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Letter to the Editor
This article originally appeared in the December 2006 Issue of INSIGHT
©2006 Collision Repair Industry INSIGHT All Rights Reserved
Allstate Explores Open Platform for Vehicle Repair Program
Auto Dealers Seek Insurer Help to Keep Flood Damaged Cars Off Streets
CARSTAR Promotes Dan Young to Senior Vice President
Women’s Industry Network Launches
Mitchell Study Identifies High Variance in Labor Rates by State, County, and Metro Areas
ASA Collision Division Presents ASA/ASE Top Score Award at NACE
3M Launches New Line of Consumer Car Care Products
ASA Updates Not-Included Operations Chart
Iowa Glass Depot Sells Automotive Finishes Division to CARQUEST
NACE 2006 Draws Industry to Las Vegas
Issue of Changes to Refinish Labor Times Discussed at CIC Las Vegas
INDUSTRY UPDATE
Allstate has announced that it is exploring an “open platform” concept for repair facilities in its Priority Repair Option (PRO) program.
Allstate will explore a new, more flexible estimating, communication, and reporting platform for Allstate’s PRO program. When complete, Allstate believes this work and the “open platform” concept will be well received by consumers, repair facilities, and the industry. Allstate expects the exploration phase to continue through mid-2007 at which time testing is expected to begin.
“The evolution of the PRO program has put Allstate in a position to begin innovative work that will benefit repair facilities and our policyholders,” said John Edelen, Allstate assistant vice president of claim strategy. “We believe repair facilities will benefit from enhanced communication with Allstate, more choice and an improved repair experience. Our goal is to make it easier for repair facilities and the entire collision repair industry to do business with us.”
Allstate anticipates the open platform concept will enhance the claim experience for customers by improving vehicle repair times and providing Allstate with greater access to more detailed repair information to help ensure facilities continue to provide an outstanding level of service.
“By further enhancing the claim experience, we build relationships and give customers a reason to choose our company ahead of all others,” noted Edelen. “Our claim organization is a competitive advantage.”
Allstate is currently working with the three major estimatic software providers on this exploration.
Allstate was the first insurer to introduce the Direct Repair Program concept and its PRO program approximately 20 years ago. The goal was to foster a mutually beneficial relationship between Allstate and repair facilities and help ensure policy holders receive superior claim service. Allstate’s PRO program includes about 4,500 shops across the country that provide customers with one-stop repair service.
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PEMCO, a Seattle-based insurance company, has announced that it will voluntarily disclose vehicle flood damage information to the public. The recent flooding in the Pacific Northwest and the Eastern U.S. has refocused public attention on the problem of flooded and totaled vehicles being resold to unsuspecting buyers.
The National Automobile Dealers Association (NADA) has been pressing the U.S. Congress since the Gulf Hurricanes of 2005 for new federal legislation which would require insurance companies to disclose total loss information to the public so that problem vehicles are red-flagged forever.
"We salute the PEMCO Insurance Company for taking this strong step for safety and consumer protection, and hope other insurance companies take notice. Flooded cars can be a roadway menace and a consumer nightmare. Whether a car is flood damaged in Washington or totaled in Oregon, total-loss disclosure would give consumers and automobile dealers essential information about these problem vehicles," said David W. Regan, NADA Vice President for Legislative Affairs.
The NADA-supported House bill (HR 6093) would rely on existing technology to permanently "red flag" totaled vehicles. The legislation would require insurance companies to make commercially available:
- the Vehicle Identification Number (VIN) of a totaled vehicle
- the reason for the total loss (flood, collision, stolen, etc.)
- the date of total loss
- the odometer reading on that date
- whether the airbag deployed.
Senator Trent Lott (R-MS) has introduced a similar bill (S.3707), pending before the Senate Commerce Committee, which recently added new backers.
The estimated 500,000 vehicles damaged by Hurricane Katrina are only part of the problem. Insurance companies totaled approximately five million vehicles last year due to extensive damage, flooding or theft. Thousands of these damaged vehicles are sold at salvage auctions, rebuilt, and re-enter the market with clean titles, so consumers, wholesale auto auctions and dealers may have no way to learn about the total loss.
Flood-damaged vehicles are surfacing far from the Gulf Coast, but conflicting and confusing state motor vehicle title laws hamper efforts to spot these problem cars. Both the House and the Senate bills would attack motor vehicle title fraud at the core by disclosing total loss information before a vehicle is sold at salvage auction, rebuilt, and returned to the market.
