NACE Online Daily News
Sponsored by AutoInc. Magazine
Home Page
Nov. 1
Nov. 2
Nov. 3
Nov. 4
Photo Archive
RSS Feeds

Town Hall Breakfast Tackles the Issue of 'Total Loss'

Posted 11/04/2006
By Colby Horton

Total loss is the one issue the entire collision repair industry can agree is important because it impacts each of the different industry segments. Today's Town Hall Breakfast addressed the issue through the perspective of different industry representatives, including representatives of body shops, information providers, insurance companies, and OEMs. The program was moderated by former CNN correspondent Gene Randall.

The issue of total loss is hardly a new one in the industry. But it's been on the rise in recent years and isn't likely to decrease in the future due in part to the development of new vehicle technology. Panelists discussing the total loss dilemma included Matthew Moore, Highway Loss Data Institute; Susanna Gotsch, CCC Information Services; Herb Lieberman, LKQ; Keith Jones, Insurance Corp. of British Columbia; Bill Mayer, Insurance Auto Auctions; and Ron Nagy, Nagy's Collision Center.

The panelists discussed different issues that contribute to the total loss of vehicles. Among those issues discussed were:

  • Vehicles being written off that may not actually be a total loss - vehicle options overlooked during estimate process, level of familiarity with estimating packages, etc.
  • Rising vehicle values and new safety and entertainment features (side curtain airbags, trim packages, CD/DVD players, custom wheels, etc.) may cause the cost of repair to surpass the total threshold in minor collisions.
  • The role higher deductibles, increased used vehicle demand, and the rising cost of raw materials play in the cost of total loss.

As discussions on the subject mounted, one theme came through: total loss is becoming increasingly expensive for all involved in the process. And the percentage of vehicles flagged for total loss increased significantly since 1996.

Nagy contributes the increase in total loss vehicles to a number of factors, including the deployment of airbags, the pricing of today's vehicles being lower and the value of vehicles coming to the shop being lower as well. In addition, the cost of repairs on vehicles seven or more years old far outweighs the price of repairs.

Nagy also explains that electronics such as adaptive cruise control drive up costs immediately. These vehicle components are often the first to get hit in a collision because the vehicle manufacturers place them at the front of the car.

To that end, Jones believes that vehicle repairers and insurers alike should solicit the original equipment manufacturers to move these components somewhere else on the vehicle.

According to Moore, air bag deployment is not the No. 1 cause of total loss. He attributes the increasing costs of headlight repair, cruise control components and even the common door replacement as contributing to the total loss dilemma.

Training was also discussed throughout the Town Hall Breakfast.

"The odds of a repairer seeing the same type of vehicle week after week is decreasing," said Gotsch. "You have an industry that's changing every day." Therefore, keeping up on vehicle training is an important element is decreasing the total loss of vehicles.

But that training doesn't stop at the technician level. Several panelists agreed that the insurance adjusters need to be up to speed on changing vehicle technology as well.

The accountability of recycled parts was also discussed. The cost of OE parts is expensive, thus driving up the percentage of total loss. According to Lieberman, "There is no such thing as a perfect used part." But a recycled part does offer consumers the ability to repair a vehicle instead of totaling their vehicle. "But a repairer must be compensated properly for the installation of a recycled part," he said.

Before taking questions from NACE attendees, the panel tackled the issue of "lap top technology." That is, relying on a computer program to determine whether or not a vehicle is totaled. Gotsch is an advocate of this technology. "Individual adjusters don't necessarily have the capability to know if a vehicle is a total loss," she said. Therefore, the shops and adjusters must rely on the technology offered by some information systems.

Jones said, "The technology is just a tool, but your people have to be trained. We can never replace an adjuster with software."

Lieberman added, "We have to insert common sense when the estimate blinks 'total loss.'"

But Nagy contends that the scenarios presented aren't necessarily "real world." When an adjuster has 20 or more claims to process on any given day, they often take the diagnosis of the technology.

"I can't blame the people, it's the process," Nagy said. "Once the total loss process starts, it's irreversible."

At the conclusion of the Town Hall Breakfast, the panelists took several questions from the NACE attendees.

Print this pageE-mail this page

Copyright 2006. Automotive Service Association and AutoInc. Magazine. All rights reserved.
XML Add RSS headlines.