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Friday, 04 January 2019 23:53

In Reverse: Early DRP Programs of the 1960s

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At that time, there was a symbiotic relationship between some shops and certain adjusters, mostly with independent adjusters /appraisers. When a potential customer came into a shop for an estimate, the shop would first try to determine which insurance company was involved. Based on that answer, the shop would know who most likely would be coming out to inspect the damage. The shop would pad the estimate by 20 percent so the adjuster could cut it by 10 percent. The shop got some premium money, the adjuster/appraiser looked good to his superiors, the customer got a quality repair, and everybody was happy.


Another trick some shops used was to keep a bin full of used parts from old jobs. If the shop owner wanted to make a few extra dollars on the job, he would pull an AC compressor or steering rack or something else that “might have been damaged” in the accident and put in a supplement to R&R that part. Another trick was to push for a complete panel replacement including parts and labor, and then fix the panel with some filler.


Shop owners had another trick to garner more insurance company work---“low-ball pricing,” or what lawyers called “predatory pricing.” In the late summer of 1969, a bill introduced by Senator John Sparkman (D-AL) would address those body shops that used “predatory” pricing to carry favor with insurance companies and garner more work at deeply discounted prices.


John Killcullen, general counsel for the Conference of American Small Business Organizations, noted, “Loss leaders (selling one product at a loss and making up the difference with other goods or services, as many shops were doing at the time) is preventing new, independent firms from entering existing markets and forcing other small businesses out of the market.”


Obviously, not every shop was guilty of the aforementioned subterfuge. There were plenty of stand-up shop owners who took pride in their craftsmanship and whose professional reputation were paramount. They took pride in their work and in their industry. Unfortunately, those who were around during that time maintain that under-handed practices were so widespread that they were described as pervasive.

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