Total motor losses are rising significantly and placing even more pressure on hard-pressed bodyshop repairers, says Jim Burrell, managing director of Enterprise Rent-A-Car.
A report from Market Facts and Business Information predicts there will be a 13% shortfall in bodyshop repair capacity this year, climbing to 28% by 2006. For insurers concerned about maintaining service standards and levels of customer retention, it makes alarming reading. In many cases, claimants suffering a total motor loss rely on the bodyshop industry to provide a replacement vehicle, as in other cases insurers fail to do so.
Burrell warns that UK insurers can't be complacent when it comes to customer service, as regulatory barriers to entering the insurance market are much lower than in comparative insurance markets such as the US.
He also believes bodyshops are not appropriate providers of replacement vehicles – he feels they should stick to their core business of vehicle repairs. “The provision of courtesy cars creates problems for insurers, because they don't have total control over the cost process.”
Burrell says US insurers become involved in the process of providing replacement vehicles much sooner than has been the case with British insurers. The reason, he believes, is the litigious nature of US society, which exposes insurers to a greater risk of being sued if they bungle a claim.
But he says UK insurers should also consider the issue of customer service in providing replacement vehicles, since this is one of the chief causes of complaint from accident victims. “Claimants who have a positive experience following a total loss are more likely to remain with their insurer than switch to another.”
And an insurer that improves its replacement car provision wins by lowering its claims costs and increasing its retention rates.
Burrell feels that the Association of British Insurers' (ABI) code on credit hire has done much to promote a climate of consensus between insurers and replacement car providers.
It's this commitment to customer service that has enabled his company to win a number of key insurance clients, such as Groupama, CGNU, Zurich and Churchill. But Enterprise's commitment to high standards hasn't encouraged Burrell to break into the accident management business.
He says: “We don't want to be in claims management – our strength is in car rental.”