Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
Industry Stocks
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
1997 Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the December, 1999 Issue of INSIGHT
©1999 Collision Repair Industry INSIGHT All Rights Reserved
Lawsuit Accuses Insurers of Fraud
Nationwide Insurance Suspends Specification of Non-OEM Crash Parts
Allstate Announces 10 Percent Staff Reduction
I-CAR Announces Changes to Gold Class Program
Sherwin-Williams Names Connor Vice-Chairman and CEO; Scaminace Named President and COO
Job Corps Approves I-CAR Education Foundation's Curriculum
INDUSTRY UPDATE
Following closely on the heels of their victory in the State Farm non-OE parts lawsuit, lawyers have once again filed a lawsuit targeting insurers for their use of non-OE parts. Insurance companies conspired to defraud motorists by creating a puppet standards-setting agency to make cheaper autobody repair parts look better than they were, according to a new lawsuit.
The lawsuit was filed November 2 by attorneys who won a $1.2 billion judgment last month over State Farm’s use of non-OE parts. In that case, the judge ruled that the non-OE parts were inferior to those made for automakers.
The new lawsuit accuses State Farm and six other insurers: CNA, Liberty Mutual, Allstate, Geico, Safeco and USAA, of creating the Certified Automotive Parts Association (CAPA), to conceal flaws with non-OE crash parts.
The creation of CAPA allowed insurance companies to use lower-quality parts while concealing from clients that the non-OE parts were used, according to the lawsuit.
Steve Goldstein, a spokesman for the Insurance Information Institute, the nonprofit communications arm of the insurance industry, called the accusations “absolutely preposterous.’’
“The insurance companies have been working hard to try to keep prices down, and one of the ways we can do that is by giving consumers the option of using generic parts,’’ Goldstein said.
CAPA executive director Jack Gillis said the agency, which was not named in the lawsuit, had not participated in fraud or conspiracy.
Like the State Farm lawsuit, the new lawsuit accuses the insurance companies and their subsidiaries of breach of contract for allegedly failing to restore their customers’ cars to their conditions before an accident.
The lawsuit also accuses the companies of consumer fraud and conspiracy. Attorneys are seeking class-action status for the lawsuit filed in Madison County Circuit Court. o
Nationwide Insurance, the country’s fourth-largest auto insurer, announced November 5 that it is temporarily suspending the specification of non-Original Equipment (non-OE) crash parts in the repair of damaged vehicles. The change became effective November 8.
Nationwide continues to honor the Blue Ribbon Appraisal Guarantee for customers whose vehicles were appraised specifying non-OE crash parts prior to November 8, 1999.
Nationwide continually reviews its practices and procedures in order to ensure that they are meeting our customers’ needs. Given the current environment surrounding non-OE crash parts, the company feels that it is appropriate to temporarily suspend the specification of such parts.
Additionally, today’s announcement affects Nationwide’s affiliates — Allied and Farmland insurance companies, based in Des Moines, IA, and Scottsdale Insurance, headquartered in Scottsdale, AZ. The change encompasses policyholder and third-party claims.
The Allstate Corporation (NYSE: ALL) announced November 10 a series of initiatives to aggressively expand its selling and service capabilities and significantly reduce cost and staffing levels.
Earlier initiatives fitting into that overall strategy included the strategic partnership with Putnam Investments to market variable insurance products; the acquisition of CNA Personal Lines in a move to make Allstate a leader in the independent agency channel, and the acquisition of American Heritage Life Investment Corporation to market workplace insurance products. CNA Personal Insurance continues as a separate business unit offering non-Allstate branded products through independent agents.
Edward M. Liddy, Allstate chairman, president and CEO, plans to move the company into direct access and electronic commerce. The company believes the power of the Allstate brand will enable it to achieve substantial market penetration of these rapidly growing sales channels.
Unlike its competitors using these means, however, the company will be selling Allstate-branded products with a uniform pricing and service model across all channels. Customers who come to Allstate initially via an agent will have access to the service capabilities provided through the Internet, just as customers who enter via the direct or Internet channels will have access to a local agent for sales or service if the customer wants to use one.
