Relationships with insurance companies are more commonly associated with the collision industry than with mechanical, but that may be changing. In May, Openbay announced a partnership with Allstate Insurance that will be the first of its kind.
This partnership is a potential boon for Openbay shops, like Bonded Transmission & Auto Repair in Framingham, Mass., where Bob Chandler serves as service manager. But with Openbay now having access to 16 million Allstate policyholders through the partnership, it could be a detrimental blow to independent shops and change the landscape of the mechanical repair industry.
Breaking the Mold
The goal of this partnership is to take consumers through every step of the vehicle ownership process, Openbay founder and CEO Rob Infantino says. From applying for a loan for a new car with Allstate to maintaining that vehicle through Openbay, this partnership will follow consumers through their vehicle’s lifecycle.
The partnership was part of Openbay’s plan for growth. Infantino explains that Allstate had a large base of policyholders and the partnership allows Openbay access to all of them. Allstate will benefit because it will be able to differentiate itself from other insurers by providing a new service to its customers.
“From an insurer’s point of view, Allstate getting involved with the mechanical repair side is ingenious,” says Ed Cushman, owner of C&H Foreign Auto in Spokane, Wash., and general director of the Automotive Service Association. “They’re building value for their customers. If this partnership is successful, the competition will follow and more insurance companies will begin looking into partnerships like this.”
How it Works
Allstate and Openbay have created a tool for consumers that will send vehicle updates and alerts and, if necessary, provide the location of shops where vehicles can be serviced. There are two ways that the tool can be utilized, Infantino says. Customers of Allstate or visitors to Allstate.com can go online and fill out a form that links that user with a shop through Openbay. The other is the automated way that works through connectivity features in the vehicle. Whenever there is an issue with the car, Allstate will be notified and will relay that information to Openbay, which can send information to the driver on locations, reviews and prices of nearby shops.
“Some shops think this is going to come and go and it won’t have a huge impact on the industry because we’re more based on relationships,” says Wayne Watson, president of Auto Works Automotive Service Center in Woodbury, Minn. “I agree with that to some extent, but on the other hand, this is how the younger millennial generation likes to communicate. This could be the start of a new era of how customers get to shops.”
Perception in the Industry
Infantino understands that there are many in the industry that will be skeptical of this, and that the common perception is that the platform is just a way to “commoditize” the industry, as detractors often say. He wants it to be clear that’s not the case. In fact, he says, 70 percent of Openbay users do not end up picking the lowest offer. The company’s data shows that consumers pick the most convenient shop with the highest reviews, he says.
Chandler agrees with this. According to his daily experience using Openbay, initially it is about price, but it’s the review section that has helped him get many customers in the door.
“I don’t like to see insurance companies getting involved in my industry, I’ve seen what it’s done to the collision industry,” Cushman says.
Steering, the practice of an insurance company directing a consumer to a specific shop, is a relatively unheard of concept in this industry compared to the collision repair industry, but an insurance company entering the mechanical world could be the beginning.
“Insurance companies coming and directing consumers to shops means the mechanical industry is going to end up with third-party administrators,” Cushman says. Infantino points out that Allstate will not have anything to do with what shop the consumer eventually goes to.
Allstate just provides the service to its customers. Openbay is the one that will be making contact.
“To some shops it may look like an insurance company is trying to regulate auto repair,” Infantino says. “I don’t see auto repair as being regulated. Allstate is all about providing value to its customer.”
Surviving as an Independent
“This is how it started in the collision industry; companies like Openbay start sending work because shops weren’t strong enough with their own businesses,” Cushman says. “It all starts out happy, but I’ve got friends in the collision industry that put up with this and it must drive them crazy.
“I believe we all have the capability to do everything that these administrators are offering. Hire a marketing manager to get your name out there. Use social media. Shops need to educate customers, earn trust, repair correctly for a fair price, and stand behind their repairs. If shops do this, they can operate independently from third parties.”