Words are often "the great foes of reality." Some within the insurance and collision industries have pieced together words into terms that, defying reality, hide their true intent - or lack thereof. Following are a number of these, in addition to those we looked at in last month's article, that are foes of the reality they are intended to present. 

Quality Replacement Parts (QRP)
Like Kind and Quality Parts (LKQ)

Non-OEM parts - any parts not manufactured by or on behalf of the auto manufacturer - have been described as "imitations, "lumpy, kinky and queer," and "kinda like the parts your vehicle was built with" by repairers frustrated trying to make them fit.

Dick Strom

The only truly Like Kind and Quality parts available are those OEM parts produced by or on behalf of the automobile's original manufacturer. No matter what insurers and manufacturers of imitation parts may insist, everything else is something less. The only reason the purveyors of imitation parts do the robust business they do in the U.S. is that insurer cost-cutting is driving their use; manufacturers of imitation parts have no incentive to improve the quality of these parts because they know insurers will force their use against the better judgment of nearly all shops. Were imitation parts forced to stand on their own merits, their manufacturers would have forced themselves out of business years ago, and conscientious shops wouldn't be fighting them today.

Cost-cutting over OEM pricing is the incentive for insurer insistence on using imitation parts. An excerpt from attorney Bruce Cornblum's Dictionary of Auto Body Repair Law points out: "A schedule included in the record in Berry v. State Farm revealed that from 1984 to 1994 State Farm saved a total of $1.25 billion dollars by using non-OEM parts." Interestingly, while visiting a collision shop in Wales, the owner told me insurers in that country write for OEM parts exclusively because insurer experiences there with specifying imitation parts have been so sour. Maybe this same experience will eventually trickle down to insurers in the U.S.

Apparently, having to admit they were wrong all along in their adamant promotion of the glories of imitation parts is too bitter a pill for insurers to swallow. It's tough for insurers to admit they were wrong in promoting/forcing use of imitations, but it's the right thing to do, and way overdue.

Usual and Customary

Apparently, insurers have taken this term from one they use in limiting medical billing - usual, customary and reasonable (UCR). According to Lawrence Gelb, CEO of CareCounsel, a company that assists employees in resolving insurance claims, "There is no regulation for determining what is usual and customary." A representative for American Health Insurance Plans stated, "Insurers use various methods in determining the UCR for any given procedure in any given market - one insurer's UCR may be different from another's UCR."

But Donald Palmisano, former president of the American Medical Association, hit the heart of the problem; "Insurance companies have so much power, they can tell physicians to take (their fee) or leave it." Insurers would tell us that usual and customary fees, rates or procedures are those charged for by others in the field.

But the usual and customary debate hits a wall when we question how any insurer who doesn't regularly and in an unintimidating manner survey all shops in any given area determine what is usual and customary for shops in that area? And what does so-called "usual and customary" have to do with reimbursement for services rendered? Not all shops do the same quality of work, use state-of-the-art tool and equipments, employ the same caliber of technicians, and the like. Other than for reasons of insurer cost-cutting, usual and customary amounts to nothing but bottom-of-the-barrel insurer economics.

"Reasonable & necessary" is the standard to which all collision repairs should be measured. Consumers don't benefit when the best service providers are not able to command a better rate for their better service. Nor do consumers benefit when the price of the product is the sole decision-making factor taken into account, without deference to other factors such as quality.