Tuesday, 01 May 2007 15:10

Progressive Concierge program captures audience attention at Collision Repair Association event

    There was no mousing around when the Collision Repair Association of California (CRA) met near Disneyland to outline their agenda to prospective members. Topping the list was “insurers’ special programs,” in particular the Progressive Concierge program presently operating in San Diego.
    “The greatest problem we face today are programs like Progressive,” said Allen Wood, the executive director of CRA and the former director of enforcement for the California Bureau of Automotive Repair (BAR).
    Wood spoke to a group of about 50 shop owners who came to hear about the new association. FinishMaster sponsored the meeting and sales manager Herb Butler welcomed the group to the Anaheim Marriott. Many of those present were already members of the long-established California Autobody Association (CAA). When asked about the difference between the two organizations, Wood replied, “We’re just a little more aggressive on some of the issues.” Aggression can be a two-edged sword. Woods admitted that his sources at the BAR have dried up a bit since the lawsuit was filed. “I guess I won’t get invited to the reunion,” he quipped. California Autobody Association Executive Director David McClune isn’t thrilled with the suit either. He said in a March interview that CRA’s lawsuit “has made it more difficult for all of us to deal with the BAR.”
    CRA, which now boasts 50 member shops, has sued the BAR over that agency’s alleged failure to enforce its own rules. BAR issued a cease and desist order to Progressive in San Diego last August, telling Progressive to register with the BAR or cease performing work that requires registration. Progressive’s lawyers protested that ruling and, according to Wood, the BAR rescinded its order on December 6, after finding that Pro-gressive was not doing teardowns.
    Wood, a 33-year veteran of the BAR before he resigned in July 2005, noted that the Progressive issue has been a very hot potato in Sacramento. Wood said it was at least part of the reason that former BAR Director Ross resigned, “and then a new guy was brought in to sign the rescission letter.” {mospagebreak}
Capping, labor rate surveys and steering   
    Aside from Progressive, CRA members say the three most immediate issues facing the industry are paint and materials caps, improper use of labor rate surveys by insurers, and steering by insurers. The association said these problems must be addressed in Sacramento, and has hired     a legislative affairs director, Richard Steffen, to work on issues with lawmakers. Steffen is the former chief of staff to State Senator Jackie Speier. Speier championed the rights of consumers in dealing with insurers when she chaired the Senate Insurance Committee.
    Hiring people like Steffen to deal with these issues effectively is expensive, said CRA President Gene Crozat of Santa Rosa, but absolutely necessary. To that end, Crozat and CRA officers from Northern California came to Anaheim seeking new members. “We need 500 for critical mass,” said CRA vice president Blake Andros, who owns four shops with 80 employees in the Bay area. “You need to understand the cause and to believe in it. We need a little help from the people we are going to help.”
    The arbitrary capping of paint materials costs by certain insurers is another issue getting attention. Crozat, in particular, has championed this issue by working with his customers to get insurers to pay the full cost rather than having paint materials capped, typically at $350. Crozat’s customers have filed over 200 lawsuits in small claims court for the difference between the actual charge for paint materials and the amount of the alleged cap. Many of these suits have been against insureds of State Farm and GEICO, and well over 90 percent of them have been won. Many of those small claims judgments were appealed to Superior Court, and at least three of the first appeals to be heard were upheld.“The DOI says capping is illegal,” said Crozat. “It costs us money, and it costs the state millions in lost sales tax revenue because the paint materials are taxable. The DOI informed insurers that capping is illegal last August 23, but they’re still doing it.” The DOI has moved against GEICO for its alleged capping practices, and that action is still pending.
    The age-old practice of steering gets CRA’s attention as well. “We’re not saying all DRP programs are bad,” said executive director Wood, “but once a customer makes a choice, he should be able to get the job done there. The practice is most blatant and clearly illegal when a shop has a signed RO and then the insurer convinces the consumer to move it to another shop.” {mospagebreak}
Labor rate surveys – bogus?
    Perhaps the topic that drew the greatest audience participation at the Anaheim meeting was labor rates and labor rate surveys. Shop owners said that they continually are told by insurers, “that’s the prevailing rate,” yet no one in the audience could recall any insurer except State Farm actually contacting them about the hourly rate. One aspect of rates that the Southern California shop owners do not understand is the huge difference between the hourly rate of $40 in Southern California and $74-$77 in the Bay Area. “I’ll fix all the little dents on the car for free,” said the owner of a luxury car collision-repair shop in Los Angeles, “if you’ll give me $70 an hour (for the insured damage).”
“It’s a crime...”
    Aside from working on legislation, CRA members are strong advocates for shops learning the laws that impact the business and using those laws to protect consumers and themselves. “Everyone here should know the Penal Code, Section 550(b),” said Crozat. “That law makes it a criminal offense, a crime, to make a written or oral statement that you know is false or misleading,” said Crozat. He went on to say that insurance adjusters do that every day when they lie about there being a maximum allowable charge (cap) on paint and materials, or talk about a prevailing rate when they know their company has not done a rate survey.
    And what about retaliation against shop owners who try to use the law? “It can happen,” Crozat acknowledged, noting that so far no CRA member shops have reported any retaliation because they belong to the group. And what about the cost of doing nothing? “We’re our own worst enemies,” said a Southern California shop owner, “when we do nothing because we’re afraid. There’s still money coming in the door, so don’t make waves. Well, it’s wrong, and that’s what the insurers are counting on. That’s how we devalue our business.”
    For more information on the Collision Repair Association of California visit, www.cra-ca.com.
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