Allstate’s goal is to begin the rollout of the new model in May and penetrate approximately 16 states, covering more than 40 percent of the U.S. population by the end of 2000 with the balance of the U.S., where allowed by law, by the end of 2001.
Part of Allstate’s new business model also calls for the transition of approximately 6,500 of its captive agents from a number of different contracts and programs to one independent contractor exclusive agency program. The Exclusive Agency Program is the arrangement under which the majority of the company’s more than 15,200 agents in the United States currently operate. This action will enable the company to service agents and customers more nimbly and cost-effectively.
The company also announced that it is implementing a program to reduce current annual expenses by some $600 million. The reduction is designed to allow investment in competitive pricing, establishment of new sales capabilities, agent and claim technology and marketing and advertising. The reduction will result in the elimination of 4,000 current non-agent positions by the end of 2000, or approximately 10 percent of the company’s non-agent work force, and will come from reductions in force, attrition, the closing of a field support center, and the previously announced closing of four regional offices. The reduction includes the elimination of approximately 460 jobs in the company’s home office in Northbrook, Ill.
The launch of I-CAR’s Enhanced Delivery courses this January will increase the number of training options available to the Collision Industry and offer more specialized course content. There will also be significant changes to the Gold Class Professionals program in the United States.
The business point requirements for the Gold Class Professionals program will remain at 80 percent of total point requirements, while the individual point requirements will increase from 40 percent to 60 percent. This change will be effective January 1, 2000 for new businesses. Renewing businesses will have a one-year grace period to achieve the 60 percent individual point requirement.
Another change for new and renewing Gold Class businesses involves the new point requirements for helper and apprentice positions that are directly involved in the collision repair process. This change has been effective for new businesses for almost a year, and will go into effect for renewing businesses beginning January 1, 2000. A 12-month grace period for new employees is still in force.
The final change to the Gold Class program is the sunsetting of three I-CAR courses and the end of the one-year grace period for renewing businesses. Points from courses that are sunsetted cannot be applied towards Gold Class for both new and renewing businesses.
Course that have been sunsetted include the original Nine-Part Unibody course (010 OLD) offered from 1981 to 1987, the original Plastic Repair course (040 PLA) offered between 1987 and 1989 and the original Color Matching Course (020CM) which was offered between 1984 and 1988.
Verification of employment for new and renewing Gold Class applicants will still be required. Accepted documentation includes Quarterly Wage Reports, Wage and Tax Registers, W-2 Forms, Statement of Tax Deposits and Filings, Employee Earnings Records, and Unemployment Records. If a business is unable to provide one of these documents, a notarized list of current employees with hire dates, social security numbers and job titles will be accepted. I-CAR also announced that the Welding Qualification Test will continue to be offered under Enhanced Delivery. The test is valid for five years, and those who successfully pass it earn four Gold Class points. Once the qualification has expired, individuals must re-take the test in order to maintain the four Gold Class points.
The Gold Class Professionals program was designed to recognize businesses that have achieved a high level of training. The changes to the program are an effective way to set apart Gold Class businesses from those that are not Gold Class.
Unistar Financial Services Corp. said October 29 its chief executive resigned and that it would delist its shares from the American Stock Exchange.
It is believed that the Dallas-based company, which has been hit by a flurry of shareholders law suits alleging securities fraud after its share price dropped sharply, is seeking a buyer for the whole company or part of it. Unistar’s chief executive and chairman, Marc Sparks, resigned but will continue as a consultant to the company.
President and Chief Financial Officer Jeffrey Nelson will take on additional duties as chief executive and one of the company’s directors, Morris Belzberg, will temporarily serve as chairman. Problems for Unistar include its $86 million valuation of a customer list and certain insider transactions. Unistar informed the exchange that it believes it cannot meet its requirements for continued listing.
Unistar went public a year ago and in May moved its stock to the American Stock Exchange from the over-the-counter bulletin board. The company, which has around 24 million shares outstanding, had just 900,000 available for public trading.
