Friday, 31 October 2003 17:00

OK shop owners start grass roots campaign against steering

There's good news for Oklahoma body shop owners who want to take immediate action to stop the steering they believe is rampant throughout their state. A grassroots group of shop owners has started an effort to get anti-steering legislation put on the books. Representative Bill Paulk (D-District #92) agreed in late October to sponsoAutobody News - Administration [Joomla]r the bill when the legislature meets again in the spring of 2004.

Larry Moore, owner of Midwest Customs in Oklahoma City, is quite outspoken about the problems facing the collision repair industry in his state. He has been a small business owner for over 30 years in Oklahoma, having had shops with lots of employees, but now runs his business by himself, with his wife Rae. Moore runs a wrecker service as part of his collision repair business. Being in the wrecker business offers a unique insight into insurance company activities because the drivers actually get to see and hear what the insurance companies say to their customers almost from the first moment of an accident.

Moore's business is located right next to a major highway, I-40, and for 30 years when called upon by the state police, his wreckers would tow vehicles off the Interstate and bring them to his yard.

Owners of the towed vehicles would be told they could have the vehicle towed to a body shop of their choice, but if they didn't have a preferred shop, he would like the opportunity to fix the car. Those without other allegiances were often agreeable to having repairs done at Midwest.

Instant communication with insurer

Before mobile phones, Moore's wreckers would often respond to an accident even before the highway patrol arrived. Now people are on the phone talking to their insurance companies before even calling the police - at the encouragement of the insurance company, says Moore. The insurance company will then show up at the accident scene and take control of the car repair, using "word tracks" to get insureds to comply with their wishes.

What the body shop owners want is the right to compete fairly to repair the towed vehicle without the insurance company unduly pressuring the customer to take it elsewhere.

Few shops get all the work

According to Moore, his research shows that there are roughly 258 body shops in the Oklahoma City metropolitan area. He says the insurance companies send their work to only 3% of the body shops. Even independents who participate in DRP relationships are not getting the work according to Moore.

Moore claims that shops are not evaluated on space, equipment, knowledge, and experience, but on who you know at the insurance companies and what concessions you make. While Moore says he cannot prove all of his allegations, it is hard not to see that steering is taking place if only a few shops have most of the work.

Oklahoma currently legislates that customers can patronize the shop of their choice and insurance companies cannot require any kind of repair work to be done at an insurer's chosen shop. But lacking any penalty, there can be no enforcement.

Moore and his colleagues are encouraged by the successful passage of anti-steering bills in California and Colorado. Representative Paulk's staff will be reviewing those bills and others as they draft language for Oklahoma's legislation.

Moore is pushing for strong language and penalties in the new law. He's adamant that any new law must include the provision that repair shops and wrecker services are not permitted to offer any incentive of any kind for the purpose of getting business. As an example, he says if the body shop tells the insurance company they can store all the cars they want for free, that is an incentive for that shop to get the repair work and defeats the purpose of leveling the playing field.

Successful grassroots effort

Grassroots efforts have had success in Oklahoma on small business issues. Several years ago, the Oklahoma Wrecker Owners Association fought against a $10 tax that was collected from customers on every vehicle that was picked up by order of a law enforcement agency. The tax put quite a burden on the wrecker owners because they had to collect and be responsible for remitting the tax and, in some cases, the owners were then audited to ensure the tax had been properly collected - all this for a $10 tax!

Chris Puckett, a fourth generation body man and owner of Puckett's, the oldest body shop in Oklahoma City, as well as a wrecker service, was president of the state wrecker operators association. Puckett launched a successful campaign to get the tax rescinded. Puckett called all the wrecker services throughout Oklahoma and instructed them to contact their representatives and request that the tax be removed. By calling their representatives and explaining the hardships they were having in general, and with the tax in particular, they were able to engender support for their cause.

