Wednesday, 22 May 2013 21:16

SCRS Says Insurer Mandated Parts Programs Still Fail to Demonstrate Benefit to Repairers

It has been over one year since State Farm began mandating the use of PartsTrader for parts procurement in certain cities in the United States. Despite public criticism and concern expressed by multiple affected industry segments, neither State Farm nor PartsTrader has provided any well-constructed explanation of how the program provides any substantial benefit to those being required to utilize it, other than to comply with the mandated programs, SCRS said in a recent press release.

"While PartsTrader has made various software updates to address the plentiful concerns expressed by their end-users, correcting and enhancing software issues is a necessary function of being in a technology business, and the industry still expects that technology companies should be able to provide a better value proposition for why we should be using their product than 'because we got the insurance company to tell you to'," remarked SCRS Chairman, Ron Reichen. "Perhaps the best questions to PartsTrader, and other companies similarly positioning their products through insurer mandated programs, is to ask if their platforms can benefit the market enough that they could, and would, grow organically without the insurer influence over their end-user?"

Other similarly mandated programs have begun to receive more attention as well, as insurers involved continue to require the use of programs despite a recognition that there is growing frustration from shops who are obligated to change their internal business practices to accommodate the changing rules of the DRP relationships.

In an email from one American Family field adjuster to a group of repair businesses on the program, he stated, "I've received lots of feedback from almost everyone about APU [Solutions]. There is some good with it, and then there are some very frustrating/difficult stuff to deal with. One of the major concerns I'm hearing about right now is APU recommending all these little outlying suppliers that are requiring credit cards before you can order a part. Shops are not set up to be dealing with credit cards all over the country, and truly local suppliers such as Keystone don't require them. Another concern is freight and more specifically, how returns are handled. None of these are making things easier for you and that's frustrating for everyone."

Another concern mentioned is when parts that are recommended by APU are located in multiple different states, or from multiple vendors. If there are 15 parts on an estimate, a repair facility could potentially be expected to purchase parts from 15 different vendors in 15 different states based solely on APU's recommendations.

"I've passed on your concerns to my boss," the email continued, and "in turn, he will be in a series of meetings this and next week with his boss as well as other managers from around the region. He tells me he's going to bring up your concerns to be discussed. Hopefully, some less frustrating answers will be coming out of these meetings."

"Despite the obvious recognition of the hardships these mandates are potentially creating, and despite the rapidly evolving market place where it appears more and more online parts procurement solutions are entering into the marketplace, it is baffling why carriers continue to dictate process, rather than seeking a results-driven relationship with repairers," commented Aaron Clark, SCRS Immediate Past Chairman. "It certainly leaves the impression that there is more to gain for the insurance industry than the desire for increasingly informed selection of parts choices from reasonable vendors and more efficient processing."

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