A number of the associations reporting on efforts they are making to work with state regulators to address issues and concerns. James Brown of the Houston Auto Body Association, for example, said the association successfully pushed the Texas Department of Insurance to conduct a 4-page survey of five top insurers in that state, asking questions about labor rate determination, shop referrals to consumers, DRP agreements, reimbursement caps or thresholds and other claims practices by the insurers (see cover this issue.)
Brown said the survey was prompted by a petition circulated by a handful of Texas shops asking the Insurance Department to request claims processing procedures and information from the insurers.
Larry Cernosek, owner of Deer Park Paint & Body in Pasadena, Texas, a member of the Houston association, presented the petition to the Insurance Department, and helped review drafts of the survey questions. He also filed an Open Records Act request with the Department to receive copies of the responses.
Also at the Dallas meeting, Montana shop owner Bruce Halcro, president of the Montana Collision Repair Specialists, said among that group’s activities is an effort to educate regulators about the issue of paint capping, and to change how shop estimators are categorized in terms of workers’ compensation insurance premiums. Halcro said premiums for insurance company estimators are 26 percent of those charged for shop estimators, and the association believes the risk of on-the-job injuries —and thus the rates—for both types of estimators should be comparable.
“How can my estimator be a higher risk doing the exact same thing as someone who is driving around town all day when my estimator spends all day in an office,” Halcro said.
Associations address legislation
Legislation also continues to be a key focus for many of the associations meeting in Dallas. Janet Chaney of the Iowa Collision Repair Association said that group plans to take another run in 2011 at legislation addressing the issue of shops not being reimbursed for state sales tax paid on paint and materials purchases.
Judell Anderson of the Alliance of Automotive Service Providers (AASP) of Minnesota said her group would likely push similar sales tax legislation again in her state this coming year. She said the association was successful this year in getting language on the issue included in both the state House and Senate tax bills, but it was opposed by the Governor who viewed it as a new tax, something he’d pledged not to allow. The association argued it was not a new tax; shops currently pay tax on the wholesale cost of materials but cannot collect it at the retail level because they charge for materials on a per-labor-hour rather than itemized basis. But Anderson said she feels confident last year’s effort has set the groundwork for success on the issue in 2011.
Jordan Hendler, executive director of the Washington Metropolitan Auto Body Association (WMABA), said the association is pleased with changes it helped craft to total loss regulations in Maryland. Repair costs related to paint, plastic parts and other “cosmetic” aspects of repair no longer must be included in the salvage calculation under a new law that went into effect this past October. Two years ago, the state mandated branding of a vehicle’s title when repair costs exceeded 75 percent of the vehicle’s value. The new law passed earlier this year excludes the cost of towing, storage or vehicle rental from the calculation, as well as a list of “cosmetic” items worked out by Maryland’s department of motor vehicles, state police, insurers and the WMABA.
“It’s going to save a lot of cars from being totaled,” Hendler said.
Hendler said she expects the association will also have to fight (as it did successfully this year) an effort in Virginia next year to raise the threshold of damage requiring a flood-damaged vehicle to receive a branded title from $1,000 to $5,000.
Hawaii shop owner Madison Spotts, representing the Automotive Body Painting Association of Hawaii, said the group in 2010 successfully defeated legislation introduced in that state related to the use of salvaged airbags. The bill, which was crafted based on model legislation approved by the National Conference of Insurance Legislators (NCOIL) in 2009, would have established criminal penalties for fraudulent installation of an airbag, and would have required shops to maintain detailed records of airbags they purchase, sell or install.
Spotts said the association was concerned that the legislation also set forth guidelines regulating – and some would say endorsing – the use of salvage airbags. Auto recyclers were also opposing an important clause in the bill that would have required anyone installing a salvage airbag to place a permanent label on the vehicle’s dashboard indicating that a salvage airbag had been installed.
Spotts said she thinks proponents of the use of salvage airbags saw Hawaii as a potential “easy state” to get such legislation enacted in, so its defeat was particularly important, she said.
Discussion of data privacy
In addition to association reports like these, Aaron Schulenburg, executive director of SCRS, discussed in Dallas some of the association’s recent and future efforts on a national level. Privacy of a shop’s estimating and management data is becoming more of a concern, he said, as the information providers move toward “cloud computing,” in which that data is stored remotely on the provider’s computers rather than the shop’s. Schulenburg said the association is hearing from more and more shops concerned that the privacy agreements with vendors do not seem adequate to address this issue.
“In addition to protecting the shop’s customer data, we also have to be concerned about our own shop data being compiled and potentially used against us,” Schulenburg said.
Fred Iantorno, executive director of the Collision Industry Electronic Commerce Association (CIECA) and a guest speaker at the SCRS event, said implementation of CIECA’s “BMS” standard would give shops more control over which of its data it shares with other parties. Currently, he said, the major estimating system providers use a different standardized format (“EMS”) to transfer data from the estimating system to the shop management system, insurer or other vendors.
Under EMS, Iantorno said, virtually all of the information from an estimate is transferred. But the BMS standard would enable a shop, for example, to transfer only the parts data from an estimate to the parts vendor. It could also potentially save shops money by making possible true freedom-of-choice of estimating system, and potentially eliminating the need for rekeying data into other systems for CSI, paint and parts ordering, etc.
Iantorno said the information providers say they have not moved to the BMS standard because they have not seen repairers asking for such a change. That’s an issue that SCRS and its state affiliate groups meeting in Dallas discussed trying to address in the coming months.