Article at a glance:
As more intense competition limits the ability of European auto insurance companies to raise their premiums, they are seeking to lower their claims payouts, including those for car repairs. Recent regulatory changes and Internet tools give insurers the means to control these expenses by organizing independent shops and suppliers into networks of preferred providers. Insurers can then negotiate discounts by using their enormous buying power as the largest indirect purchasers of car repairs and spare parts.
The take-away
Organizing suppliers into networks of preferred providers can create a virtuous circle and confer the benefits of volume discounts, better service, and greater customer loyalty on all parties involved. An auto insurer can expect net claims payouts to fall by 3 to 5 percent in many cases, and sometimes by as much as 8 percent.