Where 3rd party work fits into the mix

News Extra

Third party smash repair work is a two edged sword. On one hand it pays bodyshops well but on the other it attracts disputes with insurers. Frank Cottonaro opts for a balanced diet.
Dc1:Five years ago Frank Cottonaro was running a body shop in Melbourne when he saw the potential in providing a service to repairers who wanted more third party work.
He believed then, and still does, that shops which fill their schedules with direct insurance repair work will struggle to make a profit. On the other hand, those that go exclusively after better paid third party work may not have enough volume to keep busy. And because of insurance companies’ dislike of third party claims, even undisputed claims can take more than six months to be settled.
A third element is fleet work ‘ where many fleet owners carry their own risk for up to $10,000 damage and then insure ‘ at a low premium ‘ for the balance of much less likely major damage or write-offs. Like third party work, fleet owners generally pay better rates than direct repair providers (DRPs - ie insurers)
Cottonaro believes the ideal mix is 50 percent third party, 30 per cent fleet and 20 per cent DRPs. Now that doesn’t square with the general market profile of available work, which means that body shops who want the ‘ideal’ breakdown have to work for it. This is where Cottonaro offers his claims management service which goes by the name of Claims Made Ezy.
With background experience in a body shop, in assessing, and more recently with a university business marketing degree, Cottonaro is well prepared for his role as a body shop adviser. In addition, he is linked to a law firm which specialises cases where insurers refuse to pay third party claims.
Claims Made Ezy is a thriving business. It currently process about 100 claims a week ‘ the fine detail handled largely through a computer program developed especially for the purpose. In NSW the company charges a small success fee percentage while in Victoria, where it has been longer established, it charges a flat fee of $200 plus GST to process a claim. Court cases, of course, attract additional charges.
Currently there is quite an imbalance between NSW and Victoria when it comes to claims going as far as a court hearing. In Victoria about 20 per cent go before a judge against 70 per cent in NSW where NRMA has the majority of the market. NRMA and AAMI are the companies most likely to dispute a third party claim, according to Cottonaro. A test case currently being brought against NRMA in NSW by five third party claimants is aimed at avoiding court hearings in favour of arbitration.
Although Claims Made Ezy runs its operation from Melbourne, it is gaining national penetration. Already there are 500 repairers in Victoria interested in seeking more third party work through Claims Made Ezy’s system and some 300 in NSW.
Frank Cottonaro spends a great deal of time on the road visiting panel shops all over Australia. He shows shop owners how to go about sourcing and handling third party claims. He offers free signage to those who join his group and become Claims Made Ezy recommended repairers. There is no joining fee or annual fee ‘ only the agreement to put their third party claims work through claims Made Easy.