This Federal legislation would not require any change in state titling laws, but would give consumers access to valuable information to identify totaled vehicles before these potentially unsafe cars ever re-enter the market.
"The goal of this legislation is simple - if a vehicle is totaled, the VIN should be disclosed to the public," Regan added. "Armed with total-loss information, consumers, businesses, dealers, auto auctions - anyone buying used cars - should be able to spot one of these rebuilt wrecks, even if the title is clean. This legislation is necessary to red-flag the total-loss history of a used car forever."
The National Automobile Dealers Association, founded in 1917 and based in McLean, Va., represents approximately 20,000 new car and truck dealers holding nearly 43,000 separate franchises, domestic and international.
CARSTAR has promoted Dan Young to senior vice president of insurance relations.
CARSTAR Chairman of the Board Richard Cross III commented, “We are fortunate to have a professional the caliber of Dan Young, whose personal values and whose aspirations align so closely with, and add an accelerant to, our company’s commitment to pioneer the most effective and reliable single source collision repair solution in the history of our industry.”
An industry veteran, Young joined CARSTAR three years ago after serving 19 years with the Allstate Insurance Company, specializing in property and casualty with corporate experience in claims and risk management. During his tenure at CARSTAR he has assembled a comprehensive insurance team. This team is responsible for developing and maintaining national insurance relationships and fleet accounts on behalf of the entire CARSTAR system.
The insurance team is comprised of seven professionals who oversee a national and regional insurance relations structure. In addition, the CARSTAR system employs more than 30 business development managers who work closely with local insurance agencies to deliver exceptional service standards on a store-by-store basis.
“Dan Young brings immense credibility and professionalism to the CARSTAR management team,” said State Farm Claims Consultant George Avery. “He’s easy to work with because he brings a unique skill set to the job. He understands the insurer's business as well as CARSTAR’s. This allows him to be highly creative and develop customized solutions for our needs.”
In addition to his insurance role, Young’s management responsibilities will broaden to other areas of the organization including involvement with the company’s Quality Control Initiative. He will also work closely with the franchise development team to help acquire quality franchisees who can meet the standards of CARSTAR and its insurance providers.
Headquartered in Overland Park, Kan., CARSTAR is the largest group of auto body repair shops in North America.
Women of the auto collision repair industry are uniting in order to strengthen and expand opportunities and to encourage new women into the profession. This newly formed effort, to be known as the Women’s Industry Network (WIN), will serve to greatly enhance the collision repair industry through education, networking, and sharing of resources.
WIN’s mission is to be a supportive, nurturing, and educational network for women in the auto collision repair industry.
For those in the auto collision repair industry, WIN will be a forum to discuss problems, concerns, and implement solutions. It will also be an organization that solicits ideas to create positive change, while serving as a hub of information covering all facets of the auto collision repair business.
Planned activities include a 2007 Women’s Conference, which had its inaugural debut last May in Carefree, Arizona. Assured Performance Network, through the leadership of its CEO Scott Biggs, organized and hosted the event. Although Biggs will continue to be supportive of WIN and future Women’s Conferences, he passes the torch to the women within the auto collision repair industry.
Kathy Mello of T.G.I.F. Body Shop in Fremont, Calif., and Geralynn Kottschade of Jerry’s Body Shop in Mankato, Minn., served as co-chairs of the Women’s Conference. The work started at the Women’s Conference will continue with the duo’s leadership of WIN.
“While WIN’s primary focus will be on women, it aims to be as diverse in scope as is the collision repair industry and its customers,” said Kathy Mello. “Because of the contacts of the people involved, it will reach out internationally.”
Geralynn Kottschade said, “Another of the organization’s charges is to help prepare women for advanced positions in every aspect of the collision repair industry.”
WIN will also include elements of the Women’s Industry Network that was founded in the mid 1990s by Sheila Loftus of Sheila’s Information Network in Washington, D.C., and Trish Serratore of the National Institute for Automotive Service Excellence (ASE) in Leesburg, Va., which provided workshops, seminars, and better communication across gender lines.
Loftus will function as the group’s executive director and Serratore will join WIN’s advisory board.
