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Letter to the Editor

This article originally appeared in the December 2002 Issue of INSIGHT

Forecast Still Flat: Severity Alert

You know, when I’m right - well, I’m right! In December 2001 I wrote: “As we move into 2002, I think we will see a relatively flat Collision Repair Industry.... Key factors in calling for a flat forecast are: more totals as a percentage of claims, lower accident frequency, and the decision on the part of some insureds to ‘take the check’ and not have the vehicle repaired.”

Well, as 2002 rolls to a close, I must say that my forecast was right on the money. The accuracy of my prediction for this year makes me dare to look in my crystal ball for a look at how I see the industry doing in 2003.

I’m seeing more of the same in store during the coming New Year. I have already predicted that total collision repair paid claims for 2002 will end up down overall by about six percent, and paid claim frequency is holding steady at about 6.6. I’m still seeing a flat collision repair industry landscape, and insurers will be strictly looking for more ways to trim expenses.

Allstate and Progressive are both showing fair gains in their stock price per share, although neither will likely be suggested for INSIGHT’s 2003 Fair Player Award in our annual Who Pays for What? survey, at least based on comments we have heard from several collision repair facility owners.

CCC Information Systems out-performed all the companies we track in our stock review, up nearly 132 percent since the beginning of 2002. Concentrating on its core business has made CCC a strong performer.

Our refinish materials manufacturers have been holding fairly steady this year. Although Akzo Nobel is still struggling in the Stock Market, down about one-third from January, determined cost-cutting measures and steady management of Akzo’s key segments will, I believe, lead to a better 2003 for the company.

Valspar has reported another good quarter, and its stock price is up over ten percent since the start of 2002.

BASF management has seen the company’s cost-cutting measures begin to pay off, and DuPont is preparing to reduce its workforce slightly. In short, refinish manufacturers are planning to continue to economize in a flat market during 2003.

Have we said enough about DriverShield and eAutoClaims yet? Neither news that the two companies were merging nor subsequent word that they were not has helped these two companies. Both stock prices are down more than two-thirds from already depressingly low January levels. Could they do any worse? Well, yes - a Parts.com share is one cent today.

Both Copart and Insurance Auto Auctions appear to be gearing up for a good 2003, but Copart’s stock price needs serious attention, down to half of what it was at the start of this year.

A prediction INSIGHT has for all our readers that I want to come true: Have a Happy and prosperous New Year!

-Charles Baker-

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