AI Yai Yai: The Impact of AI on Our Industry 

by Ken Miller, AASP/NJ President

AI is everywhere, even if we don’t always recognize it.

Although it has existed in its simplest forms for quite some time, it’s now becoming more mainstream in our everyday lives. Many of us use AI to help draft the perfect email response or even write articles. (Only kidding, this is all me.) Regardless, it is a very powerful tool. Since AI is still in its infancy, the full extent of its potential has yet to be discovered, which is both exciting and frightening. 

Our industry is not exempt from the AI revolution, as we are starting to see its implementation with predictive estimating models now in use by companies like CCC. Users can walk around a vehicle and snap a few photos, and AI will generate a preliminary estimate based on predetermined profile selections and a few simple questions about the damage. Pretty cool – albeit potentially illegal for shops to use in NJ. However, it certainly has its usefulness, especially on the insurer side. 

Potential Issues with AI Implementation 

 I recently attended a negotiation seminar where I learned about another way insurers are using AI: to verify labor rates in a given market. Apparently, insurers are using AI to scrub estimates for labor rates (and likely more) to establish labor rates in a particular market for use in litigation cases. The process is simple – take the totals page from any uploaded estimate, scrub the rates column and generate a report of the current rates in a market. This would make it extremely difficult to argue against, considering it is data from estimates uploaded by repairers! 

A Suggested Solution 

During the seminar, a possible fix was suggested. It’s pretty simple and could be very telling if implemented: Using your posted door rates in the totals column, then making a bottom-line concession to the agreed price. This way, the information AI is aggregating reflects the actual market labor rate. Easy enough. 

Additional Considerations 

I’m not an attorney and don’t give legal advice, but I’m curious about taking this one step further and applying the same logic to labor operations. For those shops that do not itemize every operation performed on a customer’s vehicle – perhaps due to not receiving compensation from the bill payer or making a concession to the customer – every labor operation should be itemized and a value assigned. Any adjustment in cost should be made at the end of the estimate as a “concession to agreed price” with a negative amount assessed. 

This approach is important for several reasons.

Legal Compliance: It’s the law to fully document all labor performed and parts provided on a customer’s vehicle. 

Financial Awareness: Constantly seeing how much your concessions in labor rates, labor operations and parts are costing your business might inspire you to rethink giving your money away! 

By adopting these practices, we can ensure that the data AI uses is accurate and truly reflective of the market, ultimately benefiting our industry. 

Want more? Check out the July 2024 issue of New Jersey Automotive!