Loftus commented, “This is a dynamic group of women who are enthusiastic about bringing diverse groups together under one umbrella for the good of all within the collision repair industry.”
In addition to Serratore, Gigi Walker of Walker’s Auto Body in Concord, Calif., and Diane Rodenhouse of Rodenhouse Body Shop in Grand Rapids, Mich., will serve on the WIN advisory board. Catherine Babiar from Canada and Lyn Shepherd from the U.K., as well as a yet-to-be-named Australian and South African, will also serve.
WIN is accepting corporate sponsors to help develop WIN to become a positive force within the collision repair profession. To become a corporate sponsor, please contact Gigi Walker, WIN’s chair of corporate sponsors, at walkersab@cs.com or (925) 687-8453.
Membership is open to everyone within the auto collision repair industry. For information, contact: info@womensindustrynetwork.com or Sheila Loftus directly at (202) 363-1858.
Mitchell International has announced that highlights from a labor rate study conducted by its Business Analytics Group are available in the latest edition of Mitchell's quarterly Industry Trends Report, which may be downloaded for free at www.mitchell.com.
Labor costs are computed as the product of labor hours worked and hourly labor rates, and comprise approximately 45 percent of the estimated repair cost of physical damage appraisals, thus play a critical role in collision repair costs to insurers, total loss determinations, and collision repairer revenues.
The Mitchell study identified a 55 percent variance in labor rates between the lowest and highest cost states, and variances up to 34 percent within individual states for similar labor types pertaining to automotive collision repair.
Also of note, an examination of labor rates by telephone area code within the San Francisco-Oakland-Fremont, CA metro area showed that the 707 area code had labor rates that were consistently 14-15 percent higher than the neighboring 510 area code.
Of particular interest to both insurers and collision repairers was the finding that year-to-date growth in labor rates is one percent higher than last year, but still behind the national rate of inflation.
"Our study clearly outlines the existence of highly variable labor rates by state, county and metro area," said Paul Rosen-stein, Senior Director-Business Analytics at Mitchell. "These rate variations are largely due to local conditions, such as demand for vehicle repairs, the supply of repair shops in the local market, and claim-specific factors like insurer guidelines and complexity of the repair."
The Mitchell Business Analytics group produces comprehensive labor rate reports providing statistics on Body, Body Structural, Frame, Glass, Mechanical, and Refinish Labor types. Labor rate data in the reports is organized by state, county, MSA, and area code. The most recent study sampled a selection of auto physical damage appraisal data from 17 insurance carriers with consistently significant estimating volumes from 2003 through 2006. Only estimates for repairable vehicles were used in the study.
Scott Daffron, owner of Daffron's Body Shop and Used Cars Inc. in Cortland, Ohio, received the Automotive Service Association (ASA)/National Institute for Automotive Service Excellence (ASE) Top Score Award during the 2006 National Autobody Congress and Exposition in Las Vegas. The award recognizes the ASA Collision Division member who received the highest score on the ASE master collision repair/refinish certification test.
Darrell Amberson, ASA's Collision Division director, presented the award during the OE Forum Friday, Nov. 3. Tony Molla, vice president of communications for ASE; and Geralynn Kottschade, AAM, NACE chairman and former chairman of ASA, were also present for the award presentation.
Daffron is a third-generation collision repairer who purchased his business from his father in the mid-'90s.
"His grandfather opening a shop in 1941 started the family tradition of superior, quality repairs," said Amberson. "With a background in engineering, collision repair is a perfect fit for Scott and his desire to stay abreast of the issues in this highly technical field."
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3M Co. will launch a new line of cleaners and maintenance products for the car-care market. The new line will be available directly to consumers through automotive retailers nationwide. This marks the first time 3M has offered a consumer-focused automotive product line designed specifically for the do-it-yourselfer and enthusiast market.
The new 3M Car Care Solutions include products such as waxes, engine and parts cleaners and adhesives.
"We're very excited to introduce 3M Car Care Solutions as a line of trusted, professional quality products directly to consumers," said Greg Klausen, business manager, Car Care Products, 3M Automotive Aftermarket Division.
"Pros have trusted us for years and serious do-it-yourselfers know us, too," continued Klausen. "But we have an opportunity to offer the trusted 3M brand to a much broader audience, meet the many consumer requests we get for our products, and help our retail partners increase their sales and margins. When you look at the category today, you'll find a very fragmented marketplace with products that aren't always consumer friendly or easy to use. We're going to change that."
