Why insurers’ preferred repair shops can be good for clients

Tough times can create suspicious consumers, which can mean an insurer suggesting a preferred repair shop during the claims process could be seen by clients as not entirely in their interests.

“I think people still operate with a bit of suspicion when it comes to insurance work. And they feel using the preferred shop that the insurance company is recommending [is] somehow…benefitting the insurance company,” says Jesica Ryzynski, a claims specialist at Mitch Insurance.

While it isn’t the case, she says, the misconception is common.

“A lot of people have that knee-jerk response…or they just have a mechanic they’ve had for years and years…who they trust, who they’re comfortable with,” she adds. “In the [past] three years…I’ve maybe come across two or three situations where a preferred shop has been less than preferable. [And when they are] the insurance companies want to know that,” she says.

“If somebody is having a difficult experience with one of their preferred shops, [insurers] do take that seriously. They take it back to management. These preferred shops are preferred for a reason, and [a shop] could be [preferred] this year and not next year, because if they are not operating up to the efficiencies and standards that the company would like to see them operate at, they lose that status of preferred shop.”

Shops that lose preferred status have a hard time winning it back. And insurers want clients to report customer service issues, like people in the shops making offside comments, because the insurers see those repair teams as brand representatives.

Why innovative customer experience will define the future of personal auto insurance Image

Insights Paid Content

Why innovative customer experience will define the future of personal auto insurance

Technology is helping insurers reimagine how they support personal auto customers — and it starts the moment a collision is reported, say experts at Accident Support Services International.

By 

Sponsor Image

Fix it again

Preferred shops also provide guarantees that allow clients to bring vehicles that weren’t fixed correctly back to the shop.

“If necessary, they will set them back up with a rental,” says Ryzynski. “I much prefer when clients use preferred shops, because if there is a problem, I can very confidently refer them back to the shop to have that reviewed and taken care of, rather than being worried that they’re going to be stuck with an issue that they can’t do anything about.”

Clients who insist on using their own shops are free to do so. And Ryzynski’s only seen one case where an insurer dug its heels in due to high labour costs from the client’s choice of repair shop.

“The labour [cost difference]…was so dramatic that there was just no justifying it. There was no way for the company to make it make sense. And I ended up sitting here with both estimates, going through line by line, and the labour [was] crazy. It’s the same job,” she tells CU.

In that case, the client was told they’d have to make up the difference between the two estimates out of their own pocket.

Cash is king…sometimes

In rare circumstances, insurers will make cash payouts for vehicles that aren’t a total loss. But those instances are tied to the inability of a preferred shop (or any shop) to complete a repair within a reasonable time frame.

It happened during the COVID-19 pandemic, when supply chain and manufacturing problems prevented key parts from being delivered to shops quickly.

“The only time we will see that [is when big] delays — eight months to a year for some parts — [lead the insurer to] cash out based on the repair estimate and close the claim. Just leave it with the client,” says Ryzynski. When the part arrives, the client can take it to a shop of their choice.

It can also happen when clients own extremely rare cars, such as right-hand drive models produced in the U.K. or Japan, for which there simply are no qualified repair shops in a given region.

“There may not even be a mechanic who can work on that vehicle, and so the company can’t work with that,” she says.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.