A shop in, say, Massachusetts prepares an estimate and sends it over the internet to Allstate. With Allstate's blessing, a dotcom intercepts the message to format it in such a way that it seamlessly enters Allstate's data bases.
The upside is that regardless of which estimating system the shop and Allstate (or any insurance company, for that matter) use, they can exchange information obstruction-free over the internet.
The downside, according to Tuuri, is that the dotcoms can extract data and sell it to interested parties.
"They would have the name and phone numbers of someone soon after an accident," Tuuri says. "I could see a situation where the person gets a call when he gets home from somebody trying to sell him something."
"Yeah, and an elephant could walk into a shop and step on the computer," counters Roger Cadaret, executive director of the Collision Industry Electronic Commerce Association, or CIECA.
If Cadaret seems incredulous, believe it. For nearly seven years, CIECA has been developing the communication standards that allowed the dotcoms to emerge. ADP, as well as CCC and Mitchell, has been part of the process from the beginning. Now, with the standards on the cusp of producing the reality CIECA's founders envisioned back in 1994--unimpeded, real-time electronic transfer of information among all collision industry trading partners--only Mitchell among the three major information providers has said it would embrace the development. ADP has insisted that no third party will see any data originating from an ADP system without ADP's specific approval, a stance that foreshadows encryption.
CCC has tried to obfuscate, issuing a written statement claiming that while the company has no plans to encrypt data, any accommodations to the dotcoms must include "safeguards." When asked to clarify, CCC turned down my request for an interview. Cadaret, however, didn't hesitate to clear up any ambiguities.
"This is nothing but an effort to protect their revenues," he says. "We've been talking about this for years. ADP and CCC had to see this coming. They could have done on their own what the (dotcoms) are doing, yet they went for encryption. It's pretty absurd, and I think it will kill them. As soon as the shops get to turn their backs on them, they'll be history."
Cadaret might be overstating the case, but only a bit. Think of the information flowing from shops to insurance companies as a train of boxcars filled with data. Insurance companies, to a large degree, insist on particular estimating systems to ensure the box cars are in a specified order. That way, software which produces management reports will know which car to go to to pluck certain data.
Ensera, Autovista, and the other dotcoms rearrange the box cars the shops send so that they are in the order insurance companies desire. It won't matter if shops use Mitchell, CCC or ADP to write their estimates. A dotcom will reformat them and send them on their way. (The dotcoms could also do much more, such as warehousing the data and producing reports.) This outlines a bleak future for estimating companies that have relied on proprietary networks and market shares secured by agreements with insurance companies.
"They have milked this cow long enough," says Israel Yzaguirre, USAA assistant vice president for collision industry relations. "They've had enough time to come up with an internet solution. By encrypting data, they will be infringing on the data that we own. Like a record player, they will go out of style. They have to face up to what they are: commodities competing on price and service."
Tuuri insists that ADP would like nothing more than to compete on price and service if not for the overriding consideration of privacy. It is incumbent upon ADP, he says, to ensure that data travels securely among trading partners. If a dotcom wants to become part of the communication loop, then it will have to sign an agreement with ADP as to what precisely it will do with the data.
Here again, Cadaret is incredulous. Who will have interest in any of that data, he wonders? Why is the information safer with ADP than with a dotcom? And who is ADP to dictate how insurance companies communicate with body shops?
"Think of ADP's data as the spice that goes into a cake," says Don Feeley, a shop owner and president the California Autobody Association, which has a seat on CIECA's board. "Once I pay for that spice and make a cake, is ADP going to come back and say they own the cake? The real truth of the matter is that they were surprised by the dotcoms. For years, they have had the market to themselves with standards that didn't allow others to come in. They knew the minute open architecture hit, they would be in trouble, yet they did little to get ready. Wouldn't you think information companies like CCC and ADP would know how to prepare for something like this?"
Good point. Rather than fight the dotcoms with encryption (or some other impedance to open architecture), why not compete with them? Or even buy them? Why strive for a reprieve through encryption? Perhaps ADP hopes to buy some time. Tuuri won't concede this point, but he did say that his company was caught off guard by the sudden emergence of the dotcoms and their internet solution to claims processing.
"Did we see it coming? We certainly should have," Tuuri says. "We didn't realize the speed with which it would hit. And we've been surprised this has become as big an issue as it has. It's now an industry issue."
But why something so drastic as encryption, especially when one of the major competitors, Mitchell, scoffs at the notion.
"It has always been our position that the information is the customer's information," says John Rix, vice president of development at Mitchell. "It's our job to facilitate movement of that data, not to restrain movement through encryption."
In the end, the issue undoubtedly will be settled by the insurance companies, and sooner rather than later. Jim Laning, State Farm's liaison with the information providers, doesn't believe the day of estimating systems as commodities is here just yet. The data that comprise the systems--how many hours to paint a door, etc., etc.--still vary enough that insurance companies tend to reach a comfort level with one system or the other. He doesn't think open communication over the internet will alter that allegiance.
However, in the next breath he talks about how State Farm maintains a huge staff to keep up with all three of the major estimating systems. "Wouldn't if be wonderful if we had just one, much smaller group to support estimatics?" he says. "That would be a substantial savings in resources."
My guess is that encryption is not long for this world.