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Letter to the Editor

Gauging the Winds

At a gathering of state associations, reports offer one way to get a sense of the “mood” of the industry

A number of industry events throughout the year offer some gauge of the overall outlook of the industry. Certainly NACE is one of them. But another is any one of several gatherings designed to bring together representatives from various state associations.

The “East Coast Resolution Forum” is one such gathering. Sponsored by the Society of Collision Repair Specialists (SCRS) and the Alliance of Automotive Service Providers (AASP) of New Jersey, the forum is held in conjunction with AASP-New Jersey’s NORTHEAST 2009 trade show, this year held in March at the Meadowlands Exposition Center in Secaucus, New Jersey.

In past years, it attracted primarily representatives of Northeast state associations, but it has gradually grown to include representatives from some associations in other sections of the country as well. About 80 people – including representatives of more than a dozen state associations around the country – attended this year to share ideas, explain recent association activities, and discuss state legislative or regulatory successes and efforts.

Listening to the presentations offered some sense of the direction the industry may be headed. Although most of the state groups represented at the meeting reported pushing for state legislative solutions to issues facing collision repairers, a few of the groups said they are taking other approaches.

“We did not author any bills this year,” Bob Skrip, a Connecticut shop owner and president of the Auto Body Association of Connecticut, told fellow attendees at the meeting. “We monitor what is going on. But we decided we don’t need to spend money on legislation. Every time we do, we lose. We’ve lost hundreds of thousands of dollars the past few years trying to get something passed. It just always works against us. We just decided to take a different approach this year.”

Skrip said the association is saving the money it has spent pushing for legislation in previous years for a consumer education “media blitz.”

It was an idea that resonated with some other groups represented at the meeting. Ed Kizenberger, executive director of the Long Island Auto Body Repairmen's Association (LIABRA), said his association has been very active on the legislative front in the past but may back away from it.

“I’m not encouraging non-participation. That is absolutely not what I’m saying here,” Kizenberger said. “But at the end of the day, it really seems to be that the court system is where some of this is going to be resolved. That’s just my personal opinion.”

Tony Lombardozzi of the Coalition For Collision Repair Excellence, said he sees what he views as some misguided state legislative efforts.

“Everything gets turned around so that eventually it looks good on the surface but it comes back usually a year or two later and winds up biting us,” Lombardozzi said. “In my opinion, legislation is not the way to go.”

Lombardozzi acknowledged being caught off-guard earlier this year by Senate passage in his own home state of New Hampshire of a bill (SB 55) that calls for a commission to study the Collision Repair Industry in that state, including "means of strengthening working relationships" between shops and insurers, the role of the state insurance department in the industry, and consumer dispute resolutions issues.

Most of the other groups at the meeting focused much of their brief individual presentations on their association’s legislative successes and efforts.

Another Connecticut group, the Connecticut Collision Repair Specialists, for example, is backing a bill that would prohibit insurers from suggesting that choosing a shop outside the insurer’s direct repair program will result in delays or lack of a guarantee for the repair work. Lisa Siembab, the association’s executive director, said that under the bill, customers also would have to sign a statement at any shop indicating they are aware of their right to use the shop of their choice

Bruce Tschida, a Minnesota shop owner and president of the AASP-Minnesota, said the association successfully backed legislation last year prohibiting an insurer from "unilaterally and arbitrarily disregard(ing) a repair operation or cost identified by an estimating system.” Earlier this year, he said, the Minnesota House passed an association-backed bill (HF 978) that would prohibit insurer-owned shops in the state.

Tschida said after two years of meetings with insurers regarding labor rate surveys or other mechanisms to determine rate increases, AASP-Minnesota has decided to push for labor rate legislation in future years.

“After two years, we decided we can’t get anywhere,” he said. “We’ve put together a bill to address this.”

Bob Pulverenti, executive director of the Independent Garage Owners of North Carolina, said his group is opposing a bill (SB 50) in that state that would place a $25-per-day cap on vehicle storage rates. The association is also seeking a sponsor for its drafted shop licensing bill, a topic Pulverenti acknowledged is controversial within the industry.

