The Future of DRP: Is There One?
Updated: Dec 2, 2019
From Autobody News magazine
With an estimated 22,000 collision repair shops across the country dependent on Direct Repair Programs (DRPs), Pete Tagliapietra of NuGen IT said businesses need to pay close attention to the paradigm shift occurring in the industry related to these programs.
Tagliapietra explored the current status and future outlook of DRPs in his recent SEMA presentation, “The Future of DRP: Is There One?” His talk was part of the Society of Collision Repair Specialists (SCRS) Repairer Driven Education (RDE) Series.
Tagliapietra discussed four main reasons that the number of DRPs have been shrinking for top insurers. They include high administrative costs to run DRP programs, the growth of MSOs, alternative appraisal methods now being deployed and new technologies that are changing shops’ business relationships with insurers.
“Insurance companies are selling a commodity product—it’s all about price,” explained Tagliapietra.
During his presentation, he pointed out that both GEICO and Progressive have had rapid growth in market share over the last several years because both have focused on “price,” while other companies, such as Allstate, Farmers Insurance Group, State Farm and Travelers Insurance have typically sold “service” and as a result, lost market share.
“While these companies focused on service over the years, they lost market share and GEICO and Progressive took it,” he explained. “This is relevant because as those companies shifted and they had their own claims processing models, the number of DRP shops in this country continued to shrink and will continue to shrink.”