Shops will still need multiple estimating systems

The issue of shops needing multiple estimating systems to meet insurer direct repair program requirements may not be resolved soon, according to panelists at a NACE Town Hall meeting that focused on automated claims processing. 

Panelist Jim Dickens, senior vice president for product management and marketing for CCC Information Services, said the ability to exchange data among the three major estimating systems is improving, thanks in part to the electronic data standards being created by the Collision Industry Electronic Commerce Association (CIECA).

"But at the end of the day, you're still going to have either insurers dealing with multiple estimating systems or repairers dealing with multiple estimating system," Dickens said.

Others among the 18 Town Hall panelists - representing insurance companies, information providers, auto recyclers and other companies involved in electronic commerce - agreed with Dicken's assessment.

"I think you're going to find that at some point perhaps there will be a way to import the data from one estimating system to another," Ed Schrenk, vice president of industry relations for Mitchell Intentional, said. "But there are other reasons people choose a particular estimating system. For example, some carriers have reinspectors using one estimating system. They want the body shops [in their direct repair program] to have the same estimating system. They don't like going in with one estimating system if the shop is using another; it makes it harder for them to work together.

"So I think you're going to find insurance companies still making business decisions that are in their best interests. And the body shops can then make the business decisions that are in their best interests. For the foreseeable future, one or the other party is going to end up having to deal with multiple estimating systems. It's either going to be the body shop or the carrier. So whoever has the biggest stick is probably going to make that decision."

Reduction in choice of estimating system

"I absolutely predict a reduction in the total number of the estimating systems over time as a direct result of the integration and [data-exchange] capabilities," Applebaum said. "I also predict that those estimating systems will be selected based on their merits and abilities and not necessarily on preferences of the insurance carriers who are requiring them." Panelists also predicted that more of the information exchange between shops, insurers and vendors will shift to the Internet, offering a number of benefits. Web-based estimating, for example, will provide shops with the latest estimating information without waiting for CD updates by mail. The online information will also enable shops to keep customers updated on repair progress with fewer phone calls. "Shops are going to have to invest in broadband Internet service," Dennis Kiyohara, president of AutocheX, said.

The panel was asked if this shift could also allow more technical data - such as frame sectioning information - to be provided within the estimating systems. "Clearly that's possible. The question any of us have to ask is what is the market? How would we do it," Schrenk said. " I personally don't think the best way to do that is through the estimating system. I think there are other ways of doing that." The moderator of the Town Hall, Tom McGee, executive vice president and CEO of I-CAR, agreed that much of that information is readily available through the automaker websites. "You can go online and gain daily, weekly, monthly or annual access to their information websites," McGee said, adding that links to these websites are available through I-CAR's website (www.i-car.com) or the Automotive Service Association website (www.ASAshop.org).

The continued shift to automated systems for claims processing is not always going to be smooth, panelists predicted. "Sometimes we go backwards before we go forward," Kiyohara said. "Automation doesn't always mean it's easier at first. Like the first time you used a computer for an estimate, you didn't save any time. You have to hang in there."

Insurer ownership of shops downplayed

A second NACE Town Hall meeting was an open forum, with panelists rapidly tackling such issues as insurer-owned shops, post-repair inspections, technician training and the future of the family-owned collision repair shop.

Some of the highlights of the event:

• State Farm's Bob Medved urged everyone in the industry to get involved with their local collision repair training programs. "If you don't tell the schools what you need, and help them provide it, they're not going to know, and they'll keep developing people we can't use," he said. Local and national SkillsUSA/VICA competitions are a great place to find the best talent coming out of the collision repair training programs, he said; his interactions with students through these competitions has shown him that safety is an even bigger concern to them than salary.
• Barrett Smith of Brandon Paint & Body in Brandon, Florida, repeatedly cited post-repair inspections of vehicles - such as those he offers - as a solution to many of the decades-old shop-insurer conflicts. If shops and insurers knew 90 percent of repaired vehicles would be inspected, it would bring accountability to the industry, he said, and cut down on fraud and shoddy repairs. He also drew applause when he suggested that rather than "steering" customer to direct repair shops, insurers should simply suggest that consumers choose an I-CAR Gold Class shop, with ASE-certified technicians, that belongs to the Automotive Service Association (ASA) and offers a written warranty.
• Marty Iverson of The Hartford said that both shops and insurers are interested in customer satisfaction and profit, and select vendors they feel can help them achieve those objectives. "Most of our customers don't make a distinction between the claims process and the repair process," he said. "To them, if one of us screws up, it taints all of us. So I'm a little saddened by the conversation I'm hearing up here trying to pit the body shops against the insurance industry. We need to get our act together collectively."
• Indeed, Town Hall moderator Brian Sullivan, editor of several insurance industry publications, said his understanding is that Allstate's ownership of a chain of collision repair shops is less designed to save them money on the repair itself but more to reduce "friction costs."
• Bob Redding, national lobbyist for the ASA, said insurer-ownership of shops may not be major issue long-term, but it certainly will be for the next year or so. He said the industry needs to create an environment in which the family-owned collision repair business has an opportunity to compete to succeed.

John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.