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SCRS Interviews UK Repair Associations Regarding Standards
One model that has been frequently used as a guiding light by proponents of business standards programs has been the United Kingdom's PAS125 standard which is conducted by the British Standards Institute (BSI).
Leveraging the global network SCRS has established over our decades of existence, we felt it would be educational to reach out to collision repair associations in the United Kingdom (UK) to get better context to the repairer's perspective of how these programs impact collision repair businesses and consumers. As part of our research we were pleased to speak with many individuals, including both Malcolm Tagg, Director General at the Vehicle Builders and Repairers Association (VBRA), and Frank Harvey, Head of the Retail Motor Industry's (RMI) National Association of Bodyshops (NAB). Their insight both highlighted beneficial areas of following proper repair methodologies, while drawing significant parallels to the friction with insurance carriers over reimbursement for the cost and time to following such repair practices. Below are responses to questions posed to these international colleagues:
SCRS: I think in the US there is often confusion between PAS 125 and Thatcham, and what each of them provides to the repair industry. Can you explain the difference between them?
Frank Harvey, National Association of Bodyshops
Frank Harvey, NAB:PAS 125, (Publically Available Specification 125), is a standard against which organizations are assessed. PAS 125 is a specific standard relative to vehicle body repair and can only be awarded by an accredited body authorized to do so by the United Kingdom Accreditation Services, (UKAS).
Thatcham is a research facility funded by British Insurers to research vehicle repair operations and repair times. Thatcham were instrumental in the initiation of PAS125, and have used PAS125 as a vehicle to sell their research data to repairers. Thatcham are also a provider of vehicle body repair training and assessments relative to PAS 125 and ATA accreditations.
Malcolm Tagg, VBRA: PAS 125 is available to anyone - it stands for Publicly Available Specification. It can be used by any repairer, and can be self-audited, but in practice it is externally audited. Originally Thatcham was involved in helping to draft the standard and promoting it as a British Standard 'Kitemark'. Kitemark is an audit system operated by British Standards Institute which is much more expensive than the generic audit required for the simple PAS. Some repairers are now refusing to pay the BSI rates for audit and reverting to the generic PAS; this has not necessarily lost them work but has saved them a lot of money. The repair sector fighting back? Surely not!
SCRS: Why does the UK have the PAS 125 standard; and hat prompted it?
Malcolm Tagg, Vehicle Builders and Repairers Association
Malcolm Tagg, VBRA: This originates to counter calls for government to regulate the motor trade sector as a whole, through technician licensing. There is a PAS80 covering mechanical work and a further PAS for vehicle recovery operators as well. Initially it was a suggestion by one of our [quasi-autonomous non-governmental organizations] that all businesses involved in the sector should obtain approval under our Office of Fair Trading Consumer Code Approval Scheme (which VBRA already had in place for its members). As with many things, what started as something reasonable simply grew like topsy, and became both costly and complex! PAS 125, which is specific to body repair, was used, as a by-product of its existence, largely as a 'control method' over body shops. Insurers would stipulate 'if you don't obtain it we won't send you any work; oh, and we won't pay you any more for achieving it either!'
Frank Harvey, NAB:For a number of years the UK body repair industry had a variety of differing standards, many were driven by membership of one or other trade organizations, or by insurers for work approval. With the advent of new generation steels and advances in vehicle technology, it became apparent that a more consistent single standard was needed to add clarity.
Also coinciding with this, were changes in UK law making directors of companies liable for any failings within their business that caused death; essentially a corporate manslaughter law. For insurers, this meant that if a repairer within their 'approved' network repaired a car badly, and such a poor repair resulted in a death, the director(s) of that insurance company could, in theory, be prosecuted if they couldn't prove some sort of quality checks on that repairer and the competence of their staff.
Thus PAS125 was a 'vehicle' to give insurers some protection against that risk.
SCRS: Is the standard based solely on what is absolutely required to properly repair the vehicle?