Legislators often operate on the "squeaky wheel" principle, says Puckett. They respond to constituents who express their opinions the loudest. By sharing their stories and creating empathy among the legislators, the House voted unanimously to drop the tax, with the Senate following suit with nearly 100% approval.


What's happening now?

Body shops in Oklahoma are suffering from attrition, down from 1,120 in 2001 to fewer than 800 by September 2003. What needs to be done now, according to Moore and Puckett, is to enlist all the remaining shops in the campaign to pass an anti-steering bill.

Not only body shops stand to gain from this effort, they say, but any business where steering is possible, such as glass shops and paint suppliers, would benefit from a fairer business climate.

When Colorado ran into a brick wall trying to get its legislation passed, Automotive Services Association (ASA) stepped in and organized a campaign to get all the small shops to write to their legislators, who were melted by their tales of hardship in keeping their businesses running. When legislators became aware of the intense need for this anti-steering bill, it passed with only 10 nay votes. Now that Representative Paulk has agreed to sponsor the bill, ASA may take a role in Oklahoma.

Moore believes the time is now for the passage of anti-steering legislation. "The pump is primed with the success of the Colorado bill. Right now is the perfect time to push for this legislation. Even the DRP shops are not getting work and they are upset about this, increasing their willingness to join the fray," said Moore.

"Did you know that most body shops in Oklahoma no longer advertise in the Yellow pages? With such an unlevel playing field, it is not even worth the money to advertise there," he continued. "Steering is a violation of the free market system. Shop owners just want to run their businesses without interference. Constituents must call their representatives and tell them their horror stories, or that they are going out of business."

Moore concludes: "The people of Oklahoma have got to stand up. The time is right to speak up if you are for the free enterprise system. Just recently President George Bush stated that the playing field must be leveled for small business. We just want fairness.

"If all it takes is a couple of phone calls from you to your legislators to save your business, wouldn't you be willing to do that?"

Personal examples

Chris Puckett has seen many times just how powerful insurance steering can be. When a Mercedes belonging to his cousin's daughter was hit in the side, she was told by the other driver's insurance company to go to a particular shop for an estimate, which she did. Her own insurance company told her to go to another facility.

At this point she told them she wanted to take the car to Puckett's. She was told that they don't do body repair, which she knew, of course, to be blatantly untrue. The agent then told her that the $1000 deductible could be covered if she took her car to a repair shop that belonged to a good friend of his. Because she was informed, she did not buy into this "coercion."

Another customer of Puckett's called for answers to questions about the repair process even though she was directed to take her Jeep for repair at a different shop. She had enough confidence in Puckett's to feel comfortable making the call, but both would have been better served had she known about her right to make her own repair choice.

"And, in reality," Puckett stated, "shop owners would rather have their customers choose them for the quality of work and customer service than have customers who are forced to use their services."

"There is also a sense of urgency to get the bill drafted by December 1," Puckett points out. "Even though the legislature doesn't reconvene until spring, a rough draft with author must be ready when numbers are assigned in December."

Puckett will be involved in the grassroots effort to contact legislators and muster support among the ranks of the body repair shop owners. He points out once again that "the desire is for a level playing field. No one is asking for an unfair advantage."

Referral vs. steering

Gary Wano, Jr., owner of GW& Son Autobody and a politically active member of the auto body community, emphasized the difference between referral and steering. He stated that, "In the state of Oklahoma, there are a few insurers that take the referral process to another level, if you will. There is a difference between an insured calling the insurer for a referral and the insurer physically removing a car from a facility to which a consumer's car has been moved. Insurers are directing the insured to pull the vehicle even after it is in the shop and a work order signed.

"We want to get rid of the activity in this state whereby an insurer is strong- arming the consumer by withholding benefits or creating the fear that benefits will be withheld."

Putting legislation in place is just the first step, Wano points out. "Eventually we will have to educate the consumer, also on a grassroots level, that there is a remedy for strong-arm tactics by the insurer. If consumers don't understand that they have the right to say no, they are still going to comply with what the insurance company wants. So consumers must be educated.

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