The launch of 3M Car Care Solutions will be supported by extensive advertising and retail campaigns in spring 2007. Charlotte, NC-based Victory Management has been hired to provide strategic marketing plans.
The Automotive Service Association (ASA) has updated its “Not-Included Operations” charts, two publications designed to ensure collision repairers consider all of the possible operations when they write an estimate. Two titles are available, “Reference Chart of Not-Included Operations When Installing New Replacement Parts,” and “Reference Chart of Not-Included Operations When Installing Recyclable Parts.” The guides serve as a quick summary of general not-included operations, and should be used in addition to procedure pages supplied by individual information providers.
“Being able to write an accurate estimate is so important, as well as having a complete understanding of the estimating system. Because not all operations are included in the database of any one system, these charts point out the not-included operations of each,” said Darrell Amberson, AAM, ASA Collision Division director and president of Lehman’s Garage, Bloomington, Minn. “This knowledge is extremely valuable if one is to write a complete and accurate estimate.”
The publications are available to ASA member-shops individually or as a set, in both PDF or hard-copy formats. To order or obtain pricing information, members may access the ASA online store at www.ASAstore.com, or call the membership department at (800) 272-7467, ext. 295. Nonmembers may request the documents by contacting ASA’s membership department at (800) 272-7467, ext. 295, for further details.
Iowa Glass Depot, Inc., located in Cedar Rapids, Iowa, has announced the sale of its Automotive Finishes Division to CARQUEST Automotive Finishes, Inc., a subsidiary of General Parts International.
Automotive Finishes, Inc. started as part of the Iowa Glass Family in the early 1950s as a distributor to the automotive after market, specializing in paint and paint related products. In the early 1990s, there was an increased focus on growth in the six Midwestern states of Iowa, Minnesota, Illinois, Missouri, Kansas, and Oklahoma. Currently, there are thirty-one Automotive Finishes locations within this six state market.
"CARQUEST is an exceptional organization that has made a commitment to be the leader in the PBE sector. We feel as though this gives Automotive Finishes' employees an outstanding opportunity for growth and success in the future," said Steve Dummermuth, CEO of Iowa Glass.
"We are excited to have Automotive Finishes join our company. Steve Dummermuth and Jay Sharp have provided excellent leadership in building an outstanding company with focus on customer service. At GPI, we look forward to being part of Automotive Finishes' continued growth," said Temple Sloan, Jr., Chairman of General Parts, Inc.
Long-time attendees of the International Autobody Congress and Exposition (NACE) may have noticed a number of things missing from the 2006 event held in Las Vegas in early November.
As usual, the event offered dozens of classes, but certainly fewer than in past years. Also gone were most of the massive booths as exhibitors appeared to have scaled back; not since 1990 had the show been under 163,000 square feet as this year's was, a nine percent drop in scale from even last year despite the same number of companies exhibiting.
But this year's event did see an uptick in attendance according to show organizers, who also touted several new show elements: a custom car and motorcycle exhibit and competition, the addition of exhibits and a competition for glass installers, and a $10,000 cash give-away (won by Betty Osborn of Quality Paint & Body, Inc., in Greeley, Colorado).
Minnesota shop owner Geralynn Kottschade offered her insights about the industry as she opened the show in her second year as NACE chairperson. Kottschade said she believes that with the changes being made by State Farm and other insurers to their DRP programs, 2007 will be "a defining year for the collision repairers."
"It has made all of us, whether we're part of the program or not, really look at and analyze who we're going to partner with," Kottschade said of the State Farm shift to its "Select Service" program.
Kottschade urged anyone considering signing a DRP contract to have it reviewed by an attorney and even consider whether its liability clauses will have an impact on the shop's business insurance.
Among the other top issues for 2007, she said, was insurance reform and proposed legislation allowing federal rather than state regulation of insurance. She said it was also important to ensure that automakers and the estimating system providers work together to get insurer and shop estimators the information needed on the increasing number of aluminum, magnesium and new steels being used in new vehicles.
"When you write that estimate, you need to know if there's a different material than a traditional steel there," she said. "As collision repairers, we need to demand this."
