Copart vs IAA: How Insurers Choose Salvage Auction Providers

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What constituted that change? What kind of KPIs were you looking at when evaluating between the two providers?

The critical thing in that part of the business is speed. Speed matters. The speed of picking up the car, the speed of getting it... You can't imagine how the repair industry can be kind of messed up. I'm in it right now. I don't want to say I'm contributing to it being messed up, but I'll let you answer that on your own. For an insurance company, speed matters. Here's why. If you don't get the car into the auctioneers pickup queue quickly, it starts running crazy expenses. Rental fees could be $50 a day, storage could be $65, $70 a day. And the longer it goes, the harder it is to get the car out of a hostile shop.

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Regarding speed and its importance, did you ever notice if Copart or IAA had an advantage in terms of faster cycle times from pickup to listing, sale, and ultimately when GEICO received the proceeds?

The industry ultimately noticed because several companies switched, recognizing that Copart's catastrophe handling was superior. There was a flood event in Baton Rouge, Louisiana, involving 40,000 total losses that needed to be picked up. Copart managed it much better than IAA, and everyone in the ecosystem noticed. Major insurance companies, including mine, had to bail out IAA because they didn't have enough land. When a catastrophe occurs, if a company doesn't perform well, you start questioning their overall capabilities. It's all about speed. In a catastrophe, you need tow trucks and land. For instance, during Hurricane Harvey in Houston in 2017, there were about 150,000 total losses. Where do you put 150,000 cars? You need a lot of tow trucks. Copart had more trucks than IAA, but they don't have 20,000 tow trucks. IAA couldn't manage, even with time to plan. Carriers had to scramble. Running a tow network, I know everything about towing. You need to know how many tows you need and your ETA. If you can't meet your ETA, you need more trucks.

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