Direct Repair Programs, or DRPs, ideally offer auto insurers a greater degree of control over the claims process than situations where one is not present. As the programs have matured, however, shops have developed divergent views of such programs—ranging from supportive to combative. Additionally, legislation in numerous states is looking closely at the DRP practice to determine legal compliance. Faced with growing governmental pressure, consumer pushback, and mixed press, insurers are reexamining DRPs to ensure their claims handling processes are the best reflection of today’s realities.

DRPs have many advantages, but they are not the best solution for every insurer, every place, or every time. The real issues revolve around cost control, customer satisfaction, and reduction of cycle time. Insurers need to seek innovative alternatives that can provide many of the advantages of DRPs without the disadvantages.

Strong in Theory, Complicated in Reality
General consensus places the inception of the DRP sometime in the 1970s as a perk Allstate Insurance offered to its policyholders. The original intent was to create a prescreened network of shops which could be relied upon to do quality work in a timely manner. As DRPs have spread and evolved, they have become more complex; now they include agreements on rates, the types of parts that can be used, and other operations which had been the domain of the collision repair expert.

DRPs give carriers several advantages such as controlling costs and supporting strong service advantages for their customers. Under the right circumstances, they allow the insurer to command results from the shop in terms of cycle time, quality and savings. DRPs also add stringent key performance indicators (KPIs) that are measured monthly to ensure the advantages to the insurer are being met by the shop.

A major drawback, though, is that a DRP works well only in regions where the insurer has many customers. They work best as a partnership, which means they need to be perceived as mutually beneficial on both sides. Shops need enough volume from the insurer to make it worth their while to comply with DRP rules. If only a few jobs are being sent every month, there is little incentive to play by the rules. Customers in those areas where there may be less volume still want and deserve good service; if they don’t receive it, they will find another carrier.