Malcolm Tagg, VBRA: The PAS sets no quality standard. Like an ISO, it is a systematic approach to a problem; but if your ISO leads to a bad product, the key thing is that it is audited to prove it always leads to the same poor result! That's a bit disingenuous of course. PAS sets out to get all repairers who subscribe to it to make sure the right technician obtains the correct repair methods for the car being worked upon, and uses the correct equipment to do the job. What it has become is a nightmare of paperwork and living in fear of pernickety auditors, some of whom do not have an automotive background! This frequently leads to employing consultants to conduct 'mock' audits ahead of the real audit adding yet more cost. The inference is that if you don't have PAS you have forgotten how to 'remove the bolt that holds the door on'. Interestingly, under the Kitemark version, it requires the repair shop to get a method for every job (by VIN number of the vehicle) even if you did exactly the same job on the same model of car last week. It creates a market for this information which can be provided by Thatcham (which is in turn owned by the insurance industry) or by subscription to an OEM service, at a cost of course! It has also created a (sometimes artificial) need for additional training. In fact, it's most beneficial effect has probably been the formal up-skilling of the industry, which comes with a significant cost to repairers.
The PAS also includes reference to health and safety which is a legal requirement anyway and does not need mention within it
Frank Harvey, NAB:PAS125 is focused on the following areas:
The skills and knowledge of those involved in the repair process, this must be relevant to the tasks they undertake and their competence must be proven and current.
The processes used by an organization for the management of staff, repair programs and procurement systems. Researched, published repair methods, where available, must be used to ensure the correct repair methods are used to reinstate the vehicle, where these are not available, appropriate methods may be compiled internally, with the involvement of appropriate personnel.
The equipment available for the repair tasks to be undertaken, this must be fit for purpose, calibrated and have a scheduled maintenance plan.
The parts and other materials used within the repair process must be fit for purpose, with their origins traceable, where such materials have a shelf life there must be a process to manage this and where specific storage conditions are required these must be in place. All parts and materials that are specific to a particular repair job must be clearly identifiable as such.
SCRS:Now that we understand the background behind it, does the average UK repairer view PAS125 as something that has helped or hurt collision repair businesses?
Frank Harvey, NAB:PAS 125 has brought a number of benefits to the industry in terms of process and business improvement driven by the need to meet a single standard. The need to prove the current competence of staff has given rise to a technician assessment scheme called Automotive Technician Accreditation (ATA), which has improved the skill set of those involved in the repair process and also provide employers with a benchmark standard that can be used when recruiting skilled technicians.
However, the implementation of PAS125 has been costly to repair businesses, particularly those who needed to invest in new equipment and staff training in order to achieve the standard. In my opinion this was a missed opportunity for the repair sector to change the model and relationship with insurers, but this was not identified or seized at the time. Repairers have, by and large, borne the cost burden of PAS125 implementation within the industry.
Malcolm Tagg, VBRA: Here's the rub: those who rely almost exclusively on insurers to direct work to them think it is a good - or at least OK - idea. Repairers who do some work for insurers but are not on their 'approval' networks are also required to have it, and regard it less favorably. For good or ill, if a repairer seeks mainly high-volume, low-profit directed work, gaining PAS is a 'ticket to the game.' It does not, however, guarantee a flow of work, it does not guarantee that a current level of work will persist and there is no additional labor contribution from insurers to offset the cost of obtaining and retaining the PAS.
SCRS: Does the existence of the repair standard place more liability on the repair facility or the insurance company?
Frank Harvey, NAB:As it is, the repairer that undertakes the task of reinstating the vehicle carries the liability for the standard of the repair. Where insurers benefit is that in the event of an issue, PAS125 allows them to say that they [the insurer] only use PAS125 certified organizations, thus reducing their own liability. In reality I think at law, insurers would find it extremely difficult to wriggle out of their obligations if they had directed the policyholder to any specific repairer.
Malcolm Tagg, VBRA: The liability of the repairer is exactly the same regardless of if they are PAS125, Kitemark or not.
SCRS: You've both mentioned the financial burden on the repairer, what does that overall expense of meeting the PAS 125 standard look like to a repair facility?
Malcolm Tagg, VBRA: First, there is a registration fee, then various audit fees. Many companies decide they cannot do it on their own which involves additional consultancy fees. The largest cost has proven to be meeting the need to 'prove' current competency of technicians through formal assessed outcome training - an expense which most should arguably have been budgeting for, but which in reality, most were not.
Some repairers report it to be not unusual to spend £20k - £40k ($30,500.00 - $60,800.00) to obtain the Kitemark, and the generic PAS would be slightly less.
Frank Harvey, NAB:There is a cost over and above the actual certification cost; however, this can and does vary widely dependent upon how far the businesses processes, equipment and staff are from the criteria set out to achieve PAS 125.
