Reclaimed Parts cannot just be a Plan B for when Plan A fails
24th November 2020Tweet
A number of interesting insights arose out of the live webinar, ‘Building a Sustainable Approach to Motor Claims’, hosted yesterday, 18th November, by e2e Total Loss Vehicle Management [e2e]. Panel members included representatives from AA Insurance Services, Ageas Insurance, Co-op Insurance, and the National Body Repair Association [NBRA].
The question ‘Are we as an industry, giving the customer what they want?’ brought the customer to the centre of the discussion. Whilst utilisation of reclaimed parts provides many benefits, including reduced cost and wider social responsibility, the benefit to the customer is often overlooked yet experience shows that customers are very receptive to the use of reclaimed parts in the repair process. The panel agreed that a reclaimed parts solution brings positive customer experience in many different scenarios, from avoiding a vehicle being written off for sentimental reasons, to helping reduce downtime/alternative vehicle hire whilst a replacement vehicle is sourced.
Utilisation of reclaimed parts at the right time was a recurring theme, recognizing that reclaimed parts are not appropriate for every repair and that an entire repair cannot necessarily be completed using only reclaimed parts. However, to realise the maximum benefit from a reclaimed parts strategy, Neil Joslin, COO of e2e stressed that reclaimed parts cannot just be a Plan B for when Plan A fails. Taking the uncertainties presented by Brexit as an example, trying to quickly put a reclaimed parts solution in place at the point where difficulties are being experienced in getting parts across borders, or tariffs on parts are driving repair costs up even further, is going to be fraught with difficulties. Committing to adopting a reclaimed parts strategy, and investing the time in selecting the right partner and establishing processes that serve and support the insurer’s claims management function is crucial to success.
Some concerns were raised about demand for reclaimed parts out stripping availability as more insurers consider the concept due to parts supply being impacted by Covid and fears that Brexit will further compound difficulties. Joslin explained that there is a large stock of end of life and total loss vehicles in the UK, within the e2e network alone, and decisions can be taken around how to utilise that stock to meet demand for parts.
Reputation risk and provenance of reclaimed parts was questioned – how to ensure parts are from genuine end of life vehicles and CAT Bs, and not from a stolen vehicle. The new industry standard for reclaimed parts, the VRA Certification Scheme, introduced by the Vehicle Recyclers’ Association earlier this year, was acknowledged to be driving increased professionalism in the supply of reclaimed parts. Quality grading of parts and provenance details form part of the scheme’s audit process and improve buyer confidence. It was noted that reliability in terms of order and delivery was as good as OEM parts, provided you had an established supplier partner and processes in place.
The ability to give the customer choice to avoid a total loss situation through the use of reclaimed parts was seen to be valuable, as was the ability to reflect increasing public focus on protecting the planet which has been amplified by the ‘Attenborough and Thunberg effect’. Repair, rather than throw away and replace, can be seen to be growing in popularity generally across many aspects of consumer life.
As well as discussing the cost saving benefits delivered by reclaimed parts the additional labour cost for the repairer to prepare the part for use was considered. The combined cost representing a saving on the retail price of a new OEM part was seen to be a net win. The intangible benefits of reclaimed parts related to the customer journey and experience were also highlighted.
Collaboration was identified as a future accelerator to create a step change in the evolution of the reclaimed parts market; whilst questions were raised about the grey area in insurer processes whereby a vehicle is identified as repairable or a total loss at FNOL and starts its journey accordingly. If reclaimed parts can be used to re-categorise that vehicle as economically repairable, how easily can the insurer’s claims infrastructure achieve that switch?
Commenting as hosts of the webinar, Neil Joslin, COO at e2e said: “We were absolutely thrilled by the reaction to the webinar, both the appetite from insurers and repairers to sit on the panel, a registered audience of over 300 members and the volume of questions from the audience. Clearly reclaimed parts is front of mind across the industry and we were delighted to facilitate the sharing of views and understanding via this webinar. We will continue to advocate the use and potential of reclaimed parts and to represent the professional salvage and recycling agents who are making this concept a reality, across the insurance industry.”Tweet