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The influence of insurance companies has changed the collision repair industry. According to industry
estimates, roughly 85 percent of collision repairs are paid for by insurance, as these companies have become
more involved in decisions made at the shop level. Insurers have established Direct Repair Programs (DRPs),
which are agreements or contracts between insurers and repair shops to adhere to certain criteria to participate
in a mutual referral program. DRPs are maintained by insurance companies to facilitate claims handling and
reduce costs. In the past 12 years, thousands of independent body shops have participated in DRPs.
As the collision repair
industry has been greatly
impacted by DRPs, a
direct relationship has
emerged between the size
of a body shop and its
likelihood of involvement
with a DRP. Participation in
one or more DRP is more
prevalent among larger Vs.
smaller shops. According
to Babcox Research,
about two-thirds (66%)
of the DRP participants
comprised shops that had
over $1 million in sales,
with only 34% coming from
shops with sales totaling
less than $1 million.
Babcox Research reports
that on average, more than
two-thirds (72 percent) of the body shops were involved in a DRP. Of that total, 61 percent indicated that they
were financially better off due to their DRP arrangement.
Direct Repair Programs
Source: Babcox Research: 2017 BodyShop Business Industry Profile
Gross Sales for Body Shops, 2016
$350,000
to $749,999
7%
$250,000 to
$349,999
3%
Up to $249,999
9%
Over $2 million
34%
$750,000 to $1 million
15%
$1 million to $2 million
32%
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