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Letter to the Editor
This article originally appeared in the December 2007 Issue of INSIGHT
©2007 Collision Repair Industry INSIGHT All Rights Reserved
New Jersey DOBI Warns Insurers About Adequate P&M Reimbursement
PPG Names Outcalt Vice President Automotive Refinish Americas
SCRS Position on Use and Ownership of EMS Extract
Meineke Joins Carfax Service Link Program
Scene Genesis Launches Online SceneExchange to Link Shops to Consumers and Insurers
Mitchell Releases Latest Industry Trends Report
Solera Holdings Accredited by IACET for Continuing Education
CARSTAR Receives Three Awards at NACE 2007
State Farm Kicks Off Parts Program Test
NACE 2007 Report: Event Organizers Announce Future Changes
INDUSTRY UPDATE
The Alliance of Automotive Service Providers of New Jersey (AASP-NJ) has reported that the New Jersey Department of Banking and Insurance (DOBI) has issued a bulletin cautioning insurers about their calculation of paint and materials (P&M) reimbursement in auto damage insurance claims.
The bulletin clarifies existing regulations that require insurers to pay for paint and materials, and informs insurers that the methods or tools they are using to calculate P&M costs may be outdated or incorrect.
The DOBI bulletin urges insurers to use current guides (available through various third-party databases) to properly arrive at more accurate figures. Additionally, the bulletin warns insurers that if they continue to arrive at insufficient allowances that they will be held accountable by the State.
“When comparing costs and the information we provided to the DOBI’s examination of insurer P&M allowances, it became clear that the amounts being paid by some insurers were nowhere close to where they should have been,” said AASP/NJ Legislative Chair-man Brian Vesley, who has been a key figure in presenting information on the matter to the state for over eight years. “We weren’t getting paid what it cost us, never mind making a sufficient profit. When we told the DOBI this, they were shocked. And after many years of cited examples, complaints, and documentation, we’ve been able to get the DOBI to understand this is a real problem for consumers being denied reimbursement for proper repairs.”
“This bulletin puts the industry on notice of what is proper practice, and also says that insurers are obligated to make adequate reimbursement to shops,” Vesley continued. “The issuing of this bulletin is a landmark event that places an emphasis on the duty of insurers to justify how they arrive at the amounts they are willing to pay. It should also help eliminate the ‘take it or leave it’ attitude that’s been assumed by many insurers regarding this issue.”
“Brian has worked extremely hard on this issue for many years,” explained AASP/NJ President Tom Elder, “and this bulletin is a prime example that our voice as an association is heard by the powers that be. The DOBI took our concerns seriously and has issued a guideline that will hopefully solve an issue that’s been plaguing our industry for years. I commend Brian and all involved for their efforts surrounding the P&M issue, and congratulate them on this achievement.”
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PPG Industries has announced that John R. Outcalt, director of sales and marketing, automotive refinish, North America, has been appointed vice president, automotive refinish – Americas.
Outcalt joined PPG as a sales representative for the automotive coatings business in 1983 and progressed through several automotive coatings assignments before joining the automotive refinish business in 1996 as director of network sales. In 1998, Outcalt was appointed director, collision center operations, and the next year he was named director of sales, refinish North America. In 2004, Outcalt was named general manager, insurance and services, and in 2005, he rejoined the North American refinish team as director of sales and marketing. In 2006, he was appointed to his current position.
Ernesto Vior, general manager, refinish, Latin America, will begin reporting to Outcalt and also continue reporting to Jorge Steyerthal, vice president, coatings, Latin America.
Outcalt will continue to report to J. Rich Alexander, senior vice president, coatings.
The following is a statement from SCRS:
The Society of Collision Repair Specialists (SCRS) is strongly opposed to any entity copying, downloading or utilizing a collision repair facility's' EMS extract without its knowledge, approval, and full disclosure as to which data fields will be used, how the data will be used or sold, and to whom the data will be sold. The EMS and the information contained within it are the sole property of the collision repair facility that generated the estimate and/or supplement.
Collision repairers need to be fully aware that the EMS extract contains all the vehicle owner's private information that is included in your estimate.
The EMS extract is a copy of your estimate/supplement. You should be aware of federal and state privacy laws to ensure that you are not violating those laws as a result of another entity using or selling your data. SCRS encourages you to speak to your attorney and elicit suggestions as to what precautionary steps you should take to ensure you and your business are fully protected and compliant.
