Thursday, 31 July 2003 10:00

Allstate eliminates DRP PRO Shops in Texas

Contending that they need to comply with restrictions placed on them by Texas House Bill 1131, Allstate Insurance Company is introducing a new direct repair program in the state of Texas. The new law, which was passed on June 20, requires Allstate to change its existing relationships with auto body repair shops and provide uniformity between its owned (Sterling Collision Centers) and non-owned auto body repair operations. 

As a result, existing Allstate direct repair relationships in Texas were discontinued as of August 1 and facilities that had DRP relationships with Allstate in Texas were sent applications to enter the new program.
The application gave shop owners and managers the opportunity to send updated information to Allstate outlining the current capabilities of their repair facilities. This information, along with historical Allstate DRP program performance, current Allstate need in the market, and the geographical location of the repair facility, were to be considered in the selection of the new DRP facilities.

Allstate claims they expect most existing Allstate DRP facilities in Texas will choose to join and be included in the new program.

Allstate opposed to legislation

"Allstate vigorously opposed this legislation in Texas," said Allstate Assistant Vice President John Edelen. "These are changes Allstate is being forced to make in our Texas claim strategy to comply with legislation we continue to view as anti-business and anti-consumer. In order for us to guarantee DRP referrals on identical terms for all facilities, it is necessary to create a new direct repair program in Texas."

"Allstate has an obligation to our customers and claimants. We need to ensure our customers and claimants continue to receive high quality repairs in a timely fashion. In order to ensure this customer service and guarantee uniform treatment of each direct repair facility, as required by H.B 1131, Allstate needs to make sure our DRP facilities and capacity are properly dispersed to handle the potential flow of claim traffic," Edelen states.

Allstate is committed to maintaining strong relationships with our direct repair facilities, according to Edelen. "The DRP relationship is an essential part of Allstate's long-term claim strategy and we will continue working to make those relationships stronger."

Field Corporate Relations Manager for Allstate Justin Schmitt stated that "Allstate's motivation is to comply with the legislation, but the company also sees this as a chance to improve the DRP program. As a company we are always looking at ways to enhance our PRO shops and are treating this as an opportunity to create higher performance standards for customers and claimants.

"The new DRP will have a different range of oversight options for the company. Those may include, but are not limited to, electronic audits and repair plan agreements on all estimates and supplements. The law requires uniformity in how we treat PRO shops."

Schmitt went on to state that "all of the Sterling Collision Centers are in urban markets where there's plenty of business to go around. There is a continuous supply of fender benders.

"We do expect most of the shops to be part of the new program, but to some degree it depends on each shop's willingness to participate. Allstate considers DRPs to be an important element of the options they've given to customers for 30 years and that they will continue to play a major role in Allstate auto repairs."

Allstate hoped to have the initial phases of the new direct repair program operational before August 1, 2003 to ensure a smooth transition for Allstate customers, claimants, and direct repair program shops, concluded Edelen.

Body shop manager for Harborside Collision in Galveston, Jack Mundy, stated that although he has received the application to reapply for an Allstate DRP, there is still no information regarding the changes the program will entail. He feels that the discounts Allstate (and other insurance companies) require and the use of aftermarket parts are out of line. "Even though State Farm began approving the use of OEM parts exclusively after being sued, Allstate and others continue to require these parts." He expressed satisfaction at the passing of H.B. 1131 because "no insurance company should own their own repair shops. It is a conflict of interest."

According to Larry Coates, body shop manager for Lewis Paint and Body, Plano, he has no problem with recertifying his shop for Allstate. "As long as they [Allstate] treat everyone fairly, we don't expect any problems."

When asked for a statement, Tom Dance, president of Herb's Paint & Body in Dallas, said: "The statement was made in the Texas State legislature with state organizations fighting for the right of the customers to have their choice. It was a concentrated effort to make the playing field level for the consumer."

Other shop owners contacted either declined to comment or be identified. However, opinions were expressed that with the new program Allstate will no longer be able to arbitrarily send business to Sterling. Sterling will become just one of the options offered to consumers for vehicle repairs and will have to stand on its own in terms of the quality of service they provide.