Carriers ‘Better Wake Up’ to the Silent Cost in Auto Repairs

By Eva Thomas
Originally posted in P&C Specialist

ADAS repairs and calibrations cost hundreds of dollars even if they are done properly, which isn’t always the case. Insurers are paying the price.

The impact of Advanced Driver Assistance Systems (ADAS) repair and calibration costs is a relatively new challenge facing P&C carriers. Understanding where those costs come from is the first step to reducing unnecessary costs that can harm customers and carriers.

“Insurance companies better wake up and understand the importance of these calibrations,” said Jamie Humphries, co-owner of Georgia ADAS Calibrations, who just opened its second recalibration center in the state.

ADAS includes features like surround view, parking assist, automatic braking and pedestrian detection, all of which help keep people safe inside and outside the vehicle. To work properly and record accurate data, many of these systems must be individually calibrated. These calibrations can cost hundreds of dollars and require specific technicians, equipment and spaces, and carriers are the ones footing the bill. But a lot of these necessary calibrations don’t happen or aren’t done correctly.

Twenty-six percent of repaired vehicles require some type of ADAS calibration, and yet less than 10% receive it, said Greg Peeters, CEO of Car ADAS Solutions, a training consulting firm that specializes in starting ADAS calibration centers and has two Georgia locations.

A Developing Market

Although ADAS systems are nothing new, advanced technology and the increasing need for calibration has created a new market for calibration technicians and facilities. Companies such as Hansen VTF Labs, an ADAS calibration and vehicle-test facility in Anaheim, Calif., and Car ADAS Solutions, which Peeters started in 2020, have emerged to meet this need. These companies focus on the auto insurance industry in an attempt to inform and explain ADAS calibration and the costs that go along with them to those in the industry. As ADAS repairs and calibrations increase across the country, the costs insurance companies are paying involving ADAS also increases.

“In 2019, 96% of surveyed dealerships reported performing calibrations a few times per year, compared with only 29% in 2016,” said Insurance Institute for Highway Safety (IIHS) spokesman Joseph Young.

Understanding the Cost
Kevin Yen,
general manager of Hansen VTF Labs, said local adjusters visited the facility to understand what ADAS and calibration costs entailed and meant.

“They’ve seen that the cost of ADAS is hurting them, and they want to get an idea as to why it costs so much — and what’s an acceptable price range,” Yen said.

ADAS keeps people safe, but it’s a “double-edged sword,” as the replacements and calibrations are costly and add to an increase in severity amidst an already challenging economic environment in the auto insurance industry.

In the second quarter of 2022, personal auto loss ratios reached 78%, the highest in 20 years, according to the American Property Casualty Insurance Association (APCIA). While claim frequency has decreased, the severity of claims continues to climb, with the average cost per collision claim increasing 36.5%, to $5,743, from Q1 of 2020 to Q1 of 2022, APCIA reported.

As part of its model, Car ADAS has held grand openings in new centers and has invited local adjusters to learn general information about the facilities, Peeters said.

Training Insurers

On Dec. 2, Car ADAS announced it would open its 18th location: Georgia ADAS Calibrations in Decatur. The facility includes a training center to teach technicians and insurance companies about proper ADAS calibration and practices.

The facility looks to partner with insurance companies via a training platform and would be more information and lesson based, compared to their work with auto technicians, which would focus on ADAS certication and repair, said Humphries.

Peeters, Humphries and Yen hope to get their respective training programs off the ground in 2023.

At the trainings, adjusters learn about the calibration process and watch how different calibrations are done, as each ADAS has a unique calibration procedure.

Most auto shops do not have the capacity, equipment, or technicians to accommodate these repairs. Throughout his 20 years in the collision industry, Humphries said he has seen lawsuits because proper ADAS repair procedures were not followed on a vehicle — a costly mistake.

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