Automotive repair industry expresses concern over ICBC Operational Review recommendations

VANCOUVER, British Columbia, Feb. 19, 2018 (GLOBE NEWSWIRE) -- The president of the 1,000-member Automotive Retailers Association (ARA) representing British Columbia’s aftermarket automotive repair business says the government-ordered operational report on the Insurance Corporation identifies areas for savings that have already been put forward by his organization.

Ken McCormack notes the Price Waterhouse Coopers report vindicates ARA-represented collision shops, making it clear in their investigation that, despite ICBC union claims and comments by Attorney-General David Eby, collision repair shops have not been overbilling ICBC.

He is concerned with statements in the report suggesting a strong vendor management and strategic sourcing function will allow ICBC to use its considerable bargaining power to drive significant claims cost savings and enhancements to claimant outcomes and service standards through augmented control over its suppliers.

“Driving significant claims cost savings implies there is profit that is excessive in the industry,” McCormack says. “The recommendation seems to reference that shops, already on tight margins, will work for either a less hourly rate, do work for free, or more concerning, not repair vehicles to Original Equipment Manufacturer standards. This would leave the industry, insurers and the public at great risk.”

He notes ICBC material damage claims costs estimated at $687 million in 2016 with a total claims cost of $4.7 billion with material damage representing less than 15 per cent of the insurance company’s total claims payout. The report says that much of the increase in material damage claim cost increases relate to embedded technology and more expensive materials used in vehicle construction. Vehicles are more expensive and so are the repairs.

“The only controllable factor by industry is the amount of labour hours to complete a repair, a small component of the overall repair estimate,” he says. “The standards for repair of vehicles is set by manufacturers and the time and costs allowed are set by ICBC.”

The ARA submitted proposals to government last fall for increased support of an industry-led shop and technician certification programs designed to save ICBC money through quality repair efficiencies and improved cycle times. As well, the ARA has been advocating for increased use of serviceable ‘as-new’ recycled parts.

“These recommended measures shared with ICBC and government will satisfy the findings in the operational review for saving money for ICBC while ensuring the needs of vehicle owners are met and the industry is sustainable,” McCormack says. “It is our hope and expectation that ICBC will approve standards with our certification programs or the equivalent and that shops that are qualified and meet those standards will not be restricted from being certified.”

McCormack warns that ICBC should not be in a position of controlling the marketplace by ‘picking winners’ among qualified shops and materially affecting the viability of those qualified shops that may not be permitted to do this work.

“The backbone of this province is small business and our shops represent tens of thousands of family-supporting jobs. As a monopoly, ICBC cannot be in a position to damage the viability of shops in an effort to fix their own financial problems. The key is qualified shops, not simply restricting the number of shops through a procurement exercise that both the Liberals and NDP spoke against several years ago.”

Noting the collision repair industry has not had a significant hourly rate increase in more than eight years, McCormack says: “We cannot continue to be used as a means of subsidizing ICBC’s financial problems when we are already struggling as an industry. It is our sincere hope that ICBC and government will work with our association and industry to ensure that the measures taken to address ICBC’s financial issues are done in a genuine spirit of collaboration. The ARA and industry want to be part of the solution, but the solution must also meet the needs of industry.”

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