From the courtroom to the aluminum “clean room,” 2016 is shaping up to be another year of change and drama for the collision repair industry. New laws will go into effect, new vehicle technology will roll into shops and new insurer and vendor practices are expected to play a role in the day-to-day business of shops.
As 2016 begins, here’s our annual preview of what to look for in the coming year.
Two-tier shop licensing begins
The industry this year will get its first look at how a two-tiered shop licensing program can work as a new Rhode Island law goes into effect this month. The legislation segments collision repair facilities as "Class A" or "Class B," based on equipment and training levels. It also requires that insurance companies conduct labor rate surveys to determine "separate and distinct" prevailing labor rates for the two classes of shops.
The law stipulates that a Class A facility: must be certified by at least one auto manufacturer for the repair and refinishing of aluminum, high-strength steel and other metals; must provide a written limited lifetime warranty against workmanship defects; must maintain a system for documenting customer complaints and responses; and must provide evidence of certification of all technicians employed at the facility.
For insurers, the new law has very specific requirements for the annually required labor rate survey process, though it does allow insurers to consider factors in addition to the survey when establishing prevailing rates for each classification of shop.
Jina Petrarca-Karampetsos of the Auto Body Association of Rhode Island, which backed the new law, expects that less than 15 percent of the approximately 200 shops in the state will initially qualify as Class A. But she said the association is working to find ways – such as bringing in group training – to help shops more affordably meet the “Class A” requirements.
“It’s in everyone’s interest to get up to this level,” she said. “Any shop that doesn’t get itself ready in the next 5-10 years is not going to be in business. As we told our membership, we’re giving you the incentive to get on this now, to keep yourself competitive.”
Number and severity of claims to rise
For collision repairers bombarded with news about new accident-avoidance technology, here’s some good news: Analysts at the Big Three estimating system companies don’t think that will hurt the industry in the short-term. Across the board they are not predicting decreases in 2016 in the number and bottom-line price of collision repair jobs.
Rick Tuuri of AudaExplore is perhaps the most guarded, suggesting that the number of claims “will remain flat to up slightly in 2016.” He expects the slight rise in report costs seen in 2014-2015 also to continue in 2016.