Monday, 23 September 2013 10:07

ASA President Risley Writes to State Farm’s Ed Rust Jr. About Parts Mandates

ASA’s Dan Risley has made ASA’s position clear that it is against all forms of direct repair program requirements to use specific suppliers or products. In a letter dated September 11 to Ed Rust Jr., chairman of the board and chief executive officer of State Farm Mutual, Risley commends the U.S.’s leading private passenger automobile insurer for its past decision to eliminate its requirement to use a specific estimating platform by its direct repair shops. The association also acknowledges State Farm’s scoring system that promotes competition among Select Service repair facilities.

However, the association comes out firmly against State Farm’s recent requirement to use the PartsTrader online parts marketplace, stating it will increase a State Farm shops cycle time, negatively impacting customer satisfaction and increasing the insurance company’s costs in the long run.

The letter states, “ASA would like to acknowledge State Farm as one of the first companies in the country to not mandate that a collision repair facility utilize a specific estimating platform. For many years, several top 10 insurance carriers required a specific estimating platform to participate in their direct repair program. In addition, State Farm was one of the first to implement a scoring system that allows Select Service repair facilities to compete against each other in a transparent and real-time environment. These decisions clearly elevated State Farm’s position in the industry as a thought leader and facilitated positive change. The letter continues, “In light of the recent announcement of the national rollout of Parts Trader, ASA is taking a firm stance against insurance company mandates that limit a repairer’s right to choose their vendors, distributors and suppliers.”

ASA includes three suggestions for State Farm to consider as a starting point to address the industry’s concerns.
● Immediately eliminate mandates requiring collision repair facilities to purchase or source parts using a specific third-party vendor.
● Encourage the use of these types of programs on a voluntary basis with a financial incentive.
● Heavily weight your scoring system to reward repair facilities that are leading their respective markets in parts cost, alternative parts usage, length of rental and cycle time. All of which are key operational metrics that drive overall repair costs.