By Angie Kilbourne, AutoInc. Correspondent
John Eager, Ed.D., senior director of claims with Property Casualty Insurers Association of American (PCI), admitted a sad fact of life: Not everyone attending his session, “Insurance and Auto Repair: Issues 2008,” loves the insurance industry. However, he added, as boring as the topic of insurance may be to some people, the course keeps growing in attendance.
This morning session – attended by about 100 people – was made up of 65 percent insurance-related professionals and 35 percent collision-shop-related professionals. Eager told the audience that this was the direct opposite of last year’s session, which showed that collision shop personnel made up nearly 60 percent of the audience versus an approximate 40 percent of insurance professionals.
Eager polled attendees to learn why they’d chosen his seminar. Timothy E. Felt, a regional claim administrator with American Family Insurance, Westerville, Ohio, told the rest of the class that he wanted to network with his peers and collision shops. In addition, he said he wanted to create an outreach to collision shop owners because he feels there’s an increasing friction between the groups.
Jerry Palmer, owner, Autos R Us Collision Center, Houston, Texas, told the audience he’d just spent more than $3 million building a state-of-the-art collision repair facility. He decided to come to this morning’s session to find out more about direct repair programs (DRPs) and building relationships with insurers.
Eager found both attendees’ statements interesting. He reflected on last year’s lead speaker at NACE, who talked about ensuring success through great relationships with your business partners and how it is important for today’s collision repair professional to have a “married” business plan in place to be successful – one that works with insurers. “The marketplace is what it is,” said Eager. “And if you don’t have a good business plan in place, you’re at risk … we’re [shops and insurers] all at risk.”
Eager addressed a sobering fact of the insurance industry: In 2007, 63 cents to 67 cents of every claims dollar paid out by an insurance company went to automobile physical damage (first- and third-party). This fact alone demonstrates the importance that automobile claims have with the insurance industry, which is now counted by PCI among the Top Five major issues for insurers in 2007.
Eager then led the discussion on some of the top issues in the automotive claims arena, as defined by PCI’s Physical Damage Subcommittee:
• Towing and storage: Eager talked about the severe abuses occurring in some states and that a number of states are introducing legislation in 2008 to regulate towing and storage fees.
PCI favors legislation that requires companies to disclose when a vehicle is towed and where it is taken for storage. Limits on the distance a vehicle is towed, specific notice requirements, specific estimates of the towing expenses, and an end to extra
charges for incidental expenses, such as gate fees, are also favored by PCI.
• Salvage title legislation, state and federal levels: PCI has been working with Sen. Trent Lott, R-Miss., and Sen. Mark Pryor, D-Ark., on federal salvage title legislation. Since Hurricane Katrina in 2005, this has become a huge issue for insurers.
Proposed federal legislation would require public disclosure of information for every passenger motor vehicle that has been declared a total loss by an insurer or determined to be a total loss by a self-insurer. The legislation calls for an electronically accessible database to collect the information, including vehicle identification numbers (VINs); Eager said working out the details for this database in the private sector will be the biggest challenge.
PCI’s position favors standard salvage definitions; clear total loss trigger wording; tracking through state DMVs; and prohibitions against changing or removing brands.
• Accident response fees: Eager noted that he recently testified in Pennsylvania on this matter, and consumers hate this measure by municipalities. They are writing letters to legislators to stop these fees incurred by calling police or fire departments to an accident scene. Eager commented that this practice is no more than double taxation and that PCI would be working to abolish this measure around the country.
The discussion continued on a variety of topics including the rising cost of auto repair, studies into recycled and aftermarket airbags, a look at which states will be proposing to restrict insurer-owned collision shops, and concluded with anti-steering legislative efforts.
According to Eager, this issue continues to come up, even though there are laws prohibiting the practice in nearly every state. The biggest issue, Eager said, is the lack of reporting by consumers with the state offices of the Attorneys General or Department of Insurance. He emphasized that if the law is being violated and you can show it, you can and should proceed in the matter with your state’s attorney general’s office.