It has come to the attention of SCRS that there are several companies in the industry that are using collision repairers' EMS extracts. In some instances, these companies are using this data without the full knowledge or approval of the collision repair facilities. In other instances, repairers have given approval for a company to use the EMS extract for a very specific purpose, yet it is used for something other than its intended purpose.
Collision repairers need to know this information can be aggregated and reported upon to compare market labor rates and market practices, which may be sold to insurers and other interested parties.
The SCRS Board of Directors believes these companies should be required to provide full disclosure and seek the collision repairers' written consent prior to gathering, using, or selling their information as this is the sole property of the collision repair facility.
The Inter-Industry Conference on Auto Collision Repair (I-CAR) and the I-CAR Foundation have announced a re-organization to streamline operations, bring increased focus, and align resources around industry market segments and activities.
Following the announcement of Tom McGee’s decision to step down from the role of President & CEO, the Chair-man of the Board of Directors of I-CAR International, John Edelen, and the Chairman of the Board of Trustees of the I-CAR Education Foundation, Chris Evans, have announced, jointly, the re-organization of both I-CAR entities.
Evans advised, “The re-focusing of the I-CAR Education Foundation on the philanthropic activities in support of inter-industry technical training and development is consistent with the intent of our founders. In addition, having the interests of the Education market fully represented in I-CAR International’s content development and training delivery priorities and decisions will ensure that the efficient and effective servicing of the training needs of the Education segment will continue.”
Earlier this year, the I-CAR Education Foundation’s Board of Trustees approved a plan to re-focus the I-CAR Foundation on fundraising, grant activity, and scholarships. As a consequence of this re-positioning, the Education segment, which has long been served by the Education Foundation, is migrating to I-CAR International.
In anticipation of this migration I-CAR International has undertaken an evaluation of its organization and, as a result, is restructuring to better serve industry segments.
“The rapidly increasing pace of change in vehicle design and manufacture has a direct impact on I-CAR,” noted Edelen. “As vehicle design and materials drive new and more complex repair techniques and technologies, I-CAR needs to be better positioned to identify and address the training needs of the inter-industry that are associated with these developments. The inter-industry needs a more focused, forward-looking, nimble and responsive I-CAR.”
“We would like to thank Tom McGee for agreeing to assume the position of Director of Industry Relations and Product Operations following his decision to step down from his role as President and CEO. Tom will bring focus and expertise to industry relations at an industry leadership level...,” stated Edelen.
Other key steps are the creation of a Marketing and Dis-ribution organization under the leadership of Director Joyce Kasmer, and the addition of six Market Segment Teams.
Former Education Foundation Executive Director Ron Ray will join the Marketing and Distribution organization, representing the interests of the education, training, and related research segment.
I-CAR’s Controller Mike Brey will assume responsibility for the area of Finance. Corporate Administration will continue to be the responsibility of Margaret Knell. Shirley Pincus will continue to be responsible for I-CAR’s Human Resource Systems.
“These changes represent the recognition that I-CAR needs to re-position itself relative to the needs of the industry segments we serve, and to improve upon our ability to respond to industry concerns, needs, and opportunities,” noted Edelen. “These changes are designed to improve the quality and relevance of our training and its delivery, and to enhance our abilities to support the training administration needs of the inter-industry, now and in the future.”
I-CAR has initiated a search process for chief staff executives for the newly restructured I-CAR organizations.
Meineke Car Care Centers, Inc. has joined the Carfax Service Link program, reporting vehicle maintenance information to Carfax. Including detailed service records on Carfax Vehicle History Reports creates free advertising for Meineke locations to reach the millions of in-market consumers who receive Carfax Reports each year. Used car buyers rely on this information to better understand how a vehicle was maintained and where to take it for future service.
“We enjoy our relationship with Carfax and the exposure and traffic Meineke receives on both carfax.com and Carfax Vehicle History Reports that many used car buyers view,” said Donald P. Rausch, director of marketing and training at Meineke Car Care Centers. “If new owners see their car has been regularly serviced by one of our shops, they’re more likely to bring it back to us for future maintenance.”
Carfax Vehicle History Reports display the name, location, and web address of each shop that provides maintenance information to Carfax. Potential owners see detailed records of routine maintenance, such as oil changes and tune-ups, along with more extensive information like brake repair or parts replacement, when available.
Carfax Service Link is a free, value-added program available to any aftermarket service provider. Carfax uses the unique 17-character vehicle identification number (VIN) found on vehicle dashboards and title documents to instantly generate a detailed Vehicle History Report on any used car or light truck. Carfax Vehicle History Reports(TM) provide valuable information that helps used car buyers and sellers make better decisions. Free Carfax Vehicle History Reports are instantly available with vehicles listed in nearly every online marketplace by Carfax-subscribing dealers.
