As ICBC struggles to contain a “dumpster fire” that will see the company lose yet another $800 million this fiscal year, the province has taken radical measures to try and rein in costs.
Much of that has been directed at cutting injury claims costs, which make up about two-thirds of ICBC’s annual spending on claims.
The other third goes to vehicle damage — a payout that has ballooned by more than 50 per cent in the last five years.
In 2017, ICBC spent about about $1.5 billion on vehicle repairs, nearly half of that — $745 million — at auto body shops.
But is the agency getting value for that money?
Most drivers that have been involved in a minor crash have dealt with Express Repair Shops, the more than 500 B.C. auto body shops that have earned a special certification from ICBC.
Using the shops allow drivers to skip a trip to ICBC’s claims centre, and get the work done more quickly.
The shops snap a photo of a vehicle’s damage, then send it through specialized computer software to ICBC for approval, before they can start repairs.
The two-hour rule
But it turns out that approval isn’t always necessary, even for some substantive work.
That’s because of something known as the “Two-Hour Rule of Acceptance.”
It’s a provision by which if a body shop’s estimate isn’t assigned to an estimator within two business hours of submission, “the estimate or supplement will be considered to be accepted,” and work can begin subject to meeting ICBC’s policies and procedures.
ICBC says in the end it must still approve all work accepted in this manner.
But according to the union that represents ICBC workers, the system needs review.
ICBC says it reviews about three quarters of estimates done by Express Repair Shops, covering about 87 per cent of what it pays out to them.
But exactly how often the “two hour rule” is coming into play is unclear. Asked repeatedly for a number on how many estimates were exceeding the two-hour limit, ICBC would only acknowledge it as an area flagged for improvement.
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“We recognize that there are estimates that are not being reviewed within the two-hour window,” said the insurer in an email.
“This is certainly an area we’ll be looking to improve as part of redesigning our collision repair model next year.”
But a senior ICBC estimator, who spoke on condition of anonymity, said the numbers are significant.
“Up to 2,000 estimates are coming into ICBC for approval every day. And of those, about one third [or more than 660 estimates] are lapsing through the two hour window and are automatically approved.”
The union says a key part of the problem is a lack of estimators, and it’s an issue ICBC acknowledges needs work.
“ICBC is definitely going through the process right now of hiring more estimators. And we’re forecasting that we will need more estimators next year as well,” said Sonny Senghara, manager of claims stakeholder relations for ICBC.
In the last decade, the number of customers using ICBC Express Repair Shops has surged from about 25 per cent to more than 70 per cent.
Senghara said that shift initially allowed the insurer to work with fewer estimators, but with crash numbers now soaring, staff can be stretched.
The insurer says it has added 57 estimators in 2018, and that that on any given day it has up to 45 staff reviewing appraisals, amounting to 7,000 to 8,500 estimates a week.
“That’s one of the challenges that we have. Not every day is going to be the same. So you’re going to have periods when we have a greater volume of estimates coming through the shops,” said Senghara.
Auto body shop accountability
Under ICBC’s Express Repair program, shops can get what’s called “earned authority.” Level one allows shops to do work under $1,500 without approval, while level two allows those repairs under $2,500.
“A human doesn’t even look at these requests,” said the senior ICBC estimator. “They’re auto-approved and auto-paid.”
Senghara said that’s not exactly true — and that auditors select sample cases to make sure accredited shops are playing by the rules.
“We do hand-pick certain ones that come in, and that’s part of our due diligence,” he said.
According to ICBC’s own statistics, 78 of the more than 500 Express Repair Shops faced full audits last year by ICBC’s Supplier Management Team.
It said all audits found some level of non-compliance, though not all were serious in nature.
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But in the end, just one shop was kicked out of the Express program. Nineteen others were placed into a performance review, meaning they lost their earned authority.
ICBC’s other disciplinary options include dropping a shop from its website, or reducing how much it pays shops for labour, though just three shops saw that penalty last year.
The Automotive Retailers Association (ARA), which represents body shops, says the cost of parts has risen dramatically and that its members are just following the rules.
“We have challenged our detractors to provide any evidence that shows or suggests or proves that shops are overbilling ICBC or any way unduly benefiting from the relationship,” he said.
“We’ve never seen any such evidence.”
In fact, a provincially commissioned PricewatershouseCoopers (PwC) report earlier this year found that rates in Express Repair body shops were “consistent among each other and within five per cent of the national average.”
However, the PwC did highlight a structural issue with the way ICBC manages body shops, noting that more than 90 per cent of vendors accredited to the Express Repair program.
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“Removal from this segment is a rarity, with action to remove vendors from the list is very scarcely taken,” states the report.
“Lack of removal is due to the lack of segmentation in the program, as it would have a significant impact on the supplier if they are removed from the existing top tier.”
That is a concern that ICBC acknowledges, admitting it’s tiering criteria hasn’t been modernized — and that it is working with industry on an an overhaul of the collision repair program.
“Through that program what we’re looking for is greater accountability, we’re looking to improve customer service, but we also want to be able to identify how shops can improve their performance and we’ll identify some efficiencies that will drive out some cost savings,” said Senghara.