This can be from as little as £5,000.00 above the cost of certification, to a much as £50,000.00 ($7,600.00 - $76,000.00). Some may need to replace aging equipment to meet with new vehicle repair techniques, others may need to implement a significant training and assessment program to prove the competence of their technicians, some may need to implement general business improvement processes to ensure appropriate audit trails are in place, many have had to do all of the above in order to ready their businesses to meet the standard.
SCRS: Is the cost of complying with the standard able to be recovered through more profitable repairs by following the standards of repair?
Malcolm Tagg, VBRA: Most definitely not. It is a cost not an investment; other than being, as mentioned above, a 'ticket to the game.'
Frank Harvey, NAB:This is where the repairers missed an opportunity to change the model currently in place. In reality, it has not made the repairers any more profitable. No significant labor rate increase has materialized, and they are not recompensed for the additional work they have to undertake to align with the standard, such as repair method research. Not all insurers support/mandate/recommend PAS125, and therefore will not recognize those repairers that have achieved the standard over those that have not.
SCRS: Are all costs to perform the proper repair process, as prescribed by the standard, covered by the insurance carriers in the UK? If not, what areas seem to cause the most friction?
Malcolm Tagg, VBRA: The standard seeks to get all vehicle damage assessors properly qualified to identify the correct methodology; and then some insurers who insist in their repair shops having the standards, will not pay for the whole operation. This is a huge frustration for repairers.
It is the process that is audited, not the outcome, and the cost of achieving it is not compensated in labor rates.
Frank Harvey, NAB:Some insurers, very much the minority, give a small financial recompense to repairers mainly for the additional work involved in searching repair methods; however, to the best of my knowledge, no insurer will recompense a repairer for their financial outlay to access manufacturers' data, or for the cost they have to pay to Thatcham and other similar organizations who supply repair methods data.
SCRS: Is there a published procedure for every operation in the UK, or is the collision repairer put in a position to use their technical expertise and judgment at times to determine the proper way to repair a vehicle?
Frank Harvey, NAB:Not every model of vehicle has published repair methods available, and on occasion it falls to the repairer to compile their own repair method; however, to comply with PAS 125, this method must be compiled prior to repairs commencing in earnest and with input from a variety of skilled and knowledgeable staff. Typically the cost involved in compiling a repair method in such a way is not recognized by the insurer concerned.
Malcolm Tagg, VBRA: Sometimes they would have to write their own method if one does not exist. It encompasses the best available technique, but if they are PAS they do have to literally write it down!
SCRS: For shops that have complied with the standard, who have become equipped, trained and recognized, do they receive any less friction surrounding repair costs or severity?
Frank Harvey, NAB: 'Average Repair Costs' are still a major focus of the insurers, and some contracts stipulate that it is the repairers responsibility to ensure that 'their' average repair costs do not exceed a specific level; if it does, the repair has to recompense the insurer for the difference. Most insurers still micro manage the repair assessment, and repair costs, even when dealing with PAS 125 certified repairers.
Malcolm Tagg, VBRA: There is no difference in the frustration level - it is always high.
SCRS:Are there benefits the collision repairer has found in complying with the standard?
Malcolm Tagg, VBRA: Some repairers may get work they would not otherwise obtain; but none of them feel the expense is warranted. They were perfectly good at their job before they needed bits of paper to prove it. Our European colleagues from other countries think we're all mad.
From an industry point of view it has brought some training up to date, but do individual shops see any great benefit? No (not in technical terms anyway but maybe 'yes' in business discipline terms) ...though most would be loath to admit it, having spent so much money on obtaining and retaining it.
Frank Harvey, NAB:Many repairers adopted PAS 125 on the assumption that if they achieved the standard it would not only bring them higher volumes of insurer work, but also that that work would be more profitable than before they achieved the certification.
This has not proven to be so in either case. Whilst many repairers have seen business process improvements and had some financial benefit purely from those improvements, many insurers continue to authorize repairs at non-certified repair shops. Due to the increased cost of repairs as a result of more stringent adherence to published repair methods, we have also seen an increase in total loss numbers and the number of cases that insurers are settling on a 'cash in lieu of repair' basis, thus leaving the policy holder to take responsibility for the quality of repairs to their vehicle. For some repairers the more robust processes associated with PAS125 may have slowed down the repair cycle times.
SCRS: Given the hardships you've mentioned, in your opinion, how could the standards have been implemented in a way that would have been fairer and less damaging to you collision repair businesses?
