Accident management and vehicle repair is changing fast. Gone are days of waiting for loss adjustors with clipboards inspecting vehicles, or dealerships carrying large stocks of typical new replacement parts in storage units.
The FNOL process now utilises tech to gauge repair, hire, recovery and other costs within a few hours, plus allocate work in a much more cost-effective way for insurance brands, who are keen to get their customers back on the road.
But there is another factor now; ESG and Net Zero targets. Parts products miles make a difference, plus reusing existing parts rather than manufacturing them from new materials is also a huge saving on carbon emissions, and the energy consumed making those new bumpers, wings, alloy wheels or light clusters. That’s why a salvage and vehicle recycling network like e2e Total Loss Vehicle Management has really got something to offer insurers in the 2020s and beyond.
IE caught up with CEO Jim Loughran and NED Rob Smale from e2e to find out more.
OUR SURVEY SAID
According to the e2e 2023 Reclaimed Parts Research Report, conducted with the ABP Club, there is huge potential for the increased use of reclaimed parts. Bodyshops reported they could be used in nearly every job, but in reality, the majority of bodyshops 66% say they only use them on less than 10% of their jobs. Insurers meanwhile are moving towards the use of reclaimed parts becoming standard with 78% either already including relevant wording in their policies now or intending to do so in the next 12 months, as greener repair practice becomes the default setting.
As technology advances it could make sense to have one single portal, which would allow bodyshops and insurers alike the chance to check on parts availability during FNOL, plus compare costs of new vs reclaimed. When asked in the survey 100% insurers wanted a centralised system, but some in the repair sector thought there might be difficulties in sourcing the exact part for a make and model variant, plus the issue of pre-painted parts could mean a correct part, but in the wrong colour.
The idea of having a reclaimed parts platform or portal, offering every company in the claims chain access to more environmentally friendly, cost-effective choices, is a sound one. It also touches on the issues raised by consolidation across the bodyshop and salvage sector, where bigger players are gradually dominating the UK supply chain.
IE; Given the move towards consolidation in vehicle repair, both recyclers and bodyshops, does that make things greener in some ways, yet restrict insurer choice to a degree?
JL (pictured); All the consolidation across salvage and vehicle recycling is being driven by borrowed money and that investment is bound to have an effect on competitiveness for the end user.
Bigger is not always better and e2e feels that there is a value in having independent salvage and parts specialists, who have in-depth knowledge. That knowledge really saves time, right through the claims process. And a network of independent specialists can challenge large single entities, offer market choice, drive quality standards and service innovation and prevent pricing domination.
RS(pictured); We are at a point right now where two large companies, who are foreign owned, are expanding rapidly and that is bound to have a cost impact on the market for reclaimed parts. e2e offers insurers and repairers a UK based alternative. It’s network structure means that smaller regionally based salvage companies get the chance to compete for national contracts. By constructing a modern reclaimed parts distribution network, powered by data and technology, we can offer insurers the opportunity to access a much larger inventory of parts and services.
JL; The e2e network is UK based and that offers insurers the chance to track the product miles of parts for their ESG compliance. It isn’t just about saving money, ultimately it is about reducing the damage being done to the planet by shipping millions of parts around the world.
At e2e we see ourselves as an independent group which leads in centres of excellence and innovates, with new ideas in the repair sector. It’s important to look ahead and work with insurers to see what their ESG and Net Zero targets and ambitions are, especially after Brexit. That offers insurers the chance to track back across supplier chains and promote greener repairs as a benefit to policyholders.
IE; Looking across your network do you see regional differences in the type of damage to vehicles, or the parts needed?
RS; Yes we do and our regionally based operators use their local knowledge and data to know what parts are best to reclaim in each region of the UK. What works within the M25 doesn’t automatically work in Scotland, rural parts of England nor Wales. Different vehicles will predominate in each region for example average age may change, there maybe more commercial type four wheel drives etc. Having a local e2e member in an area who really knows the local market does make a big difference.
JL; The demand for parts can vary greatly too, you have different wear profiles in the north of England or Scotland. Knowledge really counts, for example we have a returns rate of less than 3% and much of that is down to our members knowing the spec of vehicles, plus their local market inside out.
