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Letter to the Editor
This article originally appeared in the April 2008 Issue of INSIGHT
©2008 Collision Repair Industry INSIGHT All Rights Reserved
CCC Information Services and Mitchell International to Merge
ARA and ECAR Center Partner for Online Environmental Compliance Information
Amica Mutual Selects Gerber National Glass for Auto Glass Claims Management
Akzo Nobel Q4 Results Beat Expectations
Allan Robinson Named President of Sterling Autobody Centers
Offutt Collision Repair Adds Rapid Delivery Service to Decrease Cycle Time
Ohio Collision Repair Registration Enforcement Update
VeriFacts Applauds New Sectioning Guidelines Released by I-CAR
NABC Opens Nominations for 2008 PRIDE Awards
Allstate Publicly Releases McKinsey Documents about Claims Practices
SCRS Petitions Information Providers to Provide Industry with BMS Extract
INDUSTRY UPDATE
CCC Information Services Inc., of Chicago, Illinois, and Mitchell International, Inc., of San Diego, California, have announced the signing of a definitive agreement under which they will combine in a merger-of-equals transaction valued at $1.4 billion. CCC and Mitchell are each privately held.
The combined enterprise, which will be known as CCC-Mitchell Inc., will be a provider of information, workflow management systems, and integrated software to insurance companies and collision repair facilities. The company’s data, software, and services will support the estimating and processing of claims for auto physical damage and bodily injury. At inception, CCC-Mitchell will have annual sales of approximately $460 million and approximately 2,000 employees.
Githesh Ramamurthy, Chairman and Chief Executive Officer of CCC, said, “This transaction will be a transforming event for the insurance claims and collision repair industries. Our customers are under increasing pressure to achieve new levels of efficiency and customer satisfaction, which requires their service providers to offer new and enhanced products, services, and solutions. CCC-Mitchell will be positioned to meet these needs as we bring together our two talented teams to create greater value for our customers and business partners through increased innovation and network connectivity.”
Alex Sun, President and Chief Executive Officer of Mitchell, commented, "We are pleased to have entered into this transaction with CCC, a company that shares our commitment to integrity, innovation, and providing outstanding customer service and support. This combination brings together a unique set of products and skills and an increased resource capability that will accelerate innovation, enhance our service levels and over time simplify the lives of our respective customers through greater connectivity and more seamless workflow between the broader portfolio of solutions offered."
Among the customer benefits of the transaction, the combined company promises to have:
- An expanded communication network to deliver greater connectivity between insurers, repair facilities, and other industry service providers and suppliers
- Expanded Research & Development resources and a greater ability to enhance current products and services, deliver new technology-based claims solutions, and provide faster time-to-market product delivery
- An expanded sales and service organization, providing broader and better customer service across North America
- A larger, more comprehensive data warehouse that will improve the company’s ability to deliver industry insights through benchmarking, data analytics, and predictive modeling
- A broad and widely used portfolio of claims and collision repair solutions from one provider.
Under the agreement, which was unanimously approved by the Boards of Directors of both companies, Mitchell and CCC will merge in a stock-for-stock exchange. Ownership and board seats will be held equally by Aurora Capital Group, the private equity sponsor of Mitchell, and Investcorp, the private equity sponsor of CCC. In addition, CCC-Mitchell management will have a significant stake in the combined enterprise.
Ramamurthy will become the CEO of the combined company. Sun will serve as President of CCC-Mitchell.
“Among its many advantages, the expanded resources of the combined enterprise will enable it to deliver more innovation faster, which will drive increased growth and will, in turn, provide employees with enhanced opportunities for career advancement,” Sun said. “CCC-Mitchell will draw from the talent pools of both companies, with a focus on continuing to provide outstanding products, service and support for our customers.”
Ramamurthy added, “The combined company will be able to expand and update our product portfolio, customer base, and geographic coverage more quickly than either company could have individually. Over time, our auto physical damage products and services will evolve to a single, leading platform for each of our applications, allowing us to deliver greater innovation and functionality to both insurers and repairers.”
Given the geographic distribution of the companies’ respective workforces and customers, as well as the companies’ ability to connect through their existing systems, it is anticipated that CCC-Mitchell will operate from multiple locations while maintaining a significant presence in both San Diego and Chicago.
Completion of the transaction is expected to occur immediately following completion of regulatory review and satisfaction of customary closing conditions.
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The Automotive Recyclers Association (ARA) and the Environmental Compliance for Automotive Recyclers center (ECAR center) have teamed up to provide a new logo to depict the relationship between the association and the center in their efforts to become the driving force of environmental compliance.
