Each week in our new Claims section, a professional on the front line will share some business secrets. First up, Graham Gibson of Allianz on working with motor repair firms

Insurers that use a supply chain for their motor repairs need a thriving, capable repair network to feed work into. As an insurer, I welcome both dealer network and independent suppliers, as they offer a competitive market.

For the motor repair network to be truly competitive, however, a free flow of information needs to exist from vehicle manufacturers about how vehicles are made, what they are made from and how they should be mended from the moment the vehicle rolls off the production line. Manufacturers are getting better but information needs to come quicker and in a more user friendly way to help repair firms keep up with increasingly complicated manufacturing techniques.

Gone are the days when someone could drive to any garage and expect them to dive under the bonnet and fix a problem. These days, a laptop has replaced the spanner as the most useful piece of kit.

Lighter materials, such as plastic, carbon and glass fibre, are now more prevalent in vehicle construction. These improve efficiency, safety and recycling capabilities, but they are more costly and difficult to repair, requiring specialist training and equipment.

This is forcing the motor repair industry to make fundamental and costly changes in order to continue to satisfy customer demand and insurer expectation.

It is no longer realistic for insurers to expect every provincial repair firm to act as a one-stop shop. In the future, more firms will become specialists – a model already successful in the truck repair sector – as they seek to get the most from limited training and equipment resources.

In light of these changes, insurers may have to take a tougher stance with customers as to where and how long it takes to get their vehicle repaired, in order to strike a balance between cost, convenience, standard of repair and quality of service. Those who focus too heavily on the cheapest, quickest repair will pay with customer confidence and further costs in the long run.

However, insurers have to make all this investment in training and equipment worthwhile for repair firms. By working in partnership with a select group of companies, rather than simply focusing on the best price, the repair firm benefits from guaranteed volumes and the insurer benefits from any problems being tackled earlier and more efficiently. This partnership approach to motor supply chains has been successfully put into practice by Allianz.

We are working with motor repair firms to introduce the quality benchmark, PAS 125 Kitemark, as standard for our approved network from next July. This helps us meet our obligation to our customers to provide safe and efficient repairs, as well as excellent customer service, while repair firms benefit from a publicly recognised sign of professional standards, customer confidence and improved profitability.

To support this initiative, we are heavily investing in our own engineering staff and putting them through Thatcham’s Automotive Technician Accreditation (ATA) training, to ensure they are equipped to support the network in the build-up to achieving the Kitemark.

Other initiatives, such as the increasing use of recycled parts in repairs, are a good example of how collaboration between insurers and repair firms can deliver innovative customer propositions and cost efficiencies.

Much debate has surrounded the use of recycled parts, but it is becoming increasingly popular. We have pioneered the use of green parts through our repair firm network and cite the pilot scheme as a success, both in terms of service quality and cost savings. We intend to roll out the recycled green parts initiative across our UK approved repair firm network in 2009.

Insurers should not underestimate the importance of consulting with repair firms to make this kind of initiative a success. Not all customers will be turned on to recycled parts, which is why insurers rely on repair firms working with each client to deliver a service appropriate to their needs and the insurer’s budget.

Cutting costs is certain to remain on many insurers’ agendas next year and beyond, but insurers have a duty to ensure that this isn’t at the sacrifice of quality and good customer service.