Monday, 14 September 2015 19:03

PPO Insurance, Non-OEMs Rating Better, State Farm’s Service First, Michigan’s MFN

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20 years ago in the collision repair industry (October 1995)

At the Collision Industry Conference (CIC) in Kansas City, Russ Verona of the Automotive Service Association (ASA) reiterated the association’s opposition to “PPO-type” insurance programs. PPO-type programs make discounted insurance policies available for vehicle-owners who agree to have any needed repairs made at a shop enrolled in the insurer’s direct repair program.

A number of state legislatures are considering bills that would allow insurers to institute such programs. CCC Information Services has also said it believes that insurers should be allowed to implement such programs.

“ASA hopes to slow down the runaway forces attempting to move too quickly into PPO until evidence can demonstrate to the collision repair industry that all entities involved can benefit from these types of programs,” Verona said.

– As reported in Autobody News. Although some insurers stepped up incentives (such as waiving some portion of the deductible) for customers who choose to use a direct repair shop, insurer sale of policies requiring consumers to give up shop choice have not become widespread.

15 years ago in the collision repair industry (October 2000)

For the second time since the Collision Industry Conference (CIC) began conducting test fits of replacement parts two years ago, non-OEM sheet metal parts fared better than OEM.

During the meeting in Nashville in October, two sets of parts were installed on a 1998 Honda Civic. CIC participants, not knowing which were OEM or non-OEM, were asked to rate the parts for fit, finish and overall acceptability.

A non-OEM hood certified by the Certified Automotive Parts Association (CAPA) was given average ratings of 4.22 (out of 5) for fit, and 4.5 for finish, and was rated as acceptable by 91 percent of those participating; the OEM hood received ratings of 3.39 for fit and 3.63 for finish, and was acceptable to only 69 percent of those rating the parts.

A CAPA-certified fender also received slightly higher marks than its OEM counterpart, although both were deemed acceptable to more than 90 percent of participants.

A headlamp manufactured by TYC received virtually identical ratings as the OEM. The OEM bumper cover was acceptable to everyone rating the parts, and outscored a non-CAPA-certified bumper cover (manufactured by Tong Yang) that was acceptable to 77 percent of participants.

Although open to all CIC attendees, only about 20 people completed the parts rating surveys.

The latest parts test fit results came during a meeting at which the Taiwan Auto Body Parts Association (TABPA) reported improvements that its members – manufacturers of non-OEM parts – are making in producing and packaging parts.

“Your messages are conveyed and have been heard loud and clear,” Karen Fierst, TABPA’s U.S. representative, said of the repair industry’s efforts in the last three years to communicate more directly with parts makers.

As an example, Fierst cited problems found with a non-OEM hood in a CIC test fit in 1998 that “resulted in a manufacturer adopting an enhanced checking fixture for hoods, which addresses hood latch concerns.”

– As reported in Autobody News. CIC continued to conduct these parts demonstrations at several more of its meetings, with OEM parts generally outscoring non-OEM parts when judged by CIC participants.PHOTO CAPTION: In 2000, consultant Karen Fierst represented the Taiwan Auto Body Parts Association (TABPA), speaking at CIC on behalf of the manufacturers of non-OEM parts that were members of that association.10 years ago in the collision repair industry (October 2005)

Some State Farm regions may choose to reduce the number of shops participating in the company’s Service First program, but when – and how – they decide to do that will be local decisions, according to a top State Farm claims executive.

George Avery, national auto estimating consultant for State Farm, spoke about the Service First program in Portland, Ore., in October.

Avery said local management in each zone are best equipped to determine whether and how to trim the ranks of Service First shops in order to improve the efficiency of the program.

Avery’s comments came on the heels of information that Roger Wright of AIG shared at the I-CAR annual meeting in August. Wright, who joined the company in 2003 and saw a need to revamp the program, said one of the requirements that was added was that participating shops have at least one technician who has passed I-CAR’s steel welding qualification test.

“We went from having 3,000 shops on the program to 900 shops,” Wright said of the change. “Now we’re back up to 1,000 shops. We still struggle some in certain parts of the country, but we’re committed and believe it was the right thing to have done. We think we get better repairs. It’s a commitment we feel strongly about.”

At the event in Portland, speakers were also asked if they foresaw more insurer’s following Allstate’s lead into owning collision repair shops. None said that they did. Chuck Sulkala, a Massachusetts shop owner who moderated the discussion, said that although he doesn’t have inside information on how the Allstate-Sterling “experiment” is going, he doesn’t think it will succeed because collision repair isn’t an insurer’s core competency.

“I give it a year-and-a-half,” Sulkala said of Allstate’s ownership of Sterling Auto Body.

– As reported in Automotive Report. Allstate continued to own Sterling for almost another decade, selling the 62-shop chain in April of 2014 to Texas-based Service King.

5 years ago in the collision repair industry (October 2010)

The U.S. Justice Department last week filed an antitrust lawsuit against Blue Cross Blue Shield of Michigan alleging that the “most favored nation” clauses of its contract with hospitals is anti-competitive.

Similar to State Farm’s pricing requirement for its “Select Service” shops, the Blue Cross clauses prohibit a hospital from giving better pricing to anyone than it offers Blue Cross.

The clauses raise hospital prices, discourage discounting and prevent other insurers from entering the marketplace, the Justice Department alleges. It said that some Blue Cross clauses required Michigan hospitals to charge the insurer's competitors up to 40 percent more for services.

The department said the insurer used its market dominance to impose these clauses on half the hospitals in the state.

“This cannot be allowed in Michigan, and let me be clear: We will challenge similar anti-competitive behavior anywhere else in the United States,” U.S. Assistant Attorney General Christine Varney, the department's antitrust chief, said.

– As reported in CRASH Network (www.CrashNetwork.com), October 25, 2010. The Department of Justice later dropped the suit against Blue Cross when Michigan passed a new law prohibiting "most-favored nation" clauses in health insurer preferred provider contracts in that state. A similar law was later enacted in North Carolina. The Automotive Service Association (ASA) has continued to press the Justice Department to review “most favored nation” clauses in direct repair contracts. “The anti-competitive nature of these clauses ensures both our members and consumers are at a disadvantage,” ASA has stated in letters to federal regulators.

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