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Letter to the Editor

Being Upfront

Front and center for the Collision Repair Industry this month is the insurer - body shop relationship. First, this issue of INSIGHT contains, traditionally, the results of our annual Who Pays for What? Survey. But the big news this month is State Farm’s announced decision to make changes in its Service First and Select Service auto damage repair programs. The changes are rolling out in test markets in four states immediately. (See page 3.)

State Farm continues to win the Who Pays for What? Fair Player crown - for the seventh year straight. State Farm “always pays” a bit closer to half the time for p-page items in 2005, at a record frequency of 48.8 percent. None of the other big insurers come even remotely near this level. USAA is a distant runner-up with a five percent increase that brings its “always pays” up to just under one-third of the time. (See page 9.)

The survey results for the P-page items that are least frequently paid include three operations from the grey area formed by the question: Is this procedure part of the “cost of doing business,” or is it a billable item? These procedures are solid waste disposal, road test time, and clean-up for delivery.

Our TrendLine results this month indicate that our responding shops are a little happier with the major insurer than they were a year ago, except for Farmers. Overall satisfaction with Farmers fell from 2.95 to 2.64, on a scale from 1 (Poor) to 5 (Excellent). The fairness of its DRP agreement got a low 2.71 mark. However, on average, Farmers sent its service shops a hefty 38 repair orders per month.

Despite Progressive’s Penny Pincher status in our survey results, the insurer is maintaining pretty good relationships with its DRP facilities. Progressive came in third in the TrendLine for overall satisfaction, at 4.11, and got the highest mark for increasing shop business.

State Farm’s new service agreement expects a participating shop to be an excellent partner. This means: ongoing technical training, modern equipment, great turn around times, ongoing process quality control, high customer satisfaction, cutting-edge computer usage, and superior management for vendor dealings and overall cost effectiveness. The insurer also expects to be billed at whatever are the lowest rates the shop receives from any other insurer. Sounds scary? Not for a well-run shop! Next month INSIGHT will offer more information on this.

Speaking of being upfront, this month marks the first time that all our U.S. regional TrendLine markets are UP since July 2005. Before that, all market regions had not been unanimously UP since June 2001. This gets high approval ratings from all of us!

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