ARA is an integral part of providing valuable information that helps automotive recyclers stay in compliance with local and federal regulations. This information could save the recycler thousands of dollars in hefty fines from environmental regulatory agencies.
The ARA ECAR center is the #1 source for state-by-state automotive compliance information. Automotive recyclers around the country log on to the ARA ECAR center as their one-stop-shop for the answers to all of their environmental compliance questions.
Automotive recyclers can benefit from the ARA ECAR center’s information regarding various forms of best management practices, pollution control and prevention, and environmental regulations compliance.
The ARA ECAR center is easy to use and also provides an interactive map to help recyclers locate their local compliance regulations, making the ARA ECAR center an invaluable resource to automotive recyclers.
“The ARA ECAR center, www.ecarcenter.org, not only provides automotive recyclers with the most up-to-date compliance information, but helps to save them time and money too,” noted Michael E. Wilson, ARA Executive Vice President.
ARA is a non-profit trade association with nearly 1,000 members located in all 50 states. Founded in 1943 and based in Fairfax, Virginia, the Automotive Recyclers Association represents an industry dedicated to the efficient removal and reuse of automotive parts along with the proper disposal of inoperable motor vehicles.
Amica Mutual Insurance Company, based in Lincoln, Rhode Island, has selected Gerber National Glass Services (GNGS), a subsidiary of The Boyd Group Inc. to provide glass claims management solutions for their customers.
"We are excited to have been selected by Amica to service their customers," said Eddie Cheskis, Chief Executive Officer of Gerber National Glass Services. "We are proud to have been chosen by a company that J.D. Powers has ranked the 'Highest in Customer Satisfaction Among National Auto Insurers', eight years in a row. Sharing the same principles of integrity, value, and personal service, we expect to complement Amica’s excellent reputation.”
Under this new agreement, GNGS will act as the administrator for claims in Amica’s Glass Program, providing quality auto glass repair and replacement services from its long established group of member businesses.
"We expect Gerber’s glass claims management program to continue to provide the superior service our customers have come to expect," said Sean Welch, Assistant Vice President for Amica. "We are pleased to work with an organization that shares our core values.”
Amica Mutual Insurance Company, founded in 1907, is a direct writer of personal lines insurance, with Automobile, Homeowners, Personal Umbrella Liability, and Marine coverages.
Founded in 1971, and acquired by the Boyd Group in January 2005, Gerber National Glass Services (GNGS), formerly The Globe Amerada Glass Network, is America's oldest vehicle glass repair and replacement network. GNGS's Vehicle Glass Repair & Replacement Network is comprised of over three thousand independently owned members.
The Boyd Group Inc. is the largest operator of collision repair centers in Canada and among the largest in North America. The company operates locations in the four western Canadian provinces principally under the trade names Boyd Autobody & Glass and Service Collision Repair, as well as in six U.S. states principally under the trade name Gerber Collision & Glass. The company also operates Gerber National Glass Services, an auto glass repair and replacement referral business with affiliated service providers throughout the United States.
Akzo Nobel NV, the world's biggest producer of paints, posted forecast-beating fourth-quarter results in March, boosting its shares as its coatings business grew despite the U.S. housing market crisis.
Earnings before interest and taxes (EBIT) from continuing operations, excluding extraordinary items, was 174 million euros ($264.2 million) compared with an average analyst expectation of 157 million euros in a Reuters survey of seven analysts.
Akzo plans to increase its dividend to 1.80 euros per share from 1.20 euros and intends to pay out at least 45 percent of net income excluding incidentals from 2008.
The Dutch chemical group said it would return a previously announced 3 billion euros to shareholders through share buybacks, with a 1 billion euro buyback that started in mid-March.
Akzo said ongoing pressure created by raw material prices, volatility in major currencies, and a slowdown in overall growth in North America and Europe will make for a testing environment but it still expects to outgrow its markets.
Fourth quarter revenue at its coatings unit was up two percent, reassuring analysts who had been worried after the unit failed to match growth expectations in the third quarter, pressured by the U.S. housing market crisis.
Akzo said the integration of Imperial Chemical Industries Plc (ICI) was well on track and confirmed expected annual cost synergies of 280 million euros.
Allstate-owned Sterling Autobody Centers has named Allan Robinson its president. Robinson previously served as Claim Field Director for the Midwest Claim Service Area in Buffalo Grove, Illinois, and brings over 20 years experience of product knowledge and leadership to his new position.