“But our members really feel that in our state there is an abundance of shops operating under the radar,” he said. “They pay their employees under the table. They don’t have insurance. They’re not in a properly zoned area. They don’t have a spray booth. The list goes on and on.”

Under the bill, he said, a new state board would be created to oversee the shop licensing. The proposal, if introduced and enacted, would prohibit insurers from negotiating with an unlicensed shop.

Charlie Bryant, executive director of AASP-New Jersey, said a bill introduced in his state (similar to those introduced this year in more than a dozen others) provides for a private right of action against insurers for a violation of the unfair claims settlement practices regulations. Currently in most states, departments of insurance penalize insurers only if they violate claims settlement guidelines frequently enough to be considered a general business practice.

“I equate it to someone running a red light, but the officer has to catch him doing it at least three times in a week before they can give him a ticket,” Bryant said. “It’s just a joke. And it’s been this way for a long time, and hopefully we’ll be able to stop it. This bill allows people the right to go to court and sue for one-time violation of the regulations.”

Two Massachusetts-based associations discussed legislative efforts in that state. Peter Abdelmaseh, executive director of AASP of Massachusetts and Rhode Island, explained the association’s labor rate bill that would establish three levels of shop classification, opening the door for higher rates for shops with better levels of equipment and training.

Steve Regan, representing the Massachusetts Auto Body Association, said his group anticipates the industry may have more success enacting that and other bills his group supports this year because of a statement by an insurer group that came to light late last year. In a written report, the insurer group said that legislative limits on insurer repair and glass shops networks proposed last year would jeopardize insurers’ “systematic control on the hourly labor rate and other aspects of the repair process.”

“It was an admission that the insurers in the state felt the current laws on the books gave them the right to fix prices and control the repair process,” Regan said. “It has now put the insurers on the defensive in our state.”

Several groups discussed efforts with state regulators and courts. A Vermont Department of Motor Vehicles bulletin regarding remanufactured wheels last year stated that vehicle owners should be notified of "the potential safety risk of placing such a wheel on their vehicle," and that any such wheels should be thoroughly inspected. Mike Parker, a Vermont shop owner and president of the Vermont Auto Body Association, said at the New Jersey meeting that the association recently received a letter from that state’s Department of Insurance agreeing that insurer seeking to use such a wheel “must disclose to the claimant that the wheel has been reconditioned and ensure that the wheel satisfies the inspection list set out in the Department of Motor Vehicles’ bulletin.”

Jordan Hendler, executive director of the Washington Metropolitan Auto Body Association, said her group is working to help shape Maryland’s administrative rules to ameliorate the effects of a title branding law that shocked repairers in that state when it was enacted last year. The law reduced the total loss threshold at which vehicle titles must be branded 100 percent of the vehicle’s pre-accident actual cash value to 75 percent of its value. Hendler said because all repair costs and the salvage value are included in the calculation, insurers now are sometimes totaling vehicles with damage as low as 55 percent of actual cash value, and she estimated the law reduces the number of repairable vehicles in the state by about 16,000 a year.

Connecticut shop owner Skrip also said he expected settlement mediation to begin soon in the class action lawsuit brought by a group of Connecticut body shops against The Hartford. The settlement talks come about six years after the suit was originally filed, alleging that The Hartford engaged in unfair trade practices by steering consumers to its DRP shops and improperly establishing artificially low reimbursement rates.

Skrip, who along with the Auto Body Association of Connecticut is a plaintiff in the suit, said any settlement could include hundreds of independent shops across the state.

"There are still a lot of questions with the lawsuit," he acknowledged at the event in New Jersey. "If this pile of money comes in, how do you distribute it? Who determines who gets what? Does a one-man shop get the same as a 15-man shop? Does a DRP get the same as a non-DRP? There are so many questions that still need to be answered."

He said the association has filed a similar suit against Progressive Insurance, and has three others in the works.

The views and actions of the associations gathered in New Jersey may or may not reflect those of the Collision Repair Industry as a whole. But they certainly provide one gauge of the current mood and direction in challenging economic times.   o

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