SCRS Meeting Discusses Insurance Regulation, State FarmWritten by John Yoswick
State Farm’s PartsTrader program, the use of shops’ estimating and other data, and how one state regulator oversees auto insurers, were among the topics at a recent board meeting of the Society of Collision Repair Specialists (SCRS).
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A number of participants at the meeting held on April 24 in Oklahoma City, OK, wore large buttons opposing “data mining” by the “Big Three” information providers, indicating they wanted the ability to “opt out” of having their shop estimating data aggregated and used or sold. The buttons were part of the follow-up to a joint statement that SCRS and two other trade associations sent in January to CCC Information Services, Mitchell and Audatex, voicing concern about collection and use of shop data.
“The response addressed that they have a mutual concern in protection of data, but didn’t really address the questions that we’d asked relative to an opt-out policy or discontinuation of collecting the data,” Schulenburg said.
He said it is his understanding Mitchell and Audatex are working on their responses, which he said the associations intend to share with the industry.
One aspect of data privacy concerns that Schulenburg said the association has looked into were reports of vehicle accident histories showing up on CARFAX reports—instances in which the vehicle owner presumed the information could only have been obtained through the collision repair shop that prepared an estimate on (or repaired) the vehicle.
In two of the three cases of this type of situation that SCRS looked into, Schulenburg said, the CARFAX data actually had been sourced though local police accident reports. In a third instance, a woman seeking to trade-in a vehicle was upset that a CARFAX report indicated that her vehicle had had structural damage repair, when she knew this wasn’t the case. She contacted the shop shown on the CARFAX report as having done the repairs. SCRS worked with CARFAX and determined the report was in error, incorrectly linking collision damage on one vehicle to the VIN of another. CARFAX was able to correct the error, Schulenburg reported.
He also said that SCRS held a meeting in late April with I-CAR and representatives of many of the top automakers to discuss increasing the amount and availability of published OEM repair procedures. The meeting was the result of another joint statement by SCRS and other trade associations last November recognizing published automaker repair procedures as the “official industry-recognized repair standards for collision repair.” The associations also asked I-CAR to create an industry council “to identify gaps in existing OEM procedures and develop processes to close (those) gaps.”
The need for training and standards was illustrated in a presentation by SCRS board member Paul Val, who brought to the Oklahoma City meeting a quarter panel his Arizona shop had removed from a poorly-repaired vehicle brought into his shop because of a water leak in the trunk. Val said the MIG welds used to “attach” the quarter panel didn’t penetrate, and no weld-through primer or corrosion protection had been applied.
“You could literally just pull the quarter off,” Val said.
He said his shop had to do $3,000 in re-repairs to the vehicle. He said the shop that had done the original work under an insurer direct repair program paid his shop for the rework with a credit card – and remains on the direct repair program.
“Someone is going to get killed in one of these cars,” Val said.
Also at the meeting, a presentation by representatives of the Oklahoma Department of Insurance was probably both heartening and disheartening at times for collision repairers.
On the upside, Michael Copeland of the Department’s anti-fraud unit confirmed the regulator is now focused more on fraud against consumers by insurers, rather than consumer insurance fraud, which had been its priority under some previous Insurance Commissioners. Copeland also said he’d like to partner more with the Oklahoma Auto Body Association to address issues of concern.
On the other hand, Jason Johnston, a senior claims processor and reviewer for the Department, seemed to acknowledge the state’s anti-steering law is being interpreted loosely. The law prohibits insurers from making shop referrals unless requested by the vehicle owner.
“But we’ve determined the insurance company can say, ‘Do you have a place in mind, or we can offer a repair place,’” Johnston said. “We give (insurers) that option.”
He said he’s probably had only a half dozen complaints related to steering, and they are difficult to address because it’s usually a shop’s word against the insurer’s. He said an audio recording or affidavits - enough to show a pattern - could help.
But he was also asked how a shop can combat some of the subtle but perceived as unfair “steering” techniques used, such as an insurer telling a customer the process could be slower at the non-DRP shop and thus could result in the customer having to pay some of their own rental car costs (even if the customer has 30 days of rental coverage on their policy). Johnston’s only suggestion: Perhaps the non-DRP shop can offer something to better compete for that customer’s business, such as a free rental car.
State Farm’s PartsTrader program had been the focus of a closed session of SCRS’ board meeting, but during the open session, Schulenburg asked State Farm’s George Avery if the insurer would move forward with PartsTrader if shops, dealers and other parts vendors are resistant to it.
“At this point, we are moving forward,” Avery said. “We are moving through our test. We’re obviously gathering information, making adjustments along the way. But I can tell you that State Farm is moving forward with this. We think it is in the best interest of our customer. I know we don’t have agreement, and that is fine, and I carry that information back. (And) something could happen that I can’t predict. But I can tell you that, right now, that we are moving forward with the process with our Select Service providers.”
Schulenburg said SCRS also had worked with State Farm on an issue related to shops in several markets being asked by the insurer to attempt repairs before replacing a part, but if replacement eventually proved necessary, local State Farm claims staff were telling the shop they could only pay for one or the other, but not both. Schulenburg said State Farm was able to communicate to their staff that “if it’s legitimate to have attempted repair and then it’s necessary to replace, that certainly there is no (company) policy prohibiting (paying for) that.”
Avery said advance communication between the shop and the insurer is the key.
“We had cases where it really boiled down to there being no agreement up front,” Avery said. “So that’s what we communicated. Please have communication with the repairer up front and say ‘Look, if we decide to pull this and it doesn’t work, what are we talking about?’”