Scene Genesis has introduced SceneExchange, a web-based marketplace that is sure to stir up some controversy.
SceneExchange intends to help independent autobody shops capture more business, simplify administration for insurers, and offer good choices to customers. The service is free for both autobody shops and consumers.
When a participating insurance company submits a claim, one of SceneExchange’s 1,000 independent appraisers nationwide is assigned to the job immediately. The appraiser submits a repair estimate and digital photographs of the damage to SceneExchange.
SceneExchange alerts collision shops in the area that a new job is available. Local shops can then place a cycle-time bid on how many days it will take to complete the repair. There is no fee for collision shops to register with SceneExchange and submit bids. Customers go online to review bids and information on a shop’s training and warranty policy, plus ratings from other SceneExchange customers who have used the shop. (Editor's Note: Bidding makes me uneasy. Are shops screened and/or inspected by SceneExchange before they are permitted to bid for repair jobs? Are consumers' comments verified?)
The vehicle owner then selects the shop. The insurer, which has already approved the appraisal, pays the cost, minus the deductible. After completion, the customer leaves feedback for the SceneExchange community.
SceneExchange has been in limited release in Charlotte, North Carolina since mid-August, with good comments from participating body shops and insurers.
“SceneExchange has brought pride back to our business,” said Mark Tantillo, general manager of Folger’s Autobody in Charlotte. “The vehicle owner chooses us because of the quality of our work, rated by other owners, instead of being directed to our shop by the insurer. Our customer satisfaction rating is higher on SceneExchange jobs because the owner is better educated on and more involved in the repair process.”
“SceneExchange is very easy for my claims staff to use. There’s been no need to change our normal workflow,” said Keith Chance, CPCU, North Carolina regional claims manager for Southern General Insurance.
Based in Rochester, New York, Scene Genesis is a provider of web-based workflow and connectivity solutions that automate business processes and improve management control and visibility for property and casualty insurers.
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Mitchell International, a provider of information, workflow, and performance management solutions to the Collision Claims and Repair Industries, has released the third quarter 2007 edition of its Industry Trends Report (ITR), the company’s quarterly publication that highlights industry-related news items and statistics.
This edition’s Quarterly Feature, “Measuring Alterna-tive Parts Usage,” (APU) analyzes the increasingly popular trend of APU and the important role it plays in the collision repair industry, given that parts can typically comprise 40 percent of a repair’s dollars. The recent analysis, which cross-referenced a random data set of estimators and estimates against Mitchell’s extensive database of parts prices, clearly shows that the practice of choosing less expensive parts of equal quality over parts from an Original Equipment Manufacturer (OEM) has been on the rise for several years.
The analysis also demonstrates the various methods used to measure APU, including Percent of Dollars and Percent of Part Count, and their relationship to part cost differential. The study’s results indicate that the higher APU percentage, the higher the parts cost differential.
“Our analysis shows, without a doubt, that APU percentages and parts cost differential are closely linked to one another,” said Jamison Day, Senior Director of Information Solu-tions at Mitchell. “It’s also quite interesting to note that our analysis shows that both APU metrics appear to be equally accurate predictors of cost differential.”
Other valuable points of interest in the current issue of Mitchell’s ITR include:
- In Q3-2007, the average Property Damage appraised vehicle Actual Cash Value was $11,957 compared to Q3-2006’s average of $11,957—reflecting no change from this time last year.
- At $14,070, the average Actual Cash Value of vehicles appraised for Collision losses during Q3-2007 was $673 more than in Q3-2006 and also reflected the presence of slightly older vehicles.
Complete content is available in the latest Industry Trends Report, which may be downloaded in PDF format at www.mitchell.com. First published in April 2001, Mitchell’s Trends Report has grown in both content and circulation, now reaching more than 23,000 collision and casualty industry professionals.
Solera Holdings, Inc., a global provider of software and services for the automobile insurance claims processing industry, has become the first in its industry to become an Authorized Provider of Continuing Education Units (CEUs) from the International Association of Continuing Education and Training (IACET), the highest standard available for any continuing education program in the U.S.
As an IACET Authorized Provider, Solera and its subsidiaries, including Audatex in North America, can offer CEUs for designated Computer-Based Training courses, Virtual Training Classes and Instructor- led Training. These CEUs are accepted by many U.S. colleges and universities.
