Does 2010 hold brighter promise than the year that just ended? And what about all of the industry issues left still unresolved on Dec. 31? In the waning weeks of 2009, ABRN turned to industry experts and observers to put together this 2010 outlook, a roadmap of sorts to the 12 months that lie ahead.
Total losses, claims count
What do Audatex, CCC Information Services and Mitchell International expect to see in 2010 in terms of accident frequency and the percentage of vehicles declared total losses? Their answers show that industry analysts can look at much the same data and come to somewhat different projections for the future, although all three companies say the industry can expect subtle rather than dramatic changes in 2010 compared to 2009.
Repairers may enjoy an uptick in the number of potential jobs in 2010 if claims frequency continues the upward trend that Mike Anderson, senior director for data analytics and industry trends at Audatex, has seen in the last months of 2009. He and Susanna Gotsch, CCC's lead industry analyst, both pointed out that accident rates mirror the total vehicle miles Americans travel, which has been on the increase heading into 2010.But Greg Horn, Mitchell's vice president of industry relations, said he believes the high numbers of Americans opting to drive uninsured because of the recession will drive insurance claim frequency down at least in the first half of 2010. And Anderson also cautions that claims frequency also tracks consumer confidence as well, so that's another number shops will want to watch in 2010.
The analysts also are split on whether the percentage of vehicles declared a total loss will be up, down or level this year compared to last, although all three say any change will be subtle.
Audatex's Anderson said the total loss percentage peaked about a year ago, but still hovers at just above 17 percent of estimates written, according to his company's data. He doesn't foresee a return in 2010 to the more "typical" 15 or 16 percent range in part because new car sales are likely to remain anemic. That means the vehicle fleet on the road will continue to be older and thus more prone to total.
But Horn said another total loss influencer, the actual cash value of vehicles, has improved somewhat in recent months. He sees those higher used vehicle values, which allow for higher repair costs before a vehicle is totaled, and expects the total loss percentage to dip a little in 2010.
Like Horn, Gotsch said more potential totals also are being saved as shops – perhaps in part because of a hunger for work – are using 3 or 4 percent more used and aftermarket parts, helping keep average repair costs flat or down. In spite of this, she said, the percentage of totals crept up about 1 point in 2009, and could rise further – she estimates perhaps another one-half percentage point – in 2010.
Battle over parts law language
Last fall, the Property-Casualty Insurance Committee of the National Conference of Insurance Legislators (NCOIL) approved a model law related to airbag fraud and replacement. NCOIL crafts model legislation that its members – state lawmakers from around the country – can take home for possible introduction on a state level. Although the language NCOIL committees craft carries no authority until a state chooses to enact it, NCOIL can be the "birthplace" of legislation impacting the industry.For that very reason, according to Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), it's important that the collision repair industry makes its views heard as NCOIL acts in 2010. At its meeting in March in Charleston, S.C., the NCOIL committee will consider a piece of model legislation that currently includes some anti-steering provisions, and also language on non-OEM parts that, among other things, creates the legal presumption that parts certified by the Certified Automotive Parts Association (CAPA) are of like kind and quality to OEM parts.
Schulenburg said he believes the model bill may be broken into two: one on steering and one on the parts issue. He said there appears to be concern about the parts-related language among shops, automakers, insurers and even non-OEM parts manufacturers and distributors
"While each has differing positions on why they oppose the model, we hope the vast and diverse objection to it will influence the legislators to kill the model bill." Schulenburg says.
He also urged shops to contact lawmakers from their state who are on the NCOIL Committee.
Data privacy concerns
Data privacy and ownership issues aren't new or unique to the collision repair industry. But expect them to get some renewed attention by industry groups in 2010 as the information providers shift toward systems that store shop estimates and even management system data on the vendor's computers rather than the shop's.
Lou DiLisio, chairman of the Collision Industry Conference (CIC) Database Committee, said shops are concerned about protecting not only their own data, but that of insurers with which they may have agreements, as well as consumer data.
"I personally don't want my information, about whether I had an accident, out there," DiLisio says. "It's nobody's business but mine."
Paint regulation compliance
January marks the first deadline for shops under the new Environmental Protection Agency (EPA) automotive refinishing and stripping regulation finalized some years ago. Shops must register with the EPA or their local or state environmental agency this month and indicate whether they are currently in compliance with the requirements, or that they will be by March 2011.
It's going to mean some shopping or housekeeping for some shops this year in order to meet the requirements, which include use of a compliant paint booth, approved gun-cleaning equipment and methods, and painter training. For details, check the EPA's Collision Repair Campaign Web site (www.epa.gov/collisionrepair).
Federal regulation of insurance
Last summer, the Automotive Service Association's (ASA) Washington, D.C. rep Bob Redding told shops that more than at any time in recent history, the federal government appears poised to wrest some oversight or regulation of insurance from the hands of the states.
"There are members of Congress who want to help us with the federal regulation of insurance and the repeal of the McCarran-Ferguson Act, but collision repairers will have to communicate with their representatives to let them know they support these issues," Redding says.
And indeed as 2010 begins, it seems likely that the long-standing exemption from federal anti-trust regulation that insurers have enjoyed will be over – at least for health insurers under healthcare reform legislation. Redding said ASA is pushing for other federal legislation Congress is considering that would repeal the McCarran-Ferguson exemption for property-casualty and other lines of insurance.
Meanwhile, a U.S. House Committee at the end of 2008 unanimously passed the Federal Insurance Office Act, which would establish an Office of Insurance Information in the Department of the Treasury. It also calls for a study on how to modernize and improve insurance regulation in the United States.
Such a shift away from state to federal regulation of insurance isn't supported by all repairer groups.
"It is much easier for repair shop representatives to get to know their state legislators than it is for them to get the time and attention of their Congressperson and U.S. Senators," the Alliance of Automotive Service Providers of Minnesota said, for example, in a recent statement on the topic.
