Working Towards National Accreditation

Canada’s insurance industry supports the general principle of a national accreditation process for auto repair shop facilities, The Dominion of Canada General Insurance Company president and CEO George Cooke told a national meeting of the Canadian Collision Industry Forum (CCIF) in January.

“The [insurance] industry actually endorses the notion of accreditation among repair shops,” Cooke told an audience of about 300 people representing the collision repair industry. “Do I support accreditation? Absolutely. It’s good for consumers. It’ll raise the standard and ensure they get a more uniform response.”

Cooke made his comments during a Saturday morning speech he made at the invitation of the CCIF. He qualified his statement by noting individuals within the insurance industry have their own personal views as to how accreditation should be achieved. “Please understand that within our industry, although we agree on the basic concept, on some of the details there are real differences,” he said.

CCIF administrator Mike Bryan also endorsed accreditation, saying it would provide “an objective means by which the insurer and consumer can judge the shop on a quality basis. At the moment, there is no way to do that.”

Bryan said he believed accreditation would “empower” consumers. “Now they know they would be able to ask questions and say: ‘Excuse me, is that one of those [accredited] shops?'” Bryan said. “It would give them an understanding of how to ask the right questions. I certainly know from my experience of visiting shops that consumers just don’t know the right questions to ask. And that is often to the detriment of quality shops.

“And of course an accreditation program would help the [industry’s] image, it would help pride, it would help self-respect.”

Bryan said the CCIF’s role is to act as “a catalyst” for accreditation. He said the forum should broker discussions within the industry about how to achieve some form of national consensus on the topic. Currently “there is no plan” for accreditation, he said. “There is no fix. There is no instant accreditation program.”

SELF-REGULATION

Cooke said he observed some confusion within the collision repair industry about whether or not the insurance industry was actually on board with accreditation. He said he believed the confusion resulted because individuals and companies within the insurance industry differed as to the best means to bring it about.

“We at Dominion would prefer a self-regulatory model, as opposed to one that is imposed and executed by governments/civil servants,” Cooke said.

He added the CCIF would do well to follow the example of the Ontario brokers, who introduced in early 2005 a voluntary model of self-regulation for disclosing contingent profits. “If you are looking to a model to apply to your industry, in our view, the Registered Insurance Brokers of Ontario’s [self-regulatory model] is a good model to try and apply,” Cooke said. “To be successful, the government’s role [is] none other than to enable it.”

Cooke said he has heard of proposed accreditation programs that would involve a hypothetical, overarching board of industry experts. “It sounds like the ‘Noah’s Ark’ concept of the ultimate board,” Cooke quipped, adding that Dominion would not seek a seat on such a board.

He said the insurance industry should confine itself to participating in consultations leading up to the establishment of an accreditation body. But once such a regulatory body had been established, that’s when the participation of the insurance industry should end, he said.

“The accreditation itself, we believe, should be orchestrated in as independent a way as possible,” Cooke said of Dominion’s position. “In some of the previous discussions, people have said to me: ‘Hypothetically, how would you like to be part of a board or overseeing function?’

“The answer is ‘No.’ I have no interest in it whatsoever. I think insurance companies should step back. If you [in the auto repair industry] are going to do self-regulation, you should do it yourselves.”

Bryan said the time is right to develop national standards. He suggested the sophistication of the auto repair industry is outpacing existing standards for quality control. For example, he said, more than 300 makes and models of cars are currently on the market, notwithstanding the product of six new Chinese companies that will enter the market over the next few years. At the same time, regulations governing the collision repair industry are currently “all over the map,” Bryan said.

Discussions about accreditation are timely because consumers have paid for auto repairs more frequently than insurance companies over the past five years, Cooke said. He noted that when auto premiums and deductibles began to rise about five years ago, consumers became “quite disturbed” and began to finance their own repairs. For example, repair work paid for by insurance companies accounted for 90-95% of the business of auto repair shops five years ago, Cooke noted. A year or so ago, however, insurance companies paid for only 50-65% of the work done by collision shops.

Voluntary accreditation programs already exist within the nation’s auto repair industry, Bryan noted. Provincial programs have been developed and implemented in several Canadian jurisdictions over the past six years. In Ontario, the Financial Services Commission of Ontario had one such program develop into a bill, but as of yet the bill hasn’t been implemented, Bryan said.

Nevertheless, although provincial programs do currently exist, there hasn’t been “enough of a critical mass” to develop these programs into an overarching national program, Bryan said. “Under five or six years ago, we couldn’t have begun to talk about these things,” he said. “We were still fragmented in this industry. We were still doing our own things in our own way and frankly not very interested in whatever anyone else was doing.

“That has changed. That has changed a lot, because we’ve built trust. We understand that there are no personal agendas, there’s no master plan of doing anything sinister. In the case of CCIF, [it means] acting as a catalyst and a broker to bring people together, so they can talk about these things and decide.”

NEW DATABASE

Bryan noted new technology is making it easier to catalogue the kinds of individual shop policies and best practices required to develop broader standards for accreditation. To this end, I-CAR has provided a database at no cost to the collision repair industry, he said.

“Thanks to I-CAR, they’ve stepped forward and said: ‘You, the industry, in the way that you want, can use the database that we’ve always established for managing and collecting the data on shops and individuals about their training records,'” Bryan said. “They can track their training records, manage their training records, and recognize what they need to do and where their skill sets are.

“They can see what they want to do if they aspire to a different job within the collision industry: What skills will I need to get there? How do I get there? What training do I need to get to arrive at that point?’

“So I-CAR has stepped forward. We have the trust. And we have the will towards accreditation.”

Bryan said I-CAR’s database would have cost in the “six-figure” range had the CCIF opted to develop to develop the technology on its own. “This is a gift. This is a huge gift,” he said.

PREFERRED VENDORS

Will enhanced standards throughout the industry mean insurance companies won’t have any basis for preferring certain auto repair facilities?

Cooke said he has been asked what would happen to programs touting ‘preferred vendor shops’ in the event of accreditation.

“The issue for us has been one where people have said to us: ‘Once accredited, there won’t be any further need for shops with preferred vendor programs,'” Cooke said. “Absolutely wrong. In the context of us supporting accreditation, we very clearly want the right to engage in preferred relationships with those particular suppliers that we feel for a variety of reasons can best serve the needs of our policyholders. I see absolutely no reason why someone should interfere in that equation.”

Cooke likened the situation to that of insurance companies dealing with licensed brokers. “There are many licensed brokers in the province,” Cooke noted. “There are many high-quality licensed brokers in this province. We do business with perhaps 25% of them. And there’s no need, from a consumer perspective, to force us to do business with all.”

When pressed by a question from the audience, Cooke said insurance companies would obviously prefer to deal with accredited repair shops. “If accreditation is done properly, I would be happy to have accreditation as a full restriction,” Cooke said. “I couldn’t imagine dealing with a non-accredited shop.”