IACET is in the process of establishing global standards with the International Standards Organization (ISO). Once this is complete, educational institutions around the world will accept its CEUs. This will enable clients of Solera and its global subsidiaries, located in many of the 49 countries the company serves, to receive college credit in return for meeting the requirements of Solera's CEU-designated training programs.
"We are extremely excited to be the first in our industry appointed as an IACET Authorized Provider," said Tracy Peterson, Senior Director, Education and Web Services at Audatex. "Our clients, who include automobile insurance companies, collision repair shops and automotive recyclers, have expressed interest in receiving CEUs for Audatex coursework. Now we can offer these CEUs and, at the same time, make their training experience even more valuable by letting them earn college credit while they learn about the latest Audatex technologies."
Audatex offers CEUs for the following courses: Estimating Class, Instructor-led or Virtual Training; Estimating Computer- Based Training, Shoplink Training, Instructor-led or Computer-Based; and PenPro Instructor-led Training.
Any student who has completed one or more of these courses since October 2 may request a certificate that displays their CEU credits by sending an email to education@audatex.com. Student transcripts and certificates are available at the Audatex Online Training Center.
Solera has operations in 49 countries across five continents. The Solera companies include Audatex in the United States, Canada, and in more than 35 additional countries.
CARSTAR, the largest group of collision repair stores in North America, was honored with three awards at the 2007 Collision Industry Achievement Luncheon held during NACE week in Las Vegas, Nevada.
CARSTAR was presented with the Automotive Service Association’s (ASA) and Society of Collision Repair Specialists’ (SCRS) Industry Award. The ASA/SCRS Award is given annually to recognize the most positive contribution made to the industry in the past year. CARSTAR was commended for its public letter to the industry last spring calling for “responsible push-back” and “stepping up” by repairers across the entire industry. CARSTAR was also acknowledged for its current sponsorship of an 18-month fundraising tour that supports the Make-A-Wish Foundation. The Super’Stang Muscle Tour features a rebuilt 1967 Mustang that visits franchisee fundraising events and car shows around the United States. Through the efforts of CARSTAR franchisees, the tour has already raised more than $155,000.
Patricia McConnell, president of Old Dominion CARSTAR in Eugene and Springfield, Oregon, received the National Auto Body Council (NABC) PRIDE Award. McConnell currently serves on the board of directors for the Relief Nursery, a non-profit organization that serves children in Lane County who are either the victims of abuse or at risk of being abused. The Relief Nursery offers training and education that improves parenting skills, and helps parents gain employment and overcome alcohol and drug abuse.
Glenn Davis, a collision repair technician of ARA CARSTAR Everett in Everett, Washington, was awarded the VeriFacts March Taylor Technician Achievement in Collision Repair Excellence (ACE) Award. The award recognized Davis for his responsible and positive mentoring of other technicians.
Headquartered in Overland Park, Kansas, CARSTAR has more than 270 locations in 27 U.S. states and 110 Canadian locations.
In the week prior to State Farm launching a test of an electronic parts procurement program with its Select Service shops in San Diego and Indianapolis, a spokesman for the insurer said the company is considering what role it can play in streamlining other aspects of collision repair claims.
“I don’t think this is it. This is not the end,” George Avery, a claims consultant with State Farm, told those attending the Collision Industry Conference (CIC) in Las Vegas in late October. “We’re looking at rental. We’re looking at towing. We’re looking at ways to make you efficient because of the customer that we share. I want to make it a positive experience. That positive experience, we believe, can be achieved, by getting into what is really making it inefficient.”
Improving such inefficiencies in the parts procurement process is the reason the insurer has launched its latest test program, Avery said, emphasizing that it is a test only. Select Service shops in the two markets are required to order parts using two electronic systems – because not all auto manufacturers are using the same system – from dealers that are also using the systems.
State Farm has negotiated various discounts of about three percent off parts list prices from at least six of the largest auto manufacturers. Avery emphasized that the program has been designed to not cut into a shop’s parts profit. He asked shop owners at CIC to visualize the dollar amount of profit they currently make on a particular hood.
“When the discount that we have negotiated with the OEs results in a lower price for that hood, the amount that is your profit dollars will remain the same,” Avery said.
He later stressed again that it is not that a shop will receive the same percentage but of a lower retail price. Instead, they will still receive the same actual profit dollars as before the discount program.
“The electronic ordering platforms that we’re working with are going to manage that,” he said.
Select Service shops are free to buy from dealers not using the electronic parts ordering systems, Avery said, but under the Select Service agreement, such shops would be required to give State Farm the parts discount.
