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Southeastern News

1HomePageMap small se 0816Local news stories affecting the auto body industry in Florida, Georgia, Alabama, Mississippi, North Carolina, South Carolina, Virginia, Tennessee, and West Virginia

Mississippi lawmakers could require insurers to disclose how much they collect in premiums and how much they pay in claims in each ZIP code, under House Bill 753. The bill could spark more debate over how much coastal homeowners are charged to cover against hurricanes, as well as make it clearer what areas private wind insurers are avoiding. The House Insurance Committee passed that bill, as well as House Bill 756, which would regulate when insurers can charge homeowners a hurricane deductible. Both go to the full House for more debate. The disclosure measure, called the Clarity Act by its supporters, is modeled after a similar law that was passed in Alabama. There, an initial round of disclosure has shown coastal homeowners have paid far more in premiums than they got back in claims in recent years. “Our suspicions were that we were being overcharged on the coast and we got very clear confirmation of that,” said Stan Virden, a Gulf Shores, AL, man who is active in a group called the Homeowners Hurricane Insurance Initiative.

Many of those homeowners end up buying policies from the state-sponsored Mississippi Windstorm Underwriting Association.

North Carolina auto insurers say no rate increase is needed for auto insurance policies in the coming year. Insurance commissioner, Wayne Goodwin, said the Department of Insurance has received the annual auto insurance rate filing from the North Carolina Rate Bureau. The Rate Bureau, which represents the auto insurance companies writing business in the state, submitted a filing on January 31, 2014, that requests no change in rates for private passenger car and motorcycle insurance policies for the coming year.

The rates currently in effect are the result of a rate cut and freeze initiated in 2009 that lowered car insurance rates to just below 2006 levels and required insurers to issue US$50 million in refunds. Rates have not gone up since then.

“The fact that today’s car insurance rates are no higher than they were in 2006 shows that North Carolina continues to have a strong and stable auto insurance market,” Goodwin said. “In North Carolina, we have more than 150 active auto insurance companies competing for our consumers’ business, and we have some of the lowest average rates in the country.”

According to the National Association of Insurance Commissioners, North Carolina has the sixth-lowest average auto insurance costs in the nation.

The current filing will be reviewed by the insurance department. Additionally, the department said it is reviewing the auto insurance territories, which is required to be done every 10 years under state law.

The North Carolina method of setting automobile insurance rates is unlike any in the country. Instead of each insurer filing their rates separately with the state Department of Insurance, all 160 companies operating in the state file their rate requests with the North Carolina Rate Bureau. The bureau in turn proposes a statewide base rate on behalf of the companies, which must be approved by the insurance commissioner.

Companies can only adjust individual policies by offering safe driver and other discounts, along with dividends.

There have been some legislative attempts to change the rate approval system, but, because of the low rates and opposition to change by some insurers and Goodwin, the attempts have been thwarted.

In January 2013, changes to Florida laws governing personal injury protection (PIP) coverage in automobile insurance policies went into place. The law was intended to limit fraudulent insurance claims that were reportedly costing the state nearly US$1 billion annually in the form of increased insurance premium rates. Once in effect, the revised rules limited claims on PIP policies that were not brought in a timely fashion (within 14 days) of an accident. Furthermore, to receive coverage, injuries resulting from car crashes need to be treating by an accepted medical care provider like a doctor, dentist, paramedic, or chiropractor. Claims for injuries that were not treated by an acceptable provider or within the 14-day time-frame could be denied.

One year from the date when the reformed PIP rules went into place, the Florida Office of Insurance Regulation estimates that auto insurance premiums around the state should drop an average of 13.2 percent because of the decrease in fraudulent claims. Prior to the passage of the law, the National Insurance Crime Bureau had listed several Florida cities as having among the highest number of questionable PIP claims in the country.
Background

Florida, like several other states, is a no-fault insurance state. This means that, should injuries result from a car accident, each driver’s car insurance will be responsible for his or her injuries, regardless of fault in the accident. For example, if Bill is driving his car and runs a red light, striking Jane’s car, Bill’s insurance will be responsible for covering his injuries, while Jane’s insurance will cover her injuries, even though Bill caused the accident. This is not to say that legal actions are not allowed in car accident claims, just that immediate medical care is typically funded by each driver’s PIP coverage.

Logically, the no-fault system makes sense, and it should be a relatively easy way to sort out payment issues following an injury-causing car wreck. As designed, no-fault insurance reduces delay claims by the injured policyholders and allows payment issues to be settled without the need for lawsuits. Unfortunately, there are issues related to no-fault and PIP coverage that were not easily foreseen by legislators.

Supporters of the new, stricter PIP rules say that the old system lent itself to fraud by not having sufficient time constraints on injury claims or by limiting the types of providers. They say that allowing relatively unregulated industries like acupuncture and massage therapy be counted with established, “legitimate” care providers for PIP payment purposes, and by not placing a reasonable time limit on claims, the state was all but endorsing fraudulent claims.