As president of Sterling Autobody Centers, Robinson is responsible for overseeing operations for Sterling’s network of 60 autobody stores in 16 states and eight metropolitan locations.
“Sterling is an exceptional company in encouraging professional development and excellent customer service,” Robinson said. “I look forward to further enhancing the customer experience through quality services for our insureds.”
“We are pleased to have Robinson spearhead Sterling Autobody. His strong leadership, initiative, and auto product knowledge will further Allstate’s and Sterling’s position within the marketplace,” said Bill Daly, Allstate auto assistant vice president.
Robinson, who joined Allstate in 1984, has held various claim assignments in casualty, auto and Allstate’s Special Investigation Unit. He earned a Chartered Property Casualty Underwriter certification, a premier designation for the property and casualty insurance industry, and has consistently received Allstate claims top leadership awards for exceptional professional leadership.
The Allstate Corporation is the nation’s largest publicly held personal lines insurer. Sterling Autobody Centers is a wholly owned subsidiary of Allstate Non-Insurance Holdings, Inc., a subsidiary of The Allstate Corporation.
In an effort to further decrease cycle times, Offutt Collision Repair (OCR), just outside Omaha, Nebraska, has added a Rapid Delivery Service to include technicians repairing vehicles until 2:00 am. Because OCR’s production is set up in an assembly line manner, night shift technicians are literally able to pick up where the day shift leaves off.
The assembly line (or Linear Repair System), designed by shop owner George Rybar, has proven to be a more efficient and leaner method of production, already beating the market cycle times by at least half. Adding the Rapid Delivery Service will continue to push Offutt Collision Repair’s cycle times to be top in Omaha and the entire state.
OCR's approach is to re-manufacture vehicles by utilizing a team of specialized technicians. Damaged vehicles go thru pre-set repair stages that maximize each technician's skill sets, much like the assembly line that created each car.
The shop's production area is capable of processing at optimum 28 vehicles in three production lanes depending on the severity of the repair. Two spray and bake paint booths are strategically placed so that each vehicle is always moving forward to completion.
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The Ohio Board of Motor Vehicle Collision Repair Registration and Attorney General Marc Dann’s Office filed injunctions on twenty-three separate collision repair facilities in late 2007.
The suits included three shops in Clermont County, eight shops in Butler County, and twelve shops in Hamilton County. Each shop is accused of being in violation of Ohio’s collision repair registration laws. In early 2007, the Board was granted injunctions in Lorain County against four illegal repair shops.
In March, the Court of Common Pleas of Lorain County found one shop owner in “Contempt of Court” for failing to comply with the injunction order. Jeff Gaines, owner of Jeff’s Body Shop in Lorain, will have until May 9th to register his shop, and to pay back fees and fines. Gaines’s case is the only remaining court action from the original filing. Other shops in the original suit settled with the State.
Also in March, the Common Pleas Court of Hamilton County granted injunctions on nine collision repair facilities. Three Hamilton County repair shops, four Butler County repair shops, and all three of the Clermont County shops settled their cases with the State prior to the injunctions being granted. Four cases in Butler County are still pending.
Michael Greene, Executive Director of the agency, stated, “Enforcement efforts against illegal repair facilities increased in 2007, and will continue this year. It is not the Board’s intention to close down repair shops, but rather bring them into compliance with state and federal regulations. It’s a consumer issue, and I would suggest everyone visit www.collisionboard.ohio.gov prior to selecting a repair facility. Consumers can check for registered shops at our e-licensing verification link, and learn the rights of a motorist when seeking auto repairs.”
The Ohio Board of Motor Vehicle Collision Repair Registration was created in 1999 to regulate the collision repair industry and provide consumer protection. The Board is entirely funded by registration fees from collision shops, auto glass businesses, paintless dent repair companies, and airbag replacement units throughout Ohio.
The Board is made up of five collision repair shop owners, one mechanical repair shop owner, and one person to represent the public, who has no financial interest in the auto repair industry.
Collision repair professionals take note: the Inter-Industry Conference on Auto Collision Repair (I-CAR) has released a brand new set of guidelines for structural sectioning.
This development is significant. The research for I-CAR's previous sectioning guidelines was conducted over 20 years ago. Recent advancements in vehicle structure, driven by manufacturers looking for lighter, more crash-resistant designs, dictated the change. The widespread use of advanced high strength steels unsuited for sectioning due to their vulnerability to heat is one result. Structural design complexities increasingly specific to individual manufacturers is another.
