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Monday, 21 January 2019 17:38

Challenges of Processing Hail or Other Catastrophe Claims Among Discussion at CIC

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David Pinto said he’s concerned that as insurers form relationships with PDR providers, one PDR provider may have to go through a competitor to get a supplement handled. David Pinto said he’s concerned that as insurers form relationships with PDR providers, one PDR provider may have to go through a competitor to get a supplement handled.

Index

With another hail season approaching, a panel discussion at last November’s Collision Industry Conference (CIC) offered insights from shops, insurers and paintless dent repair companies on reducing friction related to catastrophe claims after a major storm.

 

Matthew McDonnell of Big Sky Collision in Montana described some of the challenges of working on such “cat team” claims, such as those managed by a paintless dent repair company. Since 2011, for example, Montana has had a law that prohibits an insurer from "unilaterally disregard(ing) a repair operation or cost identified by an estimating system," but McDonnell said “cat team” claims handlers aren’t always aware of that.

 

“We had to go through that [PDR] company for a supplement,” McDonnell said. “We sent it to them, and they took off a significant amount. They said, ‘We have an agreement [with the insurer involved] and you don’t get paid for those things.’ I had to call them and tell them, ‘We have a different regulation in Montana. You cannot disregard repair operations, and I just want to let you know you’re inconsistent with Montana law.’ They said, ‘Oh, I don’t have to follow Montana law.’”

 

But although some states may waive their licensing requirement for adjusters who come into the states as part of a “cat claim,” they don’t waive the requirement for state laws to be followed, McDonnell said. He said shops should understand what their state requires of those who come in temporarily to assist with catastrophe claims.

 

“Our [insurance] commissioner’s office wants them to register with the state,” McDonnell said. “So they will now follow Montana regulations. It’s $100 [to register]. It’s not like it’s a big thing. But it’s the fact that we’re all playing by the rules. That’s a big deal to me.”

 

Handling Supplements

 

The other panelists at CIC were asked to explain how collision repair shops should handle supplements on cat claim estimates prepared either by PDR companies or insurer cat teams.

“On all of our estimates, you will see an appraiser name and phone number, so that’s usually who we’re looking to be the contact for that car,” Chris Andreoli of Progressive Insurance said.


 

Bo Opansyuk of Hi-Tech PDR said his multi-location company similarly lists an estimator name and supplement direction on the estimate.

 

“If we wrote the estimate, we would handle that supplement internally,” he said. “We have an internal supplement division, and if there’s staff still out in the field, they will do the follow-up visit to the shop to oversee that supplement from the beginning to the end.”

 

Michael Morrison of Catastrophe Solutions International said the subjective nature of hail claim PDR--- based on different providers’ standards and capabilities---results in a lot of unnecessary supplements.

 

“It really shouldn’t be a debate,” Morrison said. “It is a dime-sized dent, so you write it for a dime. You don’t write it for a nickel or a quarter.”

 

But he said that as part of the process of initially working with a particular insurer, he brought in two seasoned adjusters to look at a hail-damaged vehicle.

 

“These were 20-year guys,” Morrison said. “But before they even started writing the sheet, they both looked at each other and were saying, ‘What do you see? Are those nickels? Are they quarters?’ It was a debate, and it shouldn’t be.”

 

David Pinto of PDR Nation said another issue the industry faces occurs when his company is hired by a body shop to handle PDR claims originally estimated by another PDR company that has a contract with a particular insurance company.

 

“So the customer is coming to me, but I have to send my supplements to a competitor,” Pinto said. “I’ve waited several weeks for a claim to get processed because it has to go through my competitor, who has no incentive to put that claim through. They’d rather handle the claim themselves from start to finish. They don’t want someone else having it. So I have concerns about the relationships that are being created. I think the repairers themselves need to be asking more questions as these relationships evolve. It’s very comparable to what’s happened in the glass industry. You know how things have changed in the glass industry. This is what we’re looking at in the PDR industry, and that’s a concern for me.”


 

McDonnell said his company now has PDR technicians on staff year-round but had previously allowed PDR suppliers to use shop space following major hailstorms. He said there are pros and cons of bringing in the outside help.

 

“There are some incredible advantages. It’s hundreds of claims for maybe one carrier, and boom, they’re all in your shop,” he said. “You have the opportunity to fix them [beyond the PDR work]. It’s almost like you can work on one carrier’s cars and you’re busy.”

 

But a potential downside, he said, is if vehicle owners don’t feel like they were choosing your shop, but like they had to use your shop.

 

“They may feel like they were herded in and are just a claim to you,” he said. “When you go through that many customers, it’s hard to give that one-on-one attention.”

 

At Upcoming CIC Meetings

 

Based on input from CIC participants at CIC last fall, attendees at future CIC meetings this year likely can expect a return to the issue of “opt-OE” and “alt-OEM” parts. It was a topic discussed at several CIC meetings in 2016, at a time when the California Bureau of Automotive Repair (BAR) announced that the unclear or inconsistent use of “alt-OE” or “opt-OE” designations meant the terms could no longer be used on customer estimates or invoices in that state without providing additional information about such parts, including what warranty they carry.

 

That hasn't appeared to slow the use of such parts; a Farmers Insurance executive last year said his company paid for 200,000 “opt-OE” parts in a recent 12-month period, just 50,000 fewer than the number of used parts it paid for during that same time.

 

The BAR more recently codified its rule that all parts must be identified only as new, used, rebuilt, reconditioned, OEM or non-OEM. Speaking at CIC in November, Scott Biggs of Assured Performance Network said it really should be an inter-industry entity like CIC that addresses the confusion about “opt-OE” and “alt-OE” parts.


 

“Are we going to let another body figure this out, or are we going to get our heads together and come up with a better plan and start pushing it out to the legislators or [regulators]?” Biggs said. “We talked about this literally two years ago, [but] nothing has been done about it. So we waited for the BAR to do it. We can do better. This ought to be one of our principal objectives to address.”

 

Ken Weiss of SSF Imported Auto Parts agreed that the industry needs to standardize part type definitions.

 

“We have three estimating platforms and several parts procurement portals, and they all call the same parts something different,” Weiss said. “I push our parts to a third-party administrator, and it’s like sausage: I have no idea how they will come out [described] on the other end. And I’m not necessarily happy with how they come out.”

 

The next CIC meeting will be held April 17--18 in Nashville, TN. Check the CIC website (www.CIClink.com) for details. Tours of Nissan’s assembly plant in Smyrna, TN (where the Altima, Maxima, LEAF, Pathfinder and Rogue are produced), are being organized in conjunction with the meeting. Visit https://tinyurl.com/NissanTour to register.

 

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 john@CrashNetwork.com.

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