Rekeying is an insurer “negotiation tactic,” a means of convincing a shop “to bid against yourself,” Collision Hub CEO Kristen Felder argued this summer on a “Repair University” segment that painted the practice as illogical and detrimental.

Her fellow co-hosts and industry experts also lampooned the concept on the June 26 show.

Rekeying was the “the singularly dumbest thing somebody could do,” said Larry Montanez, the co-owner of P&L Consultants. Vehicle Collision Experts CEO Mark Olson called it “insane.”

Yet it’s a common sight during shop audits, according to Felder.

Repairers claim it makes negotiation easier, she said. But rekeying actually “makes it harder for you to negotiate,” she said.

When you rekey for an insurer and then give them a supplement, “they immediately go to the S1s” rather than take the item as a whole, she said. The carrier makes a series of yes/no decisions on the various line items. “You’ve got them into paying dollars, not scope,” she said.

Then the adjuster makes a counterproposal, hands you a revised estimate — “and then you rekey it again,” Olson pointed out. “… It’s insanity,” he said.

Felder said the insurer has convinced the shop “you’re actually supplementing yourself.” The shop is negotiating “down to a middle,” she said. “… You’re constantly coming down.”

Montanez wondered how many shops ever encountered an insurer who wrote more than them on that initial estimate. “You don’t see it,” he said.

(To Montanez’s point, CCC’s research into DRP supplement rates for the year ending Sept. 30, 2019, found 82 percent of repairs had at least one supplement. The average supplement represented 14.5 percent to the total repair cost.)

Felder asked how many times shops reached Supplement No. 5 or 6, found themselves $50-$100 off of the insurer’s offer, and concluded, “‘Aw, forget it. … I’m just gonna write it off.'”

That’s a huge win for an insurer seeing 40,000 of such claims daily, according to Felder. The aggregated savings are “huge money” for them, Olson said.

“It’s Chinese water torture,” Felder said.

And behind the scenes, insurers are “just laughing at you,” she said. Olson, who also has spent time in the insurance industry, agreed. “Locker room talk” for adjusters is how much they were able to get a shop to cut the bill, he said.

She pointed out that estimates used to be handwritten, a labor-intensive process. If that was still the case, collision repair rekeying would be nonexistent. “You would be upset about it,” she said.

Olson attacked the process with a different analogy. Consider a customer who brought your shop another repairer’s estimate and asked for a rewrite to that dollar amount.

Instead of rekeying, write your own repair plan and “keep handing back the same repair bill” to the carrier, according to Montanez. He suggested buying some cheap plastic rulers and painting them red. When an insurer appears asking for a supplement, let them reconcile their own estimate with the shop’s and give them the ruler to make the line-by-line comparison easier.

“‘Here’s my estimate for fixing the car; you figure it out,'” Felder described it.

“Don’t validate with supplements,” Montanez said. A supplement was for items like part price differences or a final dealer reset, he argued.

“Supplement is different than rekey,” Felder said.

Learn about negotiating, suing insurers at virtual 2020 Repairer Driven Education

Get advice for dealing with insurers during the virtual SCRS Repairer Driven Education series Nov. 2-6 by attending “Litigating and Winning Short Pay Claims” with John Parese of Buckley, Wynne & Parese, and “Overcoming Insurer Objections to Payment for Needed Repair Procedures” with Tim Ronak of AkzoNobel. Register here for individual courses or the series pass package deal, which includes the entire week of classes and the OEM Collision Repair Technology Summit.

An insurer might propose a different estimating system than the shop as grounds for a rekey. Felder said she would politely declare, “‘That’s not my problem,'” and present the shop’s estimate.

Felder said that when she worked for an insurer, she would get upset at adjusters who let shops rekey — she was paying those staffers to made those determinations.

By rekeying, shops have “created a billpayer that is incompetent,” Felder said. It allows insurers to make do with a less skilled workforce, for “it takes skill” to handle a lengthy shop estimate, according to Felder. She estimated that 90 percent of appraisers had no idea how to reconcile a 50-line insurer estimate with a 300-line one.

“The insurers love it,” she said of rekeying.

Felder, who serves as an expert witness, also observed that rekeying raised issues in court.

“Rekeying validates the insurance company’s processes and procedures,” she said. “… You’re validating their way of thinking” on how a car should be repaired.

Olson, who also serves as an expert witness, said that rekeying an estimate implies “you actually agreed” to it, even though you didn’t. It’s under your company,

It also creates a “false database” teaching artificial intelligence estimating systems, Felder said.

More information:

“Repair University: Rekey Of Insurer Estimates”

Collision Hub YouTube channel, June 26, 2020

Featured image: Rekeying is an insurer “negotiation tactic,” a means of convincing a shop “to bid against yourself,” Collision Hub CEO Kristen Felder argued this summer on a “Repair University” segment that painted the practice as illogical and detrimental. (Valeriya/iStock)