Counting the cost of repairs
28 September 2017
Author: Jack Carfrae
Are accident management schemes worth the extra expense or are you better off saving the money and handling problems in-house? Jack Carfrae asks how much they cost and whether or not they're worth it.
We've all heard the argument that accident management pays for itself.
The idea of farming out everything, from the initial phone call, to dealing with the insurer and sorting the repair, to an external specialist, is rather appealing.
Somewhere along the line, that service attracts a cost, though, and if you're the one paying for it, you need to make sure you're getting your money's worth. To justify itself, accident management needs to virtually eliminate the post-incident faff, and reduce other costs in the process.
"Typically, the customers that take advantage of the service are those that have corporatebased insurance policies - they've got big excesses," says Andy Williams, technical services business development manager at leasing giant Alphabet.
"If the insurer can see you've got a fleetmanaged process with an accident management partner, that's only going to help in those discussions around policy renewals. That's really where it works very well."
Along with the potential to cut insurance costs, the expertise of proper accident management also has to be worth something.
If you're dealing with a repair in-house, then chances are you won't be able to scrutinise a bill like a specialist - particularly now that proper fleet managers are a rarity, as we're often told.
"In the past, we've seen individuals employed to do this. Now, that role has gone, and it's actually the HR manager who does it," says Dave Bartlett, head of accident management at the AA. He adds that the firm's engineers hold an automated technician accreditation in vehicle damage assessment.
"The training is expensive, but what that means is that when my engineers receive an estimate, they can interrogate that against the incident circumstances, against the make and model of vehicle, and understand that this cost is or isn't reflective," he says.
"When they push back to repairers and say, 'This is what you repair, this is what you replace' or, 'Actually, we are going to write this vehicle off' - I don't feel that level of expertise would necessarily exist in a fleet company where they do it themselves."
"What's your driver going to do at three o'clock on a Sunday morning if you do it in-house?"
Handling accidents in-house also has drawbacks after clocking-off time, because there's no one around to pick up the phone, where external outfits are typically 24-hour operations. "What's your driver going to do at three o'clock on a Sunday morning if you do it in-house?" asks FMG commercial director Harvey Stead.
He believes analysis can pay for itself. "It's even simple things like, when drivers pull out of that depot, they turn right across a busy carriageway," he says. "If you had them turn left, go up to the roundabout and come back down, you'd have had five fewer accidents last year. It's simple risk analysis, but it's being able to see the patterns."
Often seen as the preserve of massive, blue-chip entities, accident management now has an increasing following among smaller businesses. Stead explains, "More recently, lots of SMEs are engaging with us, because it just takes away the hassle of dealing with your insurer. You're guaranteed a courtesy car, you're not having to get two estimates, you're not battling with the insurer about the cost of the repair, you're not having to worry about the booking and collection date, so there is an argument for it."
The counter argument - that it's too expensive - begins to evaporate when accident management is thrown in with a contract-hire package. Alphabet doesn't bundle accident management automatically, but does offer it as an optional free service, while many of the big leasing companies include it free of charge or for a small fee.
BusinessCar contacted the remaining four of the UK's five largest leasing companies, and asked how much they charge, if at all, for accident management. We first asked each firm's dedicated press contact, but every single one declined to comment or failed to respond to our request. So we called their switchboards, posing as a company with a fleet of 120 vehicles, but keeping other details anonymous, and also consulted their websites.
Lex Autolease said accident management was free, regardless of the size of the fleet. However, the company's website says the service is available "for an additional charge and subject to restrictions". It's the only website of the four leasing companies we examined that states outright that the service attracts an additional cost.
Leaseplan's operative estimated accident management would cost around £1-2 a vehicle, but required further details for an accurate quote. Arval said accident management is not sold as a stand-alone service but is included when fleets purchase an SMR package in addition to contract hire, though exact costs were not disclosed.
Volkswagen Financial Services said it does not currently offer an accident management service, though it was under consideration.
However, its website says the firm does provide accident management services via a partnership with the RAC.
Given that at least two of the country's biggest leasing companies offer accident management free of charge - and, anecdotally, BusinessCar understands many of the big players will throw it in for free if you have a large enough fleet - those who do not receive it as part of their contract-hire agreement would do well to have a word with their provider.
"Over the past couple of years, some of the customers coming to us for accident management aren't necessarily just the ones that are new to us," says Alphabet's Williams. "You've also got existing customers that may be deciding to outsource their fleet services.
They may have previously handled it in-house, and said 'Actually, we think we can employ that person in a core function for the business, rather than doing the secondary function of accident management'."
If it just isn't something you can get from your leasing company, or you fund your own vehicles, then there's always the option of a direct-to-fleet service. Big specialists such as the AA, the RAC and FMG have white-label contracts with many leasing firms, so they're no strangers to dealing with fleets. But putting a hard figure on the cost of stand-alone accident management is difficult, because it depends on the size of the fleet and the nature of the business.
It doesn't have to be expensive, though. "There's generally very little or no cost to taking this service as part of a lease contract or, in fact, interacting with an independent provider," FMG's Stead explains. "It's not like a maintenance charge where you're paying a fixed fee, because most of the providers generate their revenue from their relationship with the repairer."
Costs can creep in retrospectively, though, particularly if you don't use the management company's specified repairer. "Historically, you took the rough with the smooth," says the AA's Bartlett. "Ideally, you wanted all the repairs within your network, and if you had a few slip out here and there, you would just provide that as part of the service. The industry has changed, and if you're not using the accident management company's repairer network, that can incur a cost."
To get a first-hand customer view of the situation, BusinessCar spoke to a fleet with experience of dealing with accidents in-house, and also of using an external provider. Colin Hutt, category and contracts manager for fleet and insurance at construction industry training specialist CITB, operates a fleet of around 340 cars and 30-40 vans. He gave his take on the before and after of outsourcing accident management.
"When I first got here, the bizarre thing was that if drivers had a claim, they had to go to two separate garages to get estimates, then forward them to us. I'm talking minor damage - for major claims, ring the insurance company - but anything below the excess fell to us to sort out. It was kind of a laborious process, for drivers at least, and it also meant we were invoiced by all sorts of different garages for minor work," he says.
The company CITB leased with at the time had an accident management arm, so they asked the company to do their accident management. Hutt says there was a small charge, about £1-2 per vehicle each month. The advantages were that the drivers only had one number to call so didn't have to think about getting two quotes for repairs. The company would use their team of repairers, go to their preferred suppliers and they also had experts who knew what they were talking about.
"It was a much easier system; we didn't have loads of different garages billing us for repairs, we paid on a monthly basis, and the insurers paid whatever was over and above the excess," said Hutt.
"When that contract ended, we retendered, and asked for an option for accident management. The supplier that won it gave us accident management effectively for nothing - or didn't charge any extra for it per month - so it was a no-brainer to take it."