Thursday, 29 January 2009 03:58

Labor Rate ‘Negotiation’ Leads to Customer’s Policy Cancellation

What follows are extracts from recent email communication between a Southern California shop and a Progressive Specialist. At issue was a late model 7 Series BMW, which the shop insisted qualified for a specialty rate.

[Shop To Progressive Specialist]
In our last conversation I was told you did not have a problem with our specialty rates for high end vehicles. I just need your feedback before I proceed. We employ a higher skilled tech to work on these cars and for our numbers to work we need to charge accordingly. It is our intention to keep the car moving and order parts today. Please let me know what to do about the rate difference so that my supplement is as accurate as possible. In addition we have not raised our door rates as of Jan 1st as planned. I will let you know when we do and we can discuss then.
Thank you for your time,

[Reply from Progressive Specialist]
When I met with you I agreed to an aluminum rate of $95.00 an hour, the specialty rate would qualify for a Ferrari, Lotus, Bentley or Rolls, something truly “specialized”. BMW’s are all over and anyone can repair these cars with no special training with the exception of the 5 series and 6 series that require factory certification to work on in some cases. Porsche, MZ-B, Jaguar, Lexus, BMW and Audis will not fall under a specialized repair category. However if we are dealing with an aluminum or non-typical composite, example fiberglass, carbon fiber or other composite a different rate is warranted. As far as I know the 7 series is sheet metal and we can only pay standard body rate for these cars.

[Shop To Progressive Specialist]
You are wrong. You need further education in collision repair. I will contact you Monday to inform you. I think I can shed some light on the subject. You are confusing exotic and specialty. I will explain the difference.

[Reply from Progressive Specialist]
I am more then happy to let you know Progressive’s stand on this issue but the tone of your last e-mail was pretty disrespectful and I will not tolerate it. I have been professional and courteous to you with every interaction and expect the same in return. Do not bother calling me if you can not accommodate this request. I am not wrong, nor do I need you to further educate me in collision repair.

[Shop To Progressive Specialist]
Email can be that way. Sorry. But I do disagree with you respectfully. We have sent technicians to school with BMW and Mercedes. The repair process is more technically advanced than anything we have seen with other auto makers. I have been to Frankfurt, Liepzig and Munich. I have also been to Detroit and Japan. I can say from experience that our cars listed as specialty take more time and education to repair properly and according to the OEM recommendations. This is what I meant by educating you, by discussing the differences. Also if you look at production numbers over the last 3 years you will see that BMW and Porsche pale in comparison to Toyota, GM and Honda. So they are not everywhere like your email insists. When alumunium repair is involved the rate goes up, even more from our specialty rate. This would also include composite structure such as the CTS-V,Z06 and ZR1 etc.
    Specialty equipment is required to repair a BMW and we have made that investment by spending upwards of $250K. We have also spent over $7K per tech in training. BMW requires a certified technician do the repairs on their cars. We are only using OEM recommended procedures as state law requires. In turn we charge more. I understand you have a job to do. I understand you need to save money. Please remember that the customer should get a quality repair by a qualified technician.
    In regards to the customer, would he be surprised, if I called him and explained that the higher rate of premium he has been paying for his 7 series BMW only pays for repair similar to that of a Honda Civic? Premiums are different for different models. Am I wrong? Should the customer get what he has paid for or should he pay out of pocket to make up the difference? Should the insurance company decide on a substandard repair at an uncertified facility to save money? I can say that we will do a quality repair according to OEM recommendations and state law. We have the education and technical training to do the job correctly. We will also charge accordingly.
    In regards to the statement you made “anyone can repair a Porsche and BMW without any special training.” This is where your ignorance of the issue at hand shows. I mean this respectfully. Apparently you can be a supervisor at Progressive without any special training. I mean this respectfully of course.
    I still would like to discuss how we can resolve this issue. I will proceed with the customer for the remainder of the cost of repair. I will file a DOI complaint with your name on it. I will suggest the customer does the same to recover his funds. I will not negotiate a rate lower than our posted door rates.  We are currently very busy but I am available Mon-Fri 8-5 if you choose to come by and discuss. Please call for appointment.

[Reply from Progressive Specialist]
I understand your technician’s training and if all certified shops were in line with your rates maybe the world would be different, but you can file DOI complaints and name me specifically. The fact of the matter is there are countless shops that are certified BMW repair facilities that charge a labor rate that is reasonable and customary. This is a common labor rate for your region. This is all Progressive Insurance will authorize.
    This is a free market, you can charge any amount you see fit, however there are lots of choices for customers in all aspects of our lives, that’s the beautiful thing about being an American. If the customer wants you to repair the car at a higher rate, that’s perfectly fine but keep in mind that the reason the public gets premiums raised is mainly because of the always increasing charges from repair facilities.  I think we can argue this and possibly never agree and that’s not what I am here to do so we can safely agree to disagree. The short of it is I cannot authorize any rate increase for you. We will pay $45.00 per hr. for body rate and if we have an aluminum repair then you are entitled to the going aluminum repair rate of $95.00 per. hr. Sorry, I am unable to help you any further.

[Shop To Progressive Specialist]
Countless shops? So countless that you cannot name a few? This does not reflect what BMW of North America says. Who knows more about their cars, you or them? I have attached the requirements for certified BMW facilities and a brochure for your reference. The nearest facilities are 100 miles away.

When informed about the insurer’s refusal to pay what amounted to the total $93.00 difference in labor between Progressive’s rate and what the shop charged, the customer told the shop he would cancel the 6 policies he had with Progressive.