Wednesday, 30 November 2005 17:00

CIC discusses increasing number of total losses

Written by

That notation on every paint can in your shop that says, "For Professional Use Only," may soon hold some real meaning according to early indications about rule-making currently underway by the federal Environmental Protection Agency (EPA). 

"Point-of-sale restrictions [on paint products] are something we've heard a lot about," Kim Teal, an EPA environmental protection specialist, said at the Collision Industry Conference (CIC) held in Las Vegas in early November. "The paint distributor, just like a bartender, should be asking for certification. They should not be selling it unless they see a certification." Such restrictions are not currently in place, but Teal indicated that new rules her office is expected to propose in 2007 may very well include stipulations about who can purchase or use automotive refinish products.

Teal said that the message her office is hearing from the industry is that new clean air rules on automotive refinishing should help create a level playing field by clamping down on "backyarders" and others often exempted under local or state rules because of the relative small amount of coatings they spray.

"The states wouldn't be allowed to have those minimums under this rule," Teal said. "If you're using auto refinish coatings, you'll be subject to the requirements."

She said the rule will likely include national requirements for paint booths and other equipment - but probably not a lot of required record-keeping for shops or paint jobbers." I expect the distributors to be honest people who know there's a requirement for someone to be using the material properly," Teal said.

But CIC participant Tony Passwater, an industry consultant, told Teal that record- keeping may need to be a part of any enforceable restriction on the sale or use of automotive refinish products. And Bob Keith, director of environment, safety and production for CARSTAR, questioned how such new rules will be enforced when regulators are unable to halt backyarders who do not comply with existing regulations.

"The states are frustrated because a lot of them don't have programs in place that they can enforce," Teal agreed. "As far as this rule goes, all it will take at that point is for you to pick up the phone."

She said she understands that enforcement of current regulations may also be hampered by local officials concerned about interacting with the "criminal element" involved in less reputable refinishing operations.

"There is an arm of our EPA that is armed and equipped to deal with this criminal element," she said.

The EPA will be gathering data and analyzing environmental and economic impacts of new refinish regulations over the coming months, before proposing the new rule in August of 2007. That rule would be finalized in 2009 and go into effect in 2011. That timeline could be sped up, however, based on the outcome of a lawsuit by environmental groups concerned that the EPA is already late in creating the rules.

CIC this fall re-established its Environmental Committee in part to address new air quality rules being created by the EPA and by air quality agencies in California.

Committees look at 'total loss' trends

Several committees at CIC in Las Vegas addressed what one called the "total loss crisis." Passwater moderated one of the panel discussions on the topic, opening the session with a compilation of charts showing statistics related to total losses.

Mitchell International, for example, reports that currently about 5 million vehicles - or about 20 percent of those involved in insurance claims - are declared total losses each year. CCC reported a similar percentage (19.5 percent) of total losses among estimates written by insurance appraisers in 2004 - nearly double the annual rate in 1997 through 2000. State Farm statistics also showed a continued rise in the percentage of total losses in first-party claims, from about 14 percent in 1998 to more than 19 percent in 2004; total losses now account for about 45 percent of claims dollars State Farm pays out.

Panelists then offered their own views for the causes for such trends.

• Some panelists cited the expense of airbags (and the damage caused by their deployment) as a key cause of the increase in the percentage of vehicles being declared total losses. Brian Grainger, director of product management for ADP, said the increasing use of other expensive parts, such as xenon headlamps, also play a role.

• Grainger, and Keith McCrone, senior director of product management for Mitchell International, both cited in-creased salvage values - driven in part by national and international purchases of salvage vehicles via the internet - as a key cause of increasing total loss percentages.

• Susanna Gotsch, vice president of information product development for CCC Information Services, said that decreasing used car values - in part because of discounts and incentives being used to sell new cars - are resulting in vehicles more easily reaching total loss thresholds.

• Eric Burr, vice president of industry relations for Mitchell International, said insurers increasingly send vehicles directly to salvage facilities rather than a shop using a scoring system based on the vehicle owner's responses to questions ("Did the airbags deploy?" "Is the vehicle more than 5 years old?") at the time of the claim. "It's kind of pre-determined that the vehicle is going to be a total loss before someone even has a chance to visually inspect the vehicle," Burr said.

A number of CIC participants said the "total loss" issue is one that should be on CIC's agenda in 2006.

"Some of the best and brightest in this industry say we're moving so fast toward throw-away vehicles that it isn't even funny," Lee Petersen, manager of insurance and automotive industry affairs for Chief Automotive Systems, said at CIC in Las Vegas. "I think this panel was a really good start. But if this trend continues, I'm of the opinion that the problem of the escalating number of totals should be top priority for all of us."

Other news and discussion at CIC

• The Estimating Procedures Com-mittee failed to garner adequate consensus among CIC participants to approve its proposed statement on "featheredge, prime and block." Some CIC participants did not feel the draft statement adequately conveyed that such operations are a refinish operation and "not included" in estimating database times. After a lengthy discussion, CIC participants voted to send the statement back to committee for further review.

• CIC participants Tom Holmes and Ron Guilliams reported that nearly 250 students attended a recent career day event held at Holmes Body Shop in Duarte, Calif. Eight stations throughout the shop allowed students and their parents and school counselors to learn more about estimating, framework, painting and welding. Students received a raffle ticket at each station, and drawings were held for prizes including an Apple iPod, a mountain bike and a car stereo system. Holmes and Guilliams said information on the event is available through a website (www.careerswithcars.com) established to help others organize similar events in their area.

•The National Auto Body Council announced that it had successfully raised more than $130,000 to purchase a bus for Camp Mak-a-Dream, a Montana camp for children and young adults actively battling cancer. Chuck Sulkala, executive director of the NABC, said its foundation has also raised $65,000 to help members of the industry impacted by this fall's hurricanes. He said more than 24 families have been helped and that more are expected to contact the NABC. "The biggest issue we had this year was the fact that nobody knew we were there to help them," he said. For more information call 1-888-66PRIDE or visit www.collisionindustryrelief.org.

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

 

Read 1389 times