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Letter to the Editor

We don’t need no stinkin’ database

Shops see misuse or real abuse of estimating databases as a major concern.

Howard Levitt said the job very quickly went from one on which his shop would make a reasonable profit to one on which the shop was losing money.

"'Clips and fasteners? Oh, clips and fasteners are part of your overhead,'" Levitt, who asked that his real name not be used, said the insurer told his shop's estimator as they went over the vehicle. "'And there's only damage on part of that panel, so I'll give you half the basecoat time and full clear time. And here's what we'll pay for an alignment.' It reminded me of that movie where the guys say, 'Badges? We don't need no stinkin' badges.' This adjuster was saying, 'Estimating database? We don't need no stinkin' estimating database.'"

It comes as little comfort to Levitt to hear that he's not alone. In virtually every market in the country, shops are complaining that procedure page and other aspects of the estimating systems are being circumvented. The more charitable among them refer to it as misuse or misinterpretation of the databases. Others use slightly stronger language.

"It's database abuse," Levitt said. "When you don't use something as it's intended, when you manipulate it to benefit yourself and hurt someone else, that's abuse. They're abusing the system." Plenty of examples

As reported elsewhere in this issue, when shop owners and their association representatives gathered for the National Industry Issues Forum in Nashville last month to discuss key issues facing the industry, database misuse or abuse was among the top four problems they would like to see addressed.

"We have a couple insurance companies that on a repaired panel are requesting or demanding or wanting to pay only a percentage of the flat rate paint time and then full clear time," said Pat Gisler, executive director of Automotive Service Councils of Kentucky and Southern Indiana, cited as one example of the problem.

Others pointed to disputes over "feather, fill and block," or alignment reimbursements being based on "tire store sale prices."

"The database clearly indicates what it takes to perform that [alignment] operation," Gary Wano, an Oklahoma shop owner and treasurer of the Society of Collision Repair Specialists, said. "There's a lot of difference between what it takes to align a car that you're just putting new tires on as opposed to something that's been in a collision. It's not as easy in most instances."

Any discussion of database abuse always includes the issue of "caps" or "thresholds" on materials. Wano said this is a topic SCRS has worked on since 1996.

"We know SCRS has done an incredible job at getting out to all states to find out what the insurance commissioners offices have decided on this issue state by state," he said. "SCRS members have that information available to them right now."

SCRS updated its original report last year, getting responses from 47 of the 50 state insurance departments in order to clarify whether or not collision repairers were obligated to accept paint and materials thresholds. The heart of the report is a matrix that contains key excerpts from each state's response to SCRS inquiries. This helps clarify each insurance department's position on paint and materials capping in easily digestible bites of information. For example, readers will find that "Auto physical damage policies written in Delaware do not contain a cap for the cost of paint or materials" and that "Wyoming does not have a statute of regulation that addresses this issue."

"It is our hope that this report and the supporting documentation from each state will enable our members and their insurance partners to successfully negotiate what is fair and reasonable without conflict," SCRS Executive Director Dan Risley said.

Focused on the topic

Misuse or misinterpretation of the estimating databases - in particular in regard to paint procedures and times - is also being tackled by a number of committees at the Collision Industry Conference (CIC).

Toby Chess, chairman of the CIC Technical Presentations Committee, has produced a videotape showing the steps necessary - based on paint company procedures - to refinish five identical fenders depending on whether that fender was new, used, repaired, spot painted or blended.

"They all have about the same procedures," Chess said of the paint manufacturers. "What I found interesting is that paint companies on repaired panels add about 15 extra steps on average. The repair versus spot [painted] was almost identical [in terms of time required]."

March Taylor, co-chairman of the CIC Estimating Committee, said the finding contradicts one of the most common ways estimating databases are being misused because "when blending within a panel, there is no actual time savings, because the steps far exceeded what most people were thinking."

"If the procedure pages are not addressing this blend-within-a-panel as being misinterpreted or used selectively, then quite possibly there should be a change in the procedure pages," said Taylor, owner of Auto Body Hawaii, in Kailua-Kona, Hawaii.

The discussion continued as a CIC Insurance Committee panel discussion was held on various refinish related topics. Kansas shop owner Bill Eveland said that while insurers are quick to put a limit on materials reimbursement on large jobs, they are loathe to add reimbursement on a small job where the number of hours don't result in adequate compensation for the materials uses.

"That's why we have to let that formula run a little bit on the other end to make up for those smaller jobs where you have inadequate amount of materials reimbursement," he said, adding that there are alternatives out there to the most commonly used system of determining materials reimbursement.

The lone insurer on the panel, Michael Lloyd, the material damage manager for California Casualty, said his company was indeed exploring other ways of reimbursing shops for refinish materials, such as accepting paint and materials invoicing.

"We've been looking at a couple programs that are on the market right now, and have some interest in them," Lloyd said. "I've always been puzzled by how we figure materials in this business… Another thing that interests me [about the systems] is to be able to document that we paid for the proper procedures to be done. Because at least one of the systems breaks out all the elements that are needed. So if you need seam sealers or whatever to do the proper repair technique, you can build that in. It has the potential to give you an itemized list."

But interestingly, both Lloyd and Taylor agreed that although the current system of determining paint materials based on labor times may not be ideal, the industry may not like the alternative.

"I'm not trying to defend the multiplier system, but it comes back to be careful what you wish for," March said. "Is the alternative going to be better?"

Taking responsibility

While changes to the estimating systems may help alleviate some of the "abuse" issues, many in the industry recognize that the estimating system providers shouldn't take all of the heat - nor are they the source of the only solutions.

"It's like the firearms manufacturers getting sued because someone goes out and kills someone with a firearm," Eveland said. "The gun worked fine; it was the operator who had bad intentions. And that's exactly what happens in the case of the databases. I think the database providers have tried very hard to do a good job. That's not to say they're perfect, but they can't engineer something...that an insurance company or anybody can't manipulate. Every time you plug one hole, they find another one."

Massachusetts shop owner Chuck Sulkala said it's every shop owner's responsibility to ensure the abuse isn't allowed at their shop.

"Part of the problem I think that we have here is because our colleagues allow it to happen," Sulkala said. "And if 50 or 60 or 70 percent of your colleagues - you may hate to call them that but in the eyes of insurer, they are - allow that to happen, that becomes the prevailing practice of the industry. It comes down to just saying, 'No, I'm not going to do it that way.'"

Eveland agrees with the "just say no" analogy.

"We tell our kids to read the thing on the side of the police cars that says, 'Just say no to drugs,'" Eveland told those at the National Industry Issues Forum in Nashville last month. "When an insurance company overrides the paint time, saying half the panel is damaged so they'll pay half the base time plus clear, you have a business decision to make at that point, whether or not you want to do that. But if you do it, remember that it's like taking drugs. Once you start, it's real hard to stop."   o

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