How does that support the customer’s safety?”ĬCC data found 60.9 percent of repairable vehicle claims in 2020 had supplements, typically representing 18.7 percent of the repair cost. Others demand a shop write an estimate “within two hours of getting the car.” If the shop discovers more damage, instead of a supplement, “they have to absorb those costs. “Some aren’t as bad as others,” he said of DRP programs. Kiffe also painted lawmakers a less rosy picture of DRP life.
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“It is extremely difficult to run a business when you have the insurance company trying to tell you how to fix a vehicle, what parts to use, where to buy the parts,” Kiffe continued. “And the idea of cost control in that space is not antithetical to quality, we don’t think.” His insurers didn’t want to create a monopoly on parts or “particular shops.” Counterpointīut Auto Body Association of Texas board member Chad Kiffe (Berli’s Body & Fine Auto Finishes) said that as general manager of a body shop, he knew firsthand how insurers “dictate to us on how to fix a vehicle.” “It does not behoove us to have substandard repairs,” Floyd said. “We’re actually quite stringent about their technology, and the kind of repairs and what they need to do,” he said. Because the procedures and the parts are intermingled with one another.”įloyd then went on to mention direct repair program shops. Dennis Paul, R-Houston, if TCAIS had a problem with requiring OEM procedures, Floyd said “no, we have a problem with the fact that the bill seems to lead inexorably to a very restricted oligopoly … on parts. “… It’s a ‘What do you need to do to get the car fixed? Figure it out.'”īut he said insurers will speak to a repairer they feel is “driving prices up” or “way out of a economic norm.”Īsked by committee member Rep. “The answer from each of my companies was ‘Absolutely not. He said TCAIS was also asked if shops had “fixed percentages or incentives” for using aftermarket parts. Floyd said most contracts include using both OEM and aftermarket parts “as will best suit the repair and getting the job done.” Sanford asked if parts were mentioned in DRP agreements. Sanford said the insurers would then “go back and review” but did not elaborate. Do what needs to be done to get the car done.’ … That’s a general standard.” “But at the end of the day, each of the claims people … said, “‘Here’re our guidelines. “Every one of my companies has said to me they do have guidelines and they do use expectations of estimates of how much different things will cost,” Floyd said. Sanford asked if “financial arrangements” like discounts to insurers existed within the DRP agreements. “I don’t … know anybody who’s in that business,” said Floyd, the insurance industry representative. His organization includes State Farm, Allstate, USAA, Farmers, Nationwide and Texas Farm Bureau Insurance as members.Īsked why a repairer would wish to be in a DRP, Floyd cited “efficiencies” in how shops are paid and “shared computer arrangements” which permit estimates to move quickly.įloyd said insurers have found relationships with DRP shops are a “good customer service arrangement” because many people, “including me” don’t have a body shop of choice. Sandford asked Texas Coalition for Affordable Insurance Solutions Executive Director Beaman Floyd about DRP networks. HB 1131 would block insurers from forcing a DRP “in order for the beneficiary to obtain the repair without owing any out-of-pocket cost other than the deductible.” Sanford said they gave the impression he would have to go out-of-pocket for using a different facility. Scott Sandford, R-McKinney, described his recent auto claims experience, which included receiving phone calls from direct repair program body shops after filing. (Lawmakers take up HB 1131 at about the 03:20:30 mark in the video linked here.) ‘Do what needs to be done’Ĭommittee member Rep. The bill also requires a neutral third party to calculate prevailing rates using posted charges, and it places restrictions on incentives and comments an insurer might make about a particular shop.įor now, the bill remains pending before the committee following its hearing Monday. HB 1131 would require insurers to follow OEM repair procedures and P-pages with the exception of parts, though any alternative components must meet the bill’s definition of “like kind and quality.” The House Insurance Committee conversation Monday included a representative for numerous major insurers declaring their DRP shops are told “‘do what needs to be done'” for a repair, a description of a DRP forcing shops to eat supplements and confusion over DRP shops’ place in the proposed rate surveys. Legislation related to OEM procedures, labor rate surveys and DRP network promotion produced extensive discussion Monday about how direct repair programs operate in Texas.
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