We have a 30-strong member network now and we are investing heavily in reclaimed parts across that membership. Eleven of those 30 independent parts specialists are Tier 1 suppliers and 21 are certified ATF breakers, so again, that’s important for insurers to know as our members are regulated end-of-life dismantlers. Part of that dismantling process is about recognising which parts are safe to re-use and then identify and catalogue them. Our members are certified to the VRA UK Standard for Reclaimed Parts which means our parts are quality graded, provenance tested and warranty assured.
IE; Is there still some reluctance by consumers or insurers to use reclaimed parts?
JL; A little bit, but attitudes have changed fundamentally in the last few years, people do want the greener option now. The big innovation now is to offer reassurance in the form of a warranty on the reclaimed parts, so you are essentially matching the guarantee that a new part carries.
For more expensive parts, or for example a complete engine, that back-up is essential.
So e2e is investing in creating a new parts portal, which will offer quality graded, warranty assured, provenance tested, OEM parts to the insurer/repair and bodyshop market. This will launch soon and make a big difference in terms of searching for parts.
Feedback from our survey suggested that a “one stop shop” approach is what the bodyshop/repair sector really wants. It offers huge savings in time if they can get the right part quickly and that has a knock-on effect for the insurers of course.
RS; We have got to remember that traditionally car manufacturers have made a very good margin on supplying new parts, so there will be some opposition to using reclaimed parts. In addition, repairers business models often rely upon OE parts discounts. We have to overcome such barriers aided by the insurance sector in response to customer demand and environmental regulation.
There is benefit to the repair network, and in turn insurers, saving money on reclaimed parts as well. To gain traction everyone in the claims chain needs to realise commercial benefit from this shift towards a greener future.
IE; Your recent report touches on standards, in that the repair sector wants to see clarity on the safety of warranted green parts. That really has to be an industry-wide set of standards on everything from windscreens to catalysers doesn’t it?
JL; Yes it really does have to apply to everyone in the sector. So I think we have to work towards the safety standards but also the carbon/emissions standards need to be clarified too. There can only be a benefit for insurers long term if everyone can agree that utilising green alternatives for certain high C02 intensity parts like engines, catalytic converters etc. carries a higher ESG value than say an indicator cluster.
RS; Insurance brands can meet ESG targets in their offices by cutting down on paper use, recycled rainwater from the roof and so on, but that’s a tiny part of their real carbon footprint. Claims is where the opportunity to impress regulators and financial market lies. The thousands of vehicle total losses they authorise have huge potential for recycling and this is what we do at e2e, every day. Indeed, we exceed 96% recycled or reclaimed in every vehicle.
JL; Salvage has always been about recycling but what we want to do is revolutionise the distribution of reclaimed parts, use technology to speed up the system and track where the savings are, for insurers and the planet.
We are planning to introduce our new data strategy across our network soon and this will give us tremendous insights into parts demand, by season, by car make and model and more. In fact, the value of that data for insurers in terms of pricing premiums is equally valuable.
IE; Ah, you can layer the data on parts by city, county or region, then add year of vehicle, postcodes, business vs social use…
JL; Exactly, the data bank that can be built up over time will give insurers deep insights into replacement parts, whether new or reclaimed,, plus how quickly that model can be repaired. e2e can do next day delivery on most parts to all mainland UK areas, so again that network power saves insurers time on storage or hire costs.
RS; In the past e2e has only interacted with the insurer claims teams. In future I can foresee a much greater interaction beyond claims. Our accumulated years of data regarding the profitable reuse of parts will be of huge interest to underwriters. With this data they can refine, to a regional or sub regional level, the cost of vehicle right off and get that X factor essential when competitively pricing risks at the point of quote.
IE; Looking at your network of independent salvage specialists, it’s a kind of John Lewis collective approach. Rather than profits going to shareholders, everyone in the network has a vested interest in growing the business don’t they?
JL; It is a point worth making yes, because we don’t have to answer to a Board, who in turn are looking at the share price, we can concentrate on innovation, testing new ideas, responding quickly to the market – our insurer and bodyshop customers basically. Everyone in the e2e network feels that we are doing the right thing, saving the planet by using the perfect, as new, parts we can salvage from vehicles. That independent network flexibility means we can also respond faster to insurer and bodyshop needs on repairs too; setting new standards, meeting ESG compliance.
IE; Interesting stuff, thanks for your time.
Be the first to comment