The test is designed, Avery stated, to see if the electronic parts ordering and pricing systems work, if dealers are willing to participate, and if they help shops operate more efficiently by, among other things, reducing parts errors and returns. He said he could not offer a timeline for how long the test would run nor when national roll-out of the program might begin.
He also said the program had no connection to whether the insurer decides to again call for use of non-OEM parts, something it halted several years ago following a lawsuit.
In terms of State Farm’s additional involvement in other aspects of the collision repair business, Avery used an analogy of the threshold of the front door of his home. He said he interacts with some people who never cross that threshold, others who are invited in to the entry-way, and others invited in even farther, but that no one but family goes upstairs.
“That’s none of your business up there,” Avery said. “And I see it that way for the repair industry. That’s what we need to work through with the advisory council, drawing that line on what State Farm’s goal is on that threshold and what that business relationship is that you allow. I don’t want to go upstairs. I’m not interested in being in the house all the time, but if there are some advantages that we both see to be more efficient, I’d be glad to talk about that.”
Darrell Amberson, president of Lehman’s Garage, a six-location business based in Bloomington, Minnesota, kicked off the 2007 NACE opening session on November 1 with his chairman’s speech, offering his laundry list of the key issues he believes the industry needs to address.
Amberson said the decrease in auto insurance claims and the increasing percentage of totals have helped fuel an “overcapacity” in the industry, with too many shops chasing too little work. That and a lack of unity in the industry have helped add to the imbalance in shop-insurer relationships, something Amberson said that some insurers have taken undue advantage of. The industry, he cited as one example, must have a more fair way of determining fair and equitable rates, and that government involvement in such issues – as is being discussed in some states – may not be something either side finds as the best solution, Amberson said.
In a change from many past NACE addresses, Amberson discussed how ASA is working with other associations to effect change, such as the development of the Database Enhanced Gateway (DEG). Created by ASA, the Society of Collision Repair Specialists (SCRS) and the Alliance of Automotive Service Providers (AASP), the DEG will launch a website in December that will allow users to use one standardized online form to report concerns about a estimating system labor time in any of the estimating databases. The DEG will track and follow-up on such “requests for review,” posting responses and actions made by the estimating database providers on the website.
NACE organizers went for an “inspirational” focus for the 2007 event’s keynote address, inviting Chris Gardner to share his rags-to-riches story that served as the basis for his 2006 autobiography and the subsequent film, The Pursuit of Happyness.
As was pointed out at the start of Friday morning’s general session at NACE, many attendees said they often learn the most at such gatherings when talking to other shop owners in the halls – or bars – outside the convention. The NACE general session tried to capture that atmosphere by staging a discussion about “lean processing” among three actual shop owners in a “barroom setting” on the NACE stage.
Moderator (or “narrator”) Garry Steele, a business consultant in the United Kingdom, outlined each of four key principles of lean processing, after which the three shop owners discussed how they have implemented each principle in their business.
Lean, for example, often starts with a “housecleaning” known as the Five S’s: sort, set in order, sweep or shine, standardize, and sustain. Michael Giarrizzo, CEO of DCR Systems Accident Repair Centers, said his company’s model for dealership collision repair shops establishes clearly defined places for tool storage, for example, and elimination of clutter, such as those collections of “nuts and bolts you’re sure you’ll need someday.”
Ken Friesen, owner of Concours Collision Centers in Alberta, Canada, said his company practiced the Five S’s before he’d even heard the term. A “visual file rack system,” for example, helps the shop’s office staff quickly see at a glance not only where all necessary paperwork is stored but also where in production every vehicle is.
John Beckworth, co-owner of Collision Works, a shop in Beltsville, Maryland, with annual sales topping $6 million, said part of his company’s “standardization” includes limiting how many vehicles are scheduled in each day to regulate the flow through the shop and eliminate the logjams created by having too many torn-apart vehicles – and parts – were in the shop at any given time.
NACE organizers announced that starting next year, NACE will be combined with the Congress of Automotive Repair (CARS), an event aimed at the mechanical repair segment that, like NACE, is sponsored by the Automotive Service Association (ASA). The two have been held the same week but at different hotels in Las Vegas for several years. In 2008, both events will be held concurrently at the Mandalay Bay Convention Center.
The change appears to be a recognition that changes in the collision repair market have led to flat or declining numbers for NACE. NACE organizers said attendance was similar to last year (about 27,000), but the size of the trade show has declined each of the past three years, about a 25 percent drop since 2004 – and about a 43 percent decline since the show’s peak a decade ago.
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