legged stool” Paradigm
Hello to all our CSN members and client business partners. This month I want to talk about what I call the “3-legged stool” paradigm of the insurance industry. Each leg of the stool represents a business segment of the industry. One leg is the customer, another the repairer & then the insurance company. The seat represents outcome. All 3 business segments interact with each other which results in some outcome. The outcome is key and varies all the time depending on how positive or negative the interactions are. Most of us know something about insurance simply because from very early on we are told you need it and legally must have it to drive a vehicle in virtually every state. We know we need coverage to our vehicles in case we damage them due to an accident or have something other than collision cause damage to our car and in case we damage or injure someone else. Beyond this general understanding for most of us the knowledge curve begins to bend downward fast. It is this “gray” area that results in one or more of the “stools” legs to become unbalanced. That’s because in theory these 3 segments interact with each other in a predictable and balanced system with a known outcome that is equitable to all parties. Well that’s in a perfect world and everyone knows the rest of that story. So why does this not work like it should? Well for starters every leg of the stool has its own ulterior motive and self-interest. Let’s examine the expectations of each one & reveal the self-interested part.
TIP: INSURANCE COMPANIES GENERALLY ARE NOT CONCERNED WITH QUALITY OR LEVEL OF SERVICE PROVIDED AS THEY HAVE NO DIRECT LIABILITY IN SUCH MATTERS. THEY ARE NOT CONCERNED WITH THE REPAIR PROCESS OR YOUR PARTICULAR VEHICLES REPAIR. THE AUTO INSURERS CARE LITTLE ABOUT WHAT THE REPAIRER THINKS OR WANTS.
I know you’re saying, but Pete I was told by my agent or broker that my insurance company is the best and they care about me and will cover me for my accident. They care about my vehicle and how well it is repaired. Well not really! I thought the same thing, but 33 years in the insurance business and many insurance meetings later I know better and that is why I can say with certainty that no they are not that concerned with your vehicle’s repairs, who fixes them and what the outcome is. Remember I mentioned self-interest with each leg of the stool, well the insurance company’s only concern is what it will cost them. In fact, every claims person starting with the appraiser, is focused on one thing, reducing claims costs at every point in the claim process. As I have said every claims conference, directors meeting, and regional and local insurance meetings are focused on reducing claims costs, period. To be sure there are many facets of the claims process that impact costs but were concerned with your cars collision repairs; after all that is what you paid for and were told the insurance company would be most concerned about in the event you sustained damages to your car that were covered by the policy. Oh, I know your saying well what about the direct repair programs; the insurance companies repair partners, surely the insurance company cares about the outcome of my vehicle’s repairs and the process with those shops. In a general sense, yes, but specifically no. You see what they do not tell you while they are discussing the attributes of their repair program is that these collision shop partners have a hold-harmless agreement and waiver of liability with your participating insurance company which insulates them against any liabilities arising from the referrals. So, we see that this leg of the stool, the insurance leg, has a self-serving interest, to reduce cost, when, where and often. With a personal auto policy, it begins with the confirmation, inspection and appraisal of your covered vehicle’s damages. Look folk’s, truth is the insurance company is consumed with perception; more specifically perception by the customer or the state that they may have taking advantage of a policy holder. This is where the true liability lies for the insurance company; and again, I know because I have heard and witnessed the insurance companies wring their collective hands over this issue more than anything else. You see this is the only real liability the insurance company has and is ever fearful of. They never want to be viewed or accused of having taking advantage of an insured to better their own financial interest. This is what I refer to as the “black death” for an insurance company and it results in what’s called a bad faith claim. This will get the insurance company in big trouble with the state agencies and could result in large financial settlements with the policy holder and huge fines and penalties from the state.
Look insurance companies have become more aggressive and belligerent in saying no or “we do not pay for that, the customer(you) will have to pay for that out of pocket”. This of course is to push efforts to contain or reduce costs. I am here to tell you that most of what they “will not pay for” is made up. You see the policy states clearly; “we will pay for damages caused by collision to your covered vehicle”. If its other than collision then comprehensive coverage which covers just about everything else accept some obvious things like intentional criminal act, terrorism, act of war etc. That means if your shop tells you the insurance company would not pay them what they needed to restore your vehicle to its pre-loss condition; which today a growing number of vehicle manufactures are dictating how their vehicles need to be repaired, then you should be contacting them immediately and demanding that they address all conditions, repair procedures & operations & materials that your shop requires to restore your vehicle to its pre-loss condition. Your collision shop should be advocating for you and you should be intimately involved in the process. Remember the insurance company’s only liability is appearing as if they are putting their financial interest ahead of yours;” bad faith”.
REMEMBER, BEFORE YOU SPEAK TO THEM YOU SHOULD BE CALLING US.
CHOOSING A CSN COLLISION SERVICES PARTNER WILL ENSURE THAT YOU ARE INVOLVED IN THE ENTIRE REPAIR PROCESS; INCLUDING WHAT IS REQUIRED TO PROPERLY RESTORE THEIR VEHICLE TO PRE-LOSS CONDITION WITHIN HUMAN ABILITY USING INDUSTRY BEST PRACTICES AND THE COMPLETE COSTS. MOST IMPORTANTLY IS WHAT THE INSURANCE COMPANY IS NOT PAYING FOR OR FAILED TO PROVIDE TO THE SHOP SO YOU CAN CHALLENGE THEIR POSITIONS OR DENIALS AND TAKE ACTION AS THEY SEE FIT.
OK folks check back next month where I will speak more about the collision leg of the stool; their self-interest and how that impacts you the customer. Also, how CSN collision shops use best business practices to avoid these pit falls remaining customer focused to deliver a WOW experience.
Posted in Insurance