The Sherwin-Williams Company has announced that its Board of Directors has named Christopher M. Connor, Vice-Chairman and Chief Executive Officer and Joseph M. Scaminace, President and Chief Operating Officer. Both Connor and Scaminace were elected to the Board of Directors. John G. Breen, current Chairman, CEO and President remains Chairman of the Board until his expected retirement in April 2000.
Connor, 43, has served as President of Sherwin-Williams’ Paint Stores Group since 1997. This segment of Sherwin-Williams’ business has grown to almost $3.0 billion in annual sales through the expansion of its store base to over 2,300 stores, new product introductions and sales growth in the professional contractor, do-it-yourself, industrial maintenance and product finishes market segments.
Scaminace, 46, has been President and General Manager of the Consumer Group and its predecessor Coatings Division since 1997. The Consumer Group was created through the consolidation of four Divisions in 1998. The Consumer Group is responsible for the development, manufacture and physical distribution of The Sherwin-Williams Company’s architectural and industrial maintenance coatings, interior and exterior stains and sealers, aerosol products, applicators and caulks.
John G. “Jack” Breen, 65, who has been Chairman and Chief Executive Officer of The Sherwin-Williams Company since 1979, has announced his intention to retire as Chairman in April, 2000.
Breen has overseen the growth of The Sherwin-Williams Company from a troubled business in 1978 with sales of $1.132 billion and adjusted net income per share of $0.02 and no dividend to analyst projected 1999 sales of $5.0 billion, consensus earnings per share of $1.75 and a current annual dividend per share of $0.48. During this period a share of Sherwin-Williams stock has risen from a split adjusted basis of $0.625 to its current levels.
In other related management appointments, John G. Morikis was named President, Paint Stores Group replacing Connor. Thomas W. Seitz was named President, Consumer Group replacing Scaminace.
In this issue, INSIGHT honors the facilities participating in our CSI Program that scored over 92 percent for the month of September. Each has received a certificate of excellence, suitable for framing, from INSIGHT. Watch for a monthly listing of CSI winners!
Bob Hohmeier, of Hohmeier Auto Body, in St. Louis, MO, is the September CSI leader, with a 96 percent level of satisfaction. He adds special touches to repairs, such as a new-car scented vinyl cleaner, seat covers, and floor mats. Each of his customers receives a thank you note and a business card refrigerator magnet by mail upon completion of repair. “Perception is everything. A little extra expense up front pays off in the long run in terms of pleased customers’ referrals,” Hohmeier says. “Always have a positive attitude about the quality of your shop’s work and value the relationships you develop with your customers.”
Rick Recor, of Rick’s Auto Body, in Springfield, MA, deserves special recognition for his outstanding record of 95% overall performance and his constant commitment to customer satisfaction during his more than five years in the CSI Program. Recor greets every customer and personally inspects each repaired vehicle with the customer upon delivery. His advice: “Treat every customer the way you want to be treated yourself, and then CSI takes care of itself.
The Job Corps recently updated its Training Achievement Records (TARs), Equipment List and Curriculum Bibliography for the collision repair area. As of July 1, 1999, instructors at collision repair Job Corps centers have the option of using the I-CAR Education Foundation’s ADVANCE-TECH curriculum for their training needs.
ADVANCE-TECH was added to the Job Corps Curricula Materials List after a panel of collision repair experts carefully reviewed the material and approved it. Job Corps instructors are required to select curriculum for their programs from this list.
Currently, ADVANCE-TECH is taught in over 620 collision repair training programs nationwide, and several states have either endorsed, recommended, or mandated the curriculum.
Job Corps provides education, training, and housing for 16-to 24-year olds from disadvantaged backgrounds and with troubled academic histories. According to officials, last year about 69,000 young people were trained at Job Corps centers nationwide, and 80 percent of graduates left for full-time jobs or college.
Feedback
Have a comment about this article? Send Email to Russell Thrall, INSIGHT's Editor
©1999 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
