Insurance Edge caught up with Jane Pocock, UK MD at Copart, to find out how this major player in vehicle salvage and repair is adapting to the impact of Coronavirus.
IE; What changes has Copart made to everyday operations after Coronavirus?
JP; Copart is the largest nationwide operator for the insurance sector, with the majority of the insurance salvage market, working for most of the UK’s leading insurers. The body that regulates insurers, the Financial Conduct Authority (FCA) has confirmed that the claims service provided to policyholders by their insurance companies is deemed essential under the Government’s Coronavirus Bill.
As a key player in the motor claims supply chain we process in excess of 400,000 vehicles a year, so we already have a fully integrated digital transfer of information with our partners and most of our services are managed remotely. Our staff where possible are all home working and our operation centres are running with skeleton teams to enable social distancing and management of bio security measures. We have ramped up our vehicle delivery service as we took a decision to close our premises to the public to protect our team staff. We are fortunate that we own and manage our fleet of transporters so we can also protect our drivers, who are moving vehicles with the appropriate personal protection equipment.
Things have slowed down a little bit in the last few days as traffic volumes on the roads have decreased, but with 480 acres of storage around the country we have the capacity to function well during the virus emergency. We regularly test our business continuity plans and have additional storage space to cater for surges and unexpected events. I’m really pleased with how quickly and professionally our teams have risen to this unprecedented challenge.
We are also fortunate that our vehicle auction is a digital platform with online payment, so perhaps the one part of that vehicle sale process that has changed is the handover to the new owner. Now we are organising discounted delivery, digital signatures on documents, that type of thing, so that nobody is coming into close contact when dropping off a car.
There is another aspect to what we do, which is managing the end-of-life process for cars that are classified as written-off, so that too has been streamlined a bit – it’s all about mitigating risk, we all want to get back to normal as safely as possible.
IE; How have you found the response within insurance and claims management?
JP; For many years we have had a great relationship with our insurance partners, and we have been in constant communication with them regarding the new challenges we are all experiencing. As an industry we are used to handling issues such as storms, floods and fires but this has been strange as this time accidents have reduced!
In this case we have involved a task force to collect all cars assigned to us as fast as possible, but there are some damaged vehicles which are now getting stuck in garages and body shops that have had to close. This means the vehicles can’t be repaired as they normally would be, and no one wants the claims process to stall completely. So some insurers have instructed us to collect some of these vehicles to either store them or put them into the total loss process so they can conclude matters with their policy holders. We also have a huge supply of vehicles that can be dismantled for repair, so we have adapted our processes to help here too. We have all pulled together to tackle the various challenges and our workforce has been incredible.
We have had to close our operation centre to the public, to protect the safety of our employees, which of course everyone totally understands. It does mean that insurers are unable to send in their engineers – however we are able to use our own engineers to provide these reports. We are also arranging more deliveries of our vehicles so we can control the process to manage bio security and social distancing. Obviously, we are taking care of our drivers and regularly communicating with them, and we are lucky they have advanced technology that is totally contactless. Fortunately, it has been relatively easy to continue our service to ensure there is no delay in determining a vehicle’s fate.
IE; The insurance industry is lucky in a way, because much of what they do is administrative and its already online, but some part of the claims process and its supply chain can’t be done by everyone working from home – they are a part of the essential work that has to go on?
JP; Yes, Copart has received letters from Claims Directors and insurers’ legal counsel following the guidance confirming that they classify us as a “critical service partner” and that we must therefore maintain services to protect the insurance claims supply chain and ensure that the interests of their customers are protected. If we do not, the claims process will falter, and their customers will not receive settlements. Rental cars are still being dispatched and there is now clearer guidance for garages and repair shops. As you know it took government a few days to issue guidelines around essential services.
In addition, we at Copart are a significant outsourcing partner to insurers where we provide various vehicle engineering functions, claims processing and settlement services, and need to maintain support to them. Copart wants to make sure people are getting their claims dealt with as fast as possible and we have remote teams working well to continue these services.
IE; Do you think this sudden shift to remote working is going to completely restructure the vehicle claims industry?
JP; It’s definitely made everyone test their infrastructure, at every level. As for the future, I think humans like interaction and having people around them. There is something to be said for all working together in one place and building up a team atmosphere. The big challenge right now is offering support to employees and keeping up morale, especially if this situation continues until June or longer. People are all in different situations as regards health, family and finance and one thing that Copart is doing is sharing information on how individuals can cope, because we are learning from all our offices worldwide. Everyone is adapting to a new way of working and there isn’t a one-size-fits-all approach. We have many regional office but if I was paying heavy rent for a London office I might be looking to downsize now, I guess.
IE; If the lockdown continues until June it will put pressure on small businesses in particular, many within the automotive sector, will this virus change things forever in some ways?
JP; I wish I had a crystal ball! This is a really challenging time for all business leaders right now; whatever their size. It is strange seeing pictures of empty streets in and around London and you realise it isn’t just the big companies and offices that are closed. It’s all the sandwich shops, cafes, restaurants, florists and so on that thrive on the daily commuter traffic one way or another. I really feel for these businesses right now. But now, as instructed, we need to lockdown where ever we can to prevent spread of the disease and look at the relevant levels of government support and shore up cash reserves and do what we can to weather the storm.
In our particular industry it’s crucial that the car parts supply chain keeps going right now, for small companies as well as larger ones. Vehicles need to be repaired. Most of the vehicles that move through our auctions are repaired through the garage trade and the remainder are broken for parts. Defra has confirmed to the British Metals Recycling Association that front-line staff involved in the depollution and disposal of end-of-life vehicles are deemed critical workers. As a result, the British Vehicle Salvage Federation has confirmed that services supporting the recycling of salvage must continue. These workers do not by the nature of their jobs need to come into close contact with others.
By continuing with these core operations it may help some small automotive businesses reliant on the supply chain to maintain a level of trading. It also helps to maintain the flow of parts to feed repair garages – which have been deemed as essential to keep key workers’ vehicles on the roads – at a time when parts supplies from some sources is drying up.
It has also been great to see many companies in the insurance and automotive sectors doing things to help the NHS, key workers and small traders. The McClaren-Mercedes F1 team building a prototype ventilator is such a brilliant initiative. We have done our part by prioritising claims for all the key workers.
IE; Do you think the virus is going to have an impact on vehicle valuations?
JP; The immediate impact of the virus might have a broad effect on values in the short term. It’s hard to gauge how things will work out in the long run, even with technology helping to automate so many parts of the process. To an extent Copart facilitates a portfolio of damaged vehicles, already discounted as they need repair and a huge range of green parts opportunities, and we also export a large amount of vehicles for parts so that useful components can be recycled. Assuming that demand for repairable cars and serviceable car parts continues globally, then ultimately it is the customer who puts a price on the salvage vehicle. They set the market value, not the virus.
IE; Thank you for your time.