Friday, 31 October 2003 17:00

Allstate institutes new DRP in Texas

When HB 1131 was signed into law in Texas, it required that companies with an ownership interest in auto body repair facilities provide for equal referral of work to their owned and non-owned facilities within DRP programs. In order to be compliant with the new law, Allstate was forced to evaluate the make up of the current DRP program, which included owned and non-owned facilities. And the program was redesigned to help ensure that Allstate is complying with the new law. 

Allstate continues to believe that the law is inherently unconstitutional and raises significant constitutional questions towards the ability of a company to compete in a free and open market in Texas.

Allstate spokesperson Bill Mellander explains that "the legislation quite clearly puts constitutionally questionable restrictions on Allstate's First Amendment right to free speech. HB 1131 inhibits Allstate from providing honest answers to customer questions about the best available repair option available to the consumer in that the law restricts us or forbids us from honestly and truly telling customers that Sterling is the best available option to them, if they ask.

"Having said that and, unless the law is overturned, once HB 1131 was signed into law, Allstate acknowledged the need to be compliant with the law as it is written. Allstate sent notices to all DRPs in Texas announcing that as of September 1, 2003, existing DRP relationships in the state of Texas would be cancelled and a new program started. All current DRPs were encouraged to apply to the new program."

Shops were reevaluated

In order to select the new DRPs, Allstate looked at certain criteria including the capacity of a shop, the capabilities of a shop, and the geographic location of the facility. "Obviously if we were going to provide equal referral to all DRP facilities, it was important for us to make sure all DRPs were situated accurately within our claim volume," Mellander continued. "Since the new DRP relationship is different from other programs nationwide, the program has discontinued the use of the name "Pro" in Texas to avoid misinterpretation."

Now that the program is up and running, Allstate states that the response it has received from DRP facilities to this point has been extremely positive in terms of referral and their relationship with Allstate. Sterling shops have been given very positive response from their customers.

"There are questions surrounding the legality of HB 1131 in general and the impact that has had on our DRP structure in general in Texas. This is a realignment that Allstate believes was not necessary but, to the best of our knowledge, shops involved in realignment are pleased," Mellander concluded.

Body shop reaction

Darren Huggins, body shop manager, Huffines Collision Center, Lewisville, Texas, characterized the program as "different." Under the Pro plan, the body shop took in the car, wrote the estimate, put the car to work and completed the repair.

"Now an Allstate coordinator comes to the shop and writes the estimate before the repairs can begin. While it may slow down the repair process a bit, it has some advantages. The coordinator makes decisions about pre-existing damage - yes or no - right on the spot and that lets the body shop off the hook.

"The program has only been in effect for a short time, but I anticipate that it is going to be all right. It may even go back to the way it was in terms of the shop writing the estimate eventually. It's a transitional time and I am optimistic," said Huggins.

Other shop owners said they have not experienced any changes in their relationships with Allstate.

When asked how the new program was working out, Curt Meredith, body shop manager for Acme Frame and Body Shop in Amarillo, Texas, simply stated, "no changes, business as usual."

"The program is just like it was before. We're doing the same thing we've always done. Allstate made some changes but they didn't affect us in the Temple area, as both of the previous DRP shops are still on the program," offered Bill Metcalf, owner of Temple, Texas, Autobody Clinic.

Lawsuit update

Allstate's suit against the state of Texas was moved from state court to Federal court, but no other activity has taken place at this time. No hearings have been set.