Frank Harvey, NAB:Over the last twenty or so years, repairers have taken on more and more of the administrative burden of the insurer, having to provide more 'services' free of charge. The insurance carrier often takes credit for providing some of these services, and in some instances, charges their policyholder an additional premium for them. A good example might be courtesy cars, with no financial recompense to the repairer.
In my opinion, PAS 125 is good for the repairer and the consumer, but more so for the insurer. With the advent of PAS 125 and electronic estimating systems, such as Audatex, along with the FOC services provided to insurers for their policyholders, repairer margins have been eroded and net profit margins are typically around 2%.
I feel that it is time for the model to change. I would like to see a labor rate that is just that, a rate paid for the purchase of skilled labor to repair the vehicle. All other benefits, such as electronic assessments that enable insurers to obtain management information, collection, delivery, courtesy cars and the like, all should be paid for on an 'as used' basis, by way of a service level charge outside of the repair cost.
Malcolm Tagg, VBRA: Our member standards have always featured man, method and machine (as in the earlier answer).
We provide our members with a competency file; a simple, inexpensive and common sense way of keeping all their training records in place, to prove to their CUSTOMERS that they are capable of performing repairs. Sadly the insurers, in the main, want to ride roughshod over the customers wish to use his chosen bodyshop, but that's another story altogether.
SCRS: Our understanding is that the UK market has shrunk considerably, and is continuing to diminish on a monthly basis. We are being told that all the "bad shops" are closing and the shops that have complied with the standard are thriving and flourishing. Are the businesses that are closing today shops that follow the standard, shops that don't follow the standard, or both?
Malcolm Tagg, VBRA: The sector is diminishing (and has been over the last 20 years or so) but this is not related to PAS, but to the economy and its effect on fuel prices and mileages and hence exposure to risk, consequently causing there to be fewer accidents; and of those which do occur the improved technology in the vehicle increases the likelihood of economic write off being declared. The market dynamic of low labor rates is also driving profit margins down leading to liquidations.
What the reports tell us always relates to businesses closing down - as the data is easy to find. What is not mentioned as the data is not so easy to find is that there are a considerable number of (smaller) businesses in the sector starting up and these new enterprises deal with the financial situation as it currently is and leave behind the baggage of doing things the way they have always been done. For the moment at least they are listening to our ideas of how to make money and, being new and enthusiastic they do what those businesses that are closing used to do when they first started - they put their energy and enthusiasm into building their future; not looking back all the time. Some successful longer established businesses also take heed of our continual bleating that business generally does not just present at the door and have adopted a similar 'working in the now' strategy.
Frank Harvey, NAB:There are a number of factors affecting the decline in claim volumes here in the UK. The current economic climate has resulted in people using their cars less; this has been compounded by increases in fuel prices. Advances in vehicle technology and traffic calming measures in residential areas, along with rising insurance excesses and fear of rising insurance premiums in the event of a claim, has manifested itself in policyholders not making claims where a vehicle is safe and drivable, often they are not having their vehicles repaired at all, choosing to take reduced values when they come to change their cars.
With regards to shop closures, we are experiencing this right across the board, both PAS 125 certified shops and non PAS 125 shops.
I don't believe that any single issue can be highlighted as a root cause, moreover, the tight operating margins and restrictive practices we see from insurers, coupled with the tough global economic climate, have all had their part to play and yet we are still in an over capacity situation which would indicate that there are more casualties yet to come.
SCRS: It is a difficult climate for sure, and the increased financial burdens, expectations, and pressure from outside entities only further affect an already tumultuous industry. Do you have any final thoughts or comments about the standards that currently exist in the UK that you would like to share with our members?
Malcolm Tagg, VBRA: VBRA will never decry the introduction of PAS or Kitemark as anything that sets out to improve standards can only be a good thing.
We do not endorse recommend or condone it. We certainly do not require it as a condition of membership - we have our own membership standards and audit procedures. Our code of practice also looks after the consumer (which is what he government wanted to happen in the first place!)
Frank Harvey, NAB: Whilst PAS125 has brought its financial burdens it has also served to verify the professionalism of the bodyshops here in the UK. A single industry recognized standard adds clarity for the consumer and provides a clear indication of the ability of the UK vehicle body repair sector to adapt and innovate to meet the ever changing demands of the industry and the customer.