“Defining safe places to section vehicles has become incredibly nonstandard. Even the repair terminology can change from manufacturer to manufacturer,” stated Jason Bartanen, technical director for I-CAR. “The location of the part and its design intent are more important than ever, and the repairer must understand this if he or she is to carry out a safe, quality repair. ”
OEMs are supplying more material on structural repairs than ever before, and that is good news. But the challenge to repairers is seeking out this massive amount of information and mastering it. I-CAR provides an invaluable service by including a sectioning matrix on its Web site (www.i-car.com/partialreplacement) with direct links to available OEM websites where the procedures can be found.
There are times, however, when the manufacturer provides no recommendations. In these cases, according to I-CAR, determining how the vehicle should be repaired becomes a business decision between the insurer, repairer, and customer.
“It's imperative for today's technician and anyone else sharing responsibility for the repair, to know what he or she is specifically working on,” added Bartanen. “If there is any doubt, erring on the side of caution is the only prudent strategy to take.”
The publication of new structural sectioning guidelines is welcomed by VeriFacts Automotive, whose mission is to coach and train proper collision repair techniques on the front lines of the industry.
“Repairers should understand this is not ten to twelve years ago and that a one-size-fits-all approach to sectioning just doesn't work anymore,” said VeriFacts CEO and co-founder Farzam Afshar. “We salute I-CAR for its fine work in assembling this data, which will lead to safe, quality repairs, and are ourselves committed to spread the word regarding these critical new procedures.”
VeriFacts urges everyone to obtain a copy of I-CAR's new sectioning guidelines as well as a copy of its original guidelines for comparison. The I-CAR course “Steel Unibody Technology (SP07)” should be considered a must for anyone who plans to do sectioning of new vehicles.
Formed by the collision industry in 1979, I-CAR is an international, not-for-profit training organization. I-CAR develops and delivers technical training programs to professionals in all areas of the collision industry. In addition, I-CAR provides a communication forum for anyone interested in proper collision repair. I-CAR's primary funding is derived from student tuition and services. This assures that I-CAR can remain unbiased in developing programs and services on an industry-wide basis.
Founded in 2002, VeriFacts Automotive LLC addresses the implementation of technical information within the collision repair industry. Committed to ensuring that collision repairers have the correct information and skills necessary to repair today's diverse and complex vehicles, VeriFacts provides onsite, hands-on coaching and quality assessment solutions for collision repair and claims professionals.
The National Auto Body Council (NABC) PRIDE Committee has opened nominations for the 2008 PRIDE Awards, which recognize those in the collision industry who selflessly donate their time, energy, and financial resources to worthy causes outside the industry.
This is the thirteenth year NABC has sponsored the PRIDE Awards, and Chairman Gary Wano is looking forward to another great year of nominations that celebrate all the positives that make repairers proud of their profession.
"Many industry people committed to making the world a better place are quiet about it," Wano commented. "They simply roll up their sleeves and get the job done, whether it's running into a burning building to save a child, giving an elderly person rides to the grocery story, or feeding the homeless at a shelter. We continue to dig down, unearth these unsung champions and get the word out about them."
Last year, the industry gave us four extraordinary PRIDE winners:
- Barbara Cellini from Broadway Auto Rebuilders in South Chicago Heights, Illinois started the Thomas Cellini Huntington's Foundation after her husband, Tom, was diagnosed with the disease. The foundation is a leader in Huntington's research and gathers financial resources for families whose lives have been disrupted by the disease.
- Kevin DeWayne Jackson, the parts manager for Indianapolis-based Collision Solutions,continues to fill a pressing need. He and his wife have brought over 65 foster children into their home. They have adopted three of these children as their own, adding to a wonderful household into which three children have been born.
- Patricia McConnell, president of Old Dominion CARSTAR in Eugene and Springfield, Oregon currently serves on the Board of Directors for the Relief Nursery, a non-profit organization that serves children in Lane County, Oregon who are either the victims of abuse or at risk of being abused. McConnell donated a vehicle to the Relief Nursery and is ensuring that donated services keep the van in top condition. She also assists in ensuring that these children get to enjoy holidays, vacations and have a safe place to go.
- John Westlund, from Lehman's Garage in the Twin Cities of Minnesota, was brought to the committee's attention through a 30-page nomination form from shop owner Darrell Amberson. In addition to devoting over 60 years to the auto industry, Westlund has battled alcoholism. The pages were filled with personal testimonials recognizing him for all that he has done over the last 33 years to help others claim victory over the disease.
Wano wants to make this year's nominations every bit as memorable as 2007 and has issued a challenge. "Please take the time to think about the good things that happen around you," he said, "and help us recognize those who are truly deserving. After all, NABC makes it easy to participate. A downloadable version of the nomination form is available on the Council's website, www.autobodycouncil.org, and there is also a version that can be completed and submitted online."
