ASA Examines State Farm Pilot Program, Potential Effect on ASA-Member Shops

Posted 7/16/2012

ASA Collision Division speaks with State Farm’s George Avery

There’s a lot of commentary in the industry regarding State Farm’s plan to implement use of the PartsTrader LLC parts ordering application in collision repair facilities participating in the State Farm Select Service direct repair program. ASA is taking a close look at the pilot from the repairer’s perspective.

An ASA Collision Division team consisting of operations committee members and staff interviewed George Avery, State Farm’s claims consultant, regarding the pilot program prior to releasing the known facts May 31 in an ASA press release.

“State Farm’s pilot program has a potential to have a tremendous impact on the collision repair industry and the motoring public. It is vital for ASA to approach this situation methodically with an emphasis on facts to ensure that the results of the pilot are in the best interest of the collision repairer,” said Denise Caspersen, ASA Collision Division manager. “This pilot, which reaches beyond the insurer/repairer relationship, is at a pivotal point to potentially allow adjustments to the program as a result of industry input and analysis.”

ASA’s key questions are the financial impact of this tool on collision repair facilities and how this tool would be a part of providing the best possible repair for the motoring public.

“If this is a ‘win-win’ situation, as stated by State Farm, then now is the time for State Farm to provide the numerical data that specifically identifies any benefit (financially or operationally) to Select Service shops,” said Caspersen. “If State Farm is not able to clearly demonstrate the benefits of this pilot application to the repair community, then this application should not move forward.”

Ron Pyle, ASA president and chief executive officer, said, “The State Farm pilot of the PartsTrader application has generated a great deal of speculation and commentary from all corners of the collision repair industry, so it was incumbent on ASA to perform comprehensive due diligence on behalf of its members and the repair community at large. The results of that exercise have been published, and now we believe the ‘burden of proof’ falls to State Farm to demonstrate the benefit of this program as soon as practically possible.”

ASA Represents Repairers

During a conference call June 12, ASA’s affiliated groups in the Tucson, Ariz. (ASA-Arizona) and Grand Rapids, Mich. (ASA-Michigan) markets provided comments regarding the direct impact the pilot has had on its members. Other ASA-affiliated associations expressed concerns during the call, asked for clarifications and provided ASA’s collision leadership with recommendations for future actions as the association continues to professionally advocate on behalf of collision repairers nationwide.

“ASA is fortunate to have grassroots connections throughout the United States through its network of affiliated associations. Holding nationwide team calls among ASA staff and our volunteer leaders broadens the reach of this conversation and ensures our members’ voices are being heard,” said Caspersen.

Pilot program concerns presented by ASA:

«  Reduction in collision repair facility profits based on

•  Reduced manufacturer suggested retail price for parts
•  Increased administrative costs
•  Increased cycle time delays

«  Increased administrative time based on:

•  Suppliers on pilot report increased administrative time
•  Repairers on pilot report increased administrative time
•  Increased “re-keying” of estimates based on lack of system integration

«  Overall concern of the influence insurance agreements have on collision repair processes

«  Electronic application will have a negative impact on local repairer-supplier relationships

«  The “Price-Perfect” price listing of recycled parts continues to complicate the parts selection process and hinder the efficiency of the repair

«  Potential expansion of the “parts search” market beyond the local repairer-recommended suppliers

«  Potential expansion of this type of application being applied to other hard products necessary for a proper collision repair

«  Cost of the application to the supplier will be passed on to the repairer and the consumer

«  Shops in pilot areas expressed a lack of training and understanding of the application

«  Pilot shops also found a lack of responsiveness from State Farm and PartsTrader to questions from repairers and suppliers participating in the pilot

«  Lack of information regarding how this will benefit the consumer

«  Concern of the overall legality of the program

“ASA is committed to serving the entire industry, as it has for the past 61 years. Whether the business is family-owned and operated, or a corporate or franchise location, it is incumbent on the association to provide factual information about the impact and implications of any development that could be disruptive or transformational. ASA has become a trusted source because we perform the due diligence our members expect in order to make informed decisions,” said Pyle.

ASA’s research has included interviews with State Farm, PartsTrader and collision repairers – those who participate in direct repair program agreements (including some who are participating in the pilot), and those who don’t participate in DRPs. Collision repairers may share their comments regarding the pilot by contacting Denise Caspersen at denisec@ASAshop.org, or by phone at (800) ASA-SHOP, ext. 106, or (817) 514-2906 (direct).