Nebraska Autobody Association

Shop Talk Online Newsletter

February 14, 2007

Average Appraisal Falls

Mitchell’s Winter 2007 edition of its quarterly Industry Trends Report reported that the average collision appraisal fell by eight percent in 2006 to $2,771.12 compared to the prior year. Mitchell estimated that nearly 26 percent of Mitchell-equipped estimates needed to be supplemented at least once, sometimes more often. In addition, the ratio of supplements to estimates increased to over 56 percent. The state of New Hampshire is looking at ways damage estimates are written as the legislature is considering two bills aimed to stop the problem of underestimating claims. The State of Nebraska already has a law in place, but without effective market conduct enforcement such laws are routinely violated. Collision repairers have long known that insurers deliberately underwrite estimates. The process of encouraging more supplements leads to fewer repairs since some claimants elect a cash payout based on the initial estimate.

Nebraska Bill Requires Reason For Employee Termination

The Nebraska Business and Labor Committee, on March 5, will hear testimony of legislation that would
require employers to provide reason for employee terminations.  LB175 in part reads: “No employee of an employer, as defined in section 48-801 shall be terminated from employment until such employee has been given the specific reason for the proposed termination and the employee is provided a meaningful opportunity to present the employee's position in response to the reason for the proposed termination.”

Insurers Profits Rise As Claims Payouts Plummet

According to Money Magazine insurers are becoming more hard-nosed over claims handling--a practice that translates into big profits. “Insurer profits have soared while payouts as a percentage of premiums have declined”. According to data provided by the Consumer Federation of America, insurer profits have risen to $61 billion in 2006 while payouts as a percentage of premiums have dropped to 60.7 percent and shops are feeling the pinch. According to bodyshopbiz.com, 2007 will be another year when some shop owners will call it quits. One shop owner was quoted as saying: "Although shop transience is normally around 8% a year, shop closures in 2007 could be as high as 15%, with half of them going under”. Bodyshopbiz cites rapidly evolving vehicle technology, lack of skilled technicians, continuous training, updating equipment, and changes in the DRP relationship. The situation in Canada forecasts that of the 1,400 collision shops in the Canadian Province of Quebec only 800 will be left when the dust settles.

Nebraska Autobody Association Plans Historic Convention

The Nebraska Autobody Association is gearing up for its historic 30 Anniversary Convention & Expo to be held on April 13-14 at the Interstate Holiday Inn in Grand Island. Don’t miss this chance to revisit with friends, share memories and attend some great programs and events. Complete attendee and exhibitor information is available at the NABA web site at http://www.nebraskaautobody.com

Shop Licensing Gains Support

ASA members send a strong message in member surveys, meetings and other forums that they want shop licensing. This is a topic that would impact both mechanical and collision repair facilities. But is it time for the independent auto service and repair industry to support state and/or federal licensing? Many shops believe that licensing could help raise the level of professionalism and perhaps solve some of the persistent issues that continue to diminish the industry’s image and limit our opportunities to earn consumer's confidence and trust.

States With Highest Labor Rates

According to Mitchell, the states with the highest labor rates were as follows: $57.89 Alaska; $50.72 Montana; $48.55 North Dakota; $48.47 Wisconsin; $47.91 Iowa; $47.91 Wyoming; $47.76 South Dakota; $47.41 California; $46.64 Missouri; $45.79 Minnesota.

Federal Commission Studies Insurer Antitrust Exemption

A hearing of the Federal Antitrust Modernization Commission in October studied the immunities and exemptions given to insurers. Commission Chairperson Deb Garza said “With the power to regulate, of course, comes the responsibility to ensure that regulation is sound, to reevaluate it periodically from a neutral perspective that appreciates the interest of all stakeholders, and to make adjustments when appropriate.” The hearings are especially important in light of the massive failure of Nebraska’s market conduct regulatory practices.

State Farm Halts Sale of Insurance

State Farm Insurance suspended sales of commercial and homeowner policies in Mississippi. The cancellations came after a flood of lawsuits from the insurer’s handling of claims following Hurricane Katrina.  State Farm spokesperson said that the  "current legal and political environment is simply untenable” and the insurer is in no position to accept additional risks in the homeowners market.

Information in this newsletter while obtained from sources deemed to be reliable, cannot be guaranteed. Readers should consult with manufacturers’ directions, manuals and/or appropriate business professionals before acting on any information reported herein. The views represented herein are those of the authors. It should not be implied that these opinions are those of the NABA directors, members, its management, or the publisher.