NABC is a non-profit organization dedicated to enhancing the image of the collision industry.
Allstate has released the documents about the company's claims practices demanded by a Florida court, with the following comments:
The documents relate to a complex body of work that as a whole demonstrates a careful, fact-based analysis to better enable the company to more promptly investigate and more consistently and effectively evaluate claims based upon their own merits.
Public criticisms by people with a vested interest in creating an inaccurate picture of the company's claim practices have been based unfairly on only snippets from the documents taken out of context.
We continue to believe that the documents deserve protection as containing trade secret and confidential proprietary information and that our actions to protect them from general disclosure have been appropriate. However, because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole, we have decided to make the documents public.
Some of the facts about Allstate's claims practices that have been overlooked in the debate over these documents include:
- As a regulated company, Allstate's claims practices are available to and regularly reviewed by state departments of insurance.
- Allstate resolved millions of homeowners and auto claims last year and continued to earn very high rates of policy renewal. The company regularly communicates with our customers and claimants about their claim and what they can expect from the process.
- Allstate is aggressive in fighting fraud to protect our customers and reduce the cost of insurance. The company employs a special investigative unit (SIU) that is specifically charged with identifying and combating fraud.
"We became the largest publicly held personal lines insurance company in the United States in no small part because we built a reputation of being there for our customers in their time of need by resolving claims fairly, accurately and in a timely manner," said Allstate spokesperson Rich Halberg. "The fact that we have added millions of new customers over the past 15 years speaks to the outstanding claim service we provide."
When aired in the unbiased setting of a court of law, allegations about the documents have been shown to be without merit. Most recently, some of the documents were seen and explained in context to a jury during a two-week trial in Kentucky (Hager v. Allstate). The jury unanimously ruled in Allstate's favor in deliberations that lasted less than two hours.
To view the documents, visit the online Allstate media center at: http://media.allstate.com.
The Allstate Corporation is the nation's largest publicly held personal lines insurer. Claim Review Documents at Allstate Website
This page will link you to a press release and the table of contents for the approximately 150,000 pages of documents pertaining to a review of Allstate's claim practices conducted in the 1990s.
This site consists of hundreds of files in PDF format. With the exception of page numbers added to assist in the navigation of this web site, these documents are in their original state and include handwritten notes. The documents also contain many ideas that were never fully developed or implemented.
Each file may contain several separate documents. There are numerous individual documents throughout the PDFs that do not have title pages; they are identified in the table of contents as "No Title." Regardless of which title you click under the PDF, you will be directed to the first page of the file in which that document is contained. Some of these files may take quite some time to download.
The Estimating Management System (EMS) standard was developed by the Collision Industry Electronic Commerce Association (CIECA) to transfer an estimate from the estimating system to the body shop management system. This process transfers all the information contained on an estimate, and is used by repairers on a daily basis. The EMS standard, while still fulfilling its intended purpose, is outdated and turn-of-the-century technology from both a design and content perspective.
Over the years, the EMS file has been used for purposes other than its original intent. For example, it has been used to report the repair status of a vehicle. Using the EMS in this manner results in all the estimate information being transferred (in addition to the repair status information). As a result, repairers incur the risk of violating state and/or federal privacy laws. Moreover, there have been instances where the repairer's as well as the vehicle owner's information is being sold to other companies, unbeknownst to the repair facility.
Today, there is a replacement for the EMS called the Business Message Specification (BMS). The BMS is built on new specifications that are scalable and technology neutral. Rather than sending the entire EMS file and all the estimate data, the BMS provides repairers with the flexibility and security to transmit specific subsets of estimate information.
Unfortunately, the BMS is not available to collision repairers. Implementing the BMS for repairers will address many of the privacy and data security risks. It will also assist in reducing other manual processes (such as the manual keying of a vehicle's repair status into multiple systems) that we are faced with today.
If you are in favor of moving to the new BMS standard, which would assist repairers in protecting their data as well as their customers, please contact SCRS to have your name added to the petition. SCRS will send the petition to all three information providers requesting they provide the collision repair industry with the BMS format. You can contact SCRS Executive Director Dan Risley at danrisley@scrs.com or his office at 708.598.3384. We will need your name as well as your company's for validation purposes.
Through its direct members and 36 affiliate associations, SCRS is comprised of 6,000 collision repair businesses and 58,500 specialized professionals who work with consumers and insurance companies to repair collision-damaged vehicles.
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