Monday, 11 August 2008 12:08

At CIC Shops and Insurers Discuss Potential Reforms to DRPs

Whether insurer direct repair program (DRP) requirements and guidelines should be published, and whether a single person within an insurance company should be able to control whether a particular shop is allowed to participate in that company’s DRP, were among proposed reforms discussed in July by a panel of insurer, shop and association representatives.
Organized by the Collision Industry Conference (CIC) Fair Trade Practices Committee, the panel discussion took place at the CIC held July 23 in Scottsdale, Ariz. Panel moderator Scott Biggs of Assured Performance Network emphasized that the panelists did not necessarily write nor endorse the proposed DRP reforms, but were merely there to express their opinions of them.
Concern about what determines which shops participate in a particular DRP has some in the industry suggesting that an insurer’s decisions about which shops are selected or removed from its DRP in any market should be made by a “board of independent individuals that cannot have a close enough relationship with a shop to gain any…gratuity.” The proposed reform, Biggs said, also calls for insurers to rotate area staff so that “no single person has long-term authority over any one shop.”

The response to the proposal was mixed among the insurers on the CIC panel. Chris Evans of State Farm said as improved data helps the company make its program more performance-based than “relationship-based,” it becomes more difficult for a “rogue manager” to make decisions about a shop’s participation in the program for other reasons.

            Randy Hanson, manager of Allstate’s PRO program, said that “if the structure creates a situation where there could be abuses, we’d want to look at the structure.” Hanson said Allstate redesigned its program about five years ago so that its reinspectors going into shops don’t make decisions about which shops participate in PRO. But Michael Lloyd of California Casualty dismissed the proposal.
            “I believe this isn’t going to be popular, but my opinion is that it is our business and I don’t think we should be dictated to as to how we should operate,” he said.
            Dan Risley, executive director of the Society of Collision Repair Specialists, said several of the proposed reforms that would make shop selection criteria and program guidelines more publicly available would eliminate some of the most common complaints he hears about DRPs from shops. Too often, he said, shops don’t know if the “moving target” DRP shops are given by the insurer are national mandates from the company or just the “flavor of the day” for a local or regional manager.
            Almost all of the panelists had some concern with a proposed reform that any “increase in volume of referrals (to a shop) be based on performance.” All agreed customer choice of shop needs to be honored. Risley said participation in the program – not necessarily referrals – should be based on performance. And panelist Gary Wano of G.W. & Son Auto Body in Oklahoma City, Okla., questioned how an insurer knows the best performers in a market if the performance of shops not on that insurer’s program isn’t being tracked.

Repair standards by SAE?

After compiling what it sees as the various existing elements of “repair standards” in the industry, the CIC Repair Standards Committee is considering contacting SAE International (formerly the Society of Automotive Engineers) for assistance in creating a formal set of standards.
 “CIC is not a standards-setting body, but SAE is very well known as a group that does establish standards,” committee chairman Tony Molla said. “Engaging an organization like SAE would bring a level of credibility to this process.”
The idea was brought to CIC by Jeff Patti of Amica Insurance. He said he believes the Uniform Procedures for Collision Repair (UPCR) developed but largely shelved by I-CAR in the late 1990s could serve as the basis for SAE-developed repair standards.
 “Hopefully we can put something together in the next couple years that will minimize the amount of friction between insurance carriers and collision repairers,” Patti said.
Although a decision as to whether the CIC committee continues – and who will chair it – would traditionally not be made until CIC holds its biennial planning session under a new chairman in January, it appeared at the July meeting that Patti had been selected by outgoing CIC Chair Stacy Bartnik to lead the repair standards effort. Several committee members said that while they support forward movement on the development of standards, they felt some of the apparent decisions about committee leadership and direction were made in an “unprecedented” way.
 But those decisions aside, Doug Craig, collision repair manager for Chrysler and chairman of the SAE Collision Repair Subcommittee, said the announcement at CIC was the first he’d heard of an interest in approaching SAE, and he expressed doubt that repair standards were a project SAE would take on.
 “One of the problems with my committee is trying to get repair procedures out of the OEMs,” Craig said. “Understand the OEMs are concerned about liability.”

Other news at CIC

In other news and discussion at CIC in Scottsdale:

 – The CIC Education and Training Committee said that information and links to about 30 shop management and technical training providers can be found on its new website (www.Education1Stop.com).
 – The Repairer-Insurer Relations Task Force received approval for its two-page best practices guidelines outlining “in general terms, what can be expected of the collision repair process, from the time the incident occurs to the complete and safe repair of the vehicle, through vehicle delivery to the consumer and closure of file.” The document is available at CIC’s website (www.CIClink.com).
- As part of his regular technical presentation during CIC, Toby Chess worked with State Farm and local firefighters to arrange for a demonstration of rescue extraction procedures outside the CIC meeting room during the meeting.
 - A moment of silence was held in honor of Sal Donzella, a former New York shop owner and industry activist, who died July 18 at age 80. Donzella was well-known for his frequent articles in the industry trade press; for his work on behalf of the Westchester-Putnam-Rockland Autobody Association in New York; and for his dogged efforts – including at CIC – to have improvements made in the estimating databases and systems used in the industry.
- Russell Thrall III, publisher of CollisionWeek and interim associate director of the I-CAR Education Foundation, was named chairman of the Collision Industry Conference (CIC) for 2009. Thrall, who was selected by the past chairs of CIC, succeeds Stacy Bartnik of CARSTAR who has led CIC in 2007 and 2008. She will chair her final CIC meeting on November 4 in Las Vegas, and Thrall will lead CIC’s first meeting of 2009, being held January 14-16 back in Scottsdale, Ariz. 
            John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (www.CrashNetwork.com). He can be contacted by email at jyoswick@SpiritOne.com.