NFL Hall of Famer and former quarterback Troy Aikman tossed out a few footballs to NACE attendees and served as the event's keynote speaker, sharing stories not just about his football days but his more recent ventures, including ownership of Troy Aikman Ford in Dallas, Texas, and co-ownership of a new NASCAR race team that has struggled.
The availability of automaker collision repair technical information was among the topics at an OE Forum also held during NACE. Eric Bondus, national parts sales manager for Hyundai Motor America, said his company was working to produce more collision manuals for its vehicles, and all of its information is available free at the website: www.hmaservice.com.
Similarly, Bob Hartman of the General Motors Collision Repair Center said all of his company's collision repair information is now available free through the website: www.gmgoodwrench.com.
The final day of NACE 2006 kicked off with a "Town Hall Breakfast," focusing on the issue of total loss vehicles.
NACE will again be part of Automotive Aftermarket Industry Week in 2007, when the event returns to the Mandalay Bay Convention next October 31-November 3.
If refinish labor times on repaired panels are going to be adjusted from those in the estimating systems - something 96 percent of shops say they have seen insurers do -the printed copy of the estimate should show what the original labor time is.
That was the recommendation of the Collision Industry Conference (CIC) Estimating Procedures Committee at the conclusion of a panel discussion on the topic in Las Vegas in early November.
"The committee's recommendation is to show the reduction amount as a separate negative line entry, or clearly document the calculation," Mike Anderson, a member of the CIC committee who moderated the panel discussion, said. "So on the bottom of the estimate, for example, line 42 would tell you a refinish time was changed from, say, 2.2 to 1.6. Then as the end-user of that estimate, you would be able to know the time was changed and by what magnitude."
Anderson, owner of Wagonwork Collision Centers in Alexandria, Va., opened the panel discussion with the responses he received from the estimating system providers to a series of questions the committee asked about manual changes to refinish times. According to a survey conducted by INSIGHT, 72 percent of shops said the justification they are given for such changes is that the changes are being made on refinish labor times for "partial refinish" of repaired panels.
"In some cases, the system generated blend times are being applied to repaired panels, which appears to be in contradiction of database guidelines," Anderson said.
All three major estimating system providers concurred that a repaired panel may or may not warrant a time reduction from the full labor time; it's a judgment item best left to the estimator.
But representatives of Mitchell International, Audatex and CCC Information Services also all concurred that the blend option time is not intended for use on a repaired panel.
"Audatex blend refinish is to be considered for use on adjacent undamaged panels for color match purposes," Anderson read from that company's response, which was nearly identical to that of the other companies. "So blend times were intended only for undamaged panels."
Anderson said the next logical question was if a change to a refinish labor time on a repaired panel is going to be made, what magnitude of a change is appropriate.
"We all agree that the thing we're decreasing is the application of the basecoat," Anderson said. "So we need to know what percentage of the basecoat time is for actual application of the basecoat."
Motor Information Services, which provides the estimating database used by CCC, was the only company to provide this information, Anderson said. Motor said 19 percent of its basecoat paint time is for basecoat application; another 7 percent of the time is for application of primer/sealer.
"So the only thing that should be decreased when you're modifying or manually changing paint time would be only the basecoat and sealer time," Anderson said.
He cited a hypothetical refinish labor time of 6 units. Twenty-six percent of that time (19 percent for basecoat application and 7 percent for primer/sealer) would be 1.6 units.
"If you were going to decrease anything, then the most you should decrease that would be 50 percent of the 1.6 units, or .8 units, not 50 percent of the entire 6 units of labor," Anderson said.
If a shop received a printed estimate written in an estimating system the shop doesn't have, the only way to know that refinish time has been changed is to note the asterisk by the labor time. But even so, Anderson said, the shop has no way of knowing what the original labor time was if they don't have that estimating system, so there is no way to audit how significant a change has been made.
So will the estimating system providers adjust their systems so that a printed estimate with an adjusted labor time will indicate what degree of change has been made.
"We've identified the need to provide an auditing type system," Tom Fleming of Mitchell International, said. "That's one of our priorities."
"At Audatex, we also embrace that," the company's Scott Jenkins said.
Bruce Yungkans of CCC Information Services also said he had noted the committee's request for this auditing information.
One other related finding from the INSIGHT survey of shops about manual changes in refinish labor times: Nearly two-thirds of shops said they are "sometimes" successful in requesting full refinish time when such a time has been change. Twenty-five percent of shops said they are not.
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