Sunday, 31 August 2003 17:00

Remote desk auditors face questioning at CIC

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Third-party "desk auditors" faced some critics and tough questions during a panel discussion at the Collision Industry Conference (CIC) held in Hollywood, Florida, in late July. 

Representatives of three companies that offer insurers remote reviews of repair estimates discussed their companies' histories, employee training and auditing practices. The three were asked, for example, whether they are compensated for their work based upon the amount by which they are able to reduce a shop's estimate.

"We are compensated on a per-file basis, whether there are savings or not," said John Gizzio of ACE, a Pennsylvania-based desk review company that audits more than 10,000 claims each month. "We do not take part of the savings. And we do . . . charge if there are no savings. We are compensated for every job that we do."

Mike Price, of the Georgia-based, 30-employee Audit Services, Inc., also said his firm is paid on a per-claim, per-assignment basis. Mike Saliba, vice president of ComSearch's Ready Review desk auditing service, said his company's compensation is "based on a number of things, but savings is not one of them."

Gizzio said that some of the savings they offer insurers is not just in reduction in the bottom line of repair estimates but in reductions in cycle time, rental costs, and direct expenses such as field adjusters.

Banned in Boston
 
The three were also grilled about state laws that some feel should limit the practice of remote auditing. All three said Massachusetts is the only state in which they do not offer their services because state law requires physical inspection of any vehicle in which repair costs exceed $500.

"There are certain states where you cannot use a photograph to write an estimate, but auditing is basically reviewing what has been written by someone else," Gizzio said.

Saliba also said a number of states - including Vermont, New York, Connecticut and Rhode Island - require auditors to have appraisal or adjuster licenses, so his company makes sure that enough of its 58 reviewers have the licenses to handle claims in those states. But he also said he doesn't believe his company is adjusting claims.

"I don't believe it's an adjustment. It's an audit, not an adjustment," Saliba said.

All three of the companies say they are not using electronic systems that automatically flag certain items on estimates for review. Rather, the reviewer enters the estimate into the company's chosen estimating system - Mitchell for ComSearch and ACE, ADP for Audit Services - and checks it against the profile established by their insurer client.

While those "profiles" cover such things as non-OEM and salvage parts use, all three of the companies say they do not change "judgment" repair times.

Judgment items not adjusted
 
"We do not adjust or change judgment items," Price said. "We apply our client's guidelines . . . When it comes to a judgment item, obviously we haven't seen the damage."

The other two companies represented on the panel concurred, and although the three represent a majority of the desk audit market, nearly every shop owner at CIC raised their hand when asked if they have had judgment times changed as part of desk audits.

"There are other companies that do this work," Gizzio said. "We're not representing them, just our own companies here today . . . If you put down a 5-hour repair, you get a 5-hour repair."

Price said he would recommend that if a remote auditor changes judgment times, the shop should call the insurer involved.

 {mospagebreak}

New twists in non-OEM parts issue

After several years of installing OEM and non-OEM parts on vehicles to allow CIC attendees to compare the fit and finish of the parts, CIC's Parts Committee is now turning its attention to other aspects of the ongoing debate over aftermarket parts.

The committee has proposed that CIC oversee research into non-OEM parts certification groups (such as CAPA, the Certified Automotive Parts Association) and process validation programs (such as MQVP, the Manufacturer's Qualification and Validation Program) to review how well these programs accurately identify high-quality non-OEM parts. The committee proposes that the research be funded by the programs themselves, which would be asked to voluntarily pay a fee to an independent evaluator to validate their processes.

"This would probably be the first time this body has taken an objective look the different processes and programs that are out there," Rod Enlow, co-chairman of the Parts Committee, said.

The committee also plans to develop "best practices" for insurers, repairers, and parts distributors regarding use of non-OEM parts, and plans to work with other organizations to develop training and education materials that "clarify the parts certification and process validation programs."

Also at CIC in late July, the Society of Collision Repair Specialists (SCRS) announced it will conduct a study of the non-OEM distribution channel. SCRS Executive Director Dan Risley said an informal survey of shops found that almost 20 percent of the time a CAPA-certified part is ordered, a non-CAPA part is delivered, and that 25 percent of CAPA parts had to be returned.

To get more statistically valid data, SCRS will conduct a larger, more formal survey over the next several months. Participating shops will have to fill out a survey form each time a non-OEM part is ordered. To participate in the study, call SCRS' Risley at (708) 598-2384.

Other news and discussion

A wide variety of other subjects were also discussed during CIC in July. A sampling:

• The CIC Fraud Awareness Commit-tee conducted a survey of CIC attendees, asking them to make judgments about a series of "real-world" scenarios involving collision industry participants. Those completing the survey indicated how ethical they found certain behaviors, such as a shop regularly buying lunch for an appraiser, using an uncertified non-OEM part because the certified part listed on the estimate wasn't available, or agreeing to an insurance representative's suggestion to add to a labor time in place of a higher allowance for materials. Results from the survey will be reported at the next CIC meeting in early October in Boston.

•A presentation on "black box" technology - the airbag control module that records such data as vehicle speed and braking when an accident causes the airbag to deploy - raised as many questions as it answered. A representative of one insurer at CIC, for example, said his company has had several legal cases brought against it by attorneys saying the insurer destroyed evidence by not retrieving the black box data before disposing of a total loss vehicle. That has the insurer - and some shop owners at CIC - wondering what it should do with the airbag control modules that are replaced, or sold with a totaled vehicle.

Also left unclear at the end of the discussion: Does the system that retrieves recorded information from the airbag control module allow the user to link a vehicle identification number (VIN) from one vehicle to airbag module information actually pulled from a different vehicle? And if the vehicle-owner owns that data when it is recorded, who owns it after an insurer buys the vehicle as a total loss?

•Lirel Holt, chairman of Coordinating Committee For Automotive Repair (CCAR), urged CIC participants to encourage schools offering automotive and autobody training to use CCAR's free online safety and pollution prevention training. About 800 schools are using the "S/P2" training, Holt said, but there are still about 3,800 other schools with auto-related programs. He said each of the S/P2's two programs include testing and require about 45 to 90 minutes to complete.

Federal regulations require safety and pollution prevention training for all employees, so Holt recommends that schools and shops check out the CCAR online training (www.sp2.org) or call CCAR at (866) 477-2669 for more information.

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

 

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