The ongoing insurance fraud investigation known as ‘Operation Leaky Pipes’ has led to the arrests of 12 Miami, FL residents, according to an announcement made by CFO, Jeff Atwater. The investigation uncovered a scheme between a licensed public adjuster and a plumber to coach homeowners on how to file fraudulent insurance claims for preexisting or non-existent water damage. The homeowners filed fraudulent claims in an attempt to claim money for home remodeling. “These 12 individuals tried to cheat the system and now they have to face the consequences,” said Atwater. “The National Insurance Crime Bureau (NICB) works with its 1,100 member companies and law enforcement to identify, investigate, and deter insurance fraud that impacts the American public,” said NICB director, Dennis Russo. “The NICB values our partnership and working relationship with the Florida Division of Insurance Fraud.” The Florida Division of Insurance Fraud detectives obtained sworn confessions from all 12 named homeowners. They were arrested and transported to the Miami Dade County Jail for processing. Although the homeowners will be charged individually, the scheme in total resulted in a loss of more than US$175,000 to insurers.

Gunder’s Auto Center owner, Ray Gunder, is traveling throughout the country speaking with auto body repair owners about the most pressing issues facing the collision industry.

Gunder has become a guest speaker at many industry seminars and conventions throughout the United States. He spoke in Michigan and will be speaking again in April 2014 in Mississippi at the Southern Automotive Repair Conference on topics such as consumer safety and protection, insurance company steering tactics, bad repairs, insurance company collision repair shops, and current law suits filed by consumers against insurance companies for failure to pay for proper repairs.

“It is time we take back control of our shops by breaking the control the insurance companies have had over the auto industry for many years. We need to stop seeing the body shop across town as an enemy, but as an ally in the industry since we are all fighting the same fight,” said Ray Gunder.

In addition to his speaking engagements, Gunder and his wife, Deanie, formed the non-profit, One Voice, a group of independent auto body repair shop owners, attorneys, and others connected to the auto collision repair industry in June 2013. The non-profit was formed to bring these leaders together throughout the year to discuss industry issues and work together to change the way insurance companies contract with auto repair centers.

Founded in 1969, Gunder’s Auto Center has been serving fellow Lakeland, FL community members and the central Florida area for over 40 years.

The Gunder’s also formed the Auto Angel’s Car Give-a-Way, bringing together many other shops, vendors, and the industry to give Christmas vehicles to the needy.

Gunder’s Auto Center is located 930 Griffin Road, Lakeland, FL, 33805.

“I heard Mobile’s first responders’ overtime budgets were used up [during winter storm Leon that blanketed the southeast],” said Greg Cole, district manager who oversees six of the 15 Cockrell’s Body Shop locations. “I thought, ‘What can we do?’”

Cole was well aware of the impact of the storm. Cockrell’s Auto Body saw between 30 and 40 vehicles at their six locations as a direct result of the storm. Local media called other shops and heard similar numbers. Cole said most of the damage has been superficial.

“A lot of the cars that have been brought in have just had small bump and dents,” Cole said. “We’ve had a few tow-ins that spun around on the road and had some suspension damage so they couldn’t drive. But most of them just have small bump and dents.”

Cole says that, thankfully, no one was hurt in any of the vehicle accidents Cockrell’s serviced.“We can fix the bodies on the cars, but we don’t want anybody to get hurt,” Cole said.

What Cole realized was being hurt was the budgets for the responders. The city needed help.

Cole approached his manager, Jody Johnston, with an idea to use some of the company savings to help support the city overtime budgets, which are stretched during natural disasters like the ice storm that paralyzed Mobile for more than 24 hours.

The company presented Mobile mayor, Sandy Stimpson, with a US$12,000 check—representing two percent of the company savings during the month of January 2014—and promised two more months of financial support that will be earmarked for overtime expenses.

“This is something we’re grateful for,” Stimpson said during a news conference at the Cockrell’s Body Shop at 108 East I-65 Service Road North in Mobile, AL. “We have Mobile heading in the right direction financially, where we have people stepping up.”

The donation comes as the Stimpson administration continues to push for private-public partnerships highlighted with a donation in late December 2013 by auto dealer Dean McCrary of DeanMcCrary.com for approximately US$11,000 that was used to pay for the fireworks display during MoonPie Over Mobile.

McCrary’s donation, which was forwarded to Events Mobile, Inc.—a non-profit entity that handled the planning of the annual New Year’s Eve event—came after the Stimpson administration decided that taxpayers were only going to fork over US$7,500 for the fireworks show instead of the approximately US$18,000 cost in years past.

“It set a tone for maybe what other Mobilians can consider doing,” Stimpson said. “There are a lot of things they can consider doing for our city. I hope it begins a movement.”

Interim Mobile Fire-Rescue chief Paul “Randy” Smith said that the private support is definitely something that can be used for a department that is trying to shore up overtime costs. The Fire-Rescue Department spent US$250,000 on overtime during the three-day ice storm event.

Other departments are also being mindful of overtime costs. Police Chief James Barber, said that police patrols will be lighter during afternoon Mardi Gras parades this year in an effort to cut back on overtime during the city’s carnival season.

“We’re happy we have citizens like this and businesses in the city willing to step up,” Smith said.

Private-public partnerships helping to pay for public services is nothing new, but the practice has become an increasing trend in the U.S. as city governments struggle with deficits and budget cuts.

For Mobile, the push to generate more public-private partnerships comes as the city battles its own budget issues, which includes a US$4.4 million deficit for fiscal year 2014. Plans on how to reduce the deficit are likely to be unveiled soon.

Those plans are likely to include more ways to reduce overtime and other personnel expenses.