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SCRS
Charts Demonstrate Paint Costs Increases & Unfairness of Arbitrary
Formulas Used to Calculate Charges
January
2001
The
Society of Collision Repair Specialists (SCRS) continues its work
to educate collision repair professionals, insurance company claims
personnel, and state insurance departments on the true costs of
paint and materials and to bring equity and fairness to the process
of calculating these charges.
One
of these efforts includes SCRS's work to identify which state insurance
departments disallow the practice of placing an arbitrary cap or
threshold on the charges for paint and materials. Another important
SCRS project is to publish charts demonstrating the annual increases
in the costs of refinish materials. Shops and insurers can then
use this information to demonstrate the need to adjust the rates
in order to cover the regular cost increases applied by the paint
manufacturers.
SCRS's
most recent charts compare the cost increases from 1999 to 2000
for refinish materials that are manufactured by five major suppliers:
Akzo Sikkens, BASF, DuPont, ICI Autocolor, PPG Industries, and Sherwin
Williams. There are two separate charts-one is for materials used
in areas that comply with the Environmental Protection Agency's
National Rule limiting the content of volatile organic compounds
(VOCs) and one for those areas (primarily in California) that are
restricted to using products that have VOC limits lower than
the National Rule.
"SCRS
publishes these charts every year," explains SCRS Chairman Gene
Hamilton, "because we understand how easy it is to lose sight of
the hard costs for paint and materials. Paint suppliers don't issue
itemized invoices for paint and materials for each vehicle as it
is done for the other parts of the repair. This situation is compounded
by the fact that historically, shops have been forced to calculate
charges for paint and materials based on an arbitrary formula -
the paint labor hours of the job multiplied by an arbitrary dollar
figure. On top of that, the dollar figure can vary from region to
region-$14 here or $22 there-in spite of the fact that the manufacturer
costs are the same for each paint and material product throughout
the country.
"There
are several other factors that affect the cost of paint and materials,"
Hamilton continues. "For one, there are vehicles that require more
expensive multi-stage coatings, special colors, iridescents or pearls.
Repairers are also faced with the dilemma that the number of hours
for refinish labor has been reduced over the last five years due
to the technology improvements. At the same time, no adjustments
were made to the 'formula' to reflect this in spite of the fact
that the amount of materials used has remained the same and the
costs of materials has increased. This system is inadequate and
is responsible for not only eroding profits, but in many cases it
does not allow for enough money to pay the repairer's costs."
"Another
problem encountered by the shops is the arbitrary limitation placed
by the insurance company on what they charge," states SCRS Executive
Director John Loftus. "Call it a cap or call it a threshold, the
result is often insufficient. Some of these caps were set in 1996
at anywhere from $175 to $350. The cost of paints and materials
has increased an average of 8 percent each year, which means the
$350 limit of 1996 should by $514 in 2001. But insurers still continue
to use the old figures, which contribute to friction and cost shifting."
SCRS
recommends that repairers document their costs for these materials.
One way is with the help of the paint jobber or with computer systems
provided by the paint manufacturers. The Mitchell Refinishing Materials
Guide, the Mitchell Refinishing Materials Calculator, ComputerLogic's
PaintLogic, and the PaintEX information systems are other reliable
resources. These guides and systems are being used successfully
throughout the country. The state insurance departments of New York
and Nebraska say that a guide is an acceptable method to calculate
paint and material charges. Members of SCRS and its affiliate associations
can purchase the Mitchell Refinishing Materials Guide at a $30 saving
and the Calculator at a $100 saving.
"SCRS
is grateful to all of the participating paint manufacturers," says
Loftus. "We could not accomplish a project of this scope and credibility
without their cooperation."
The
Paint & Material Cost Charts are attached to this press release.
For more copies or further information, call SCRS at 509-547-0445
or fax 509-547-0446 or send email to scrs1@aol.com. Additional information
about SCRS, including news releases, is available at the SCRS web
site (http://www.scrs.com).
Through
its direct members and 32 affiliate associations, SCRS is comprised
of 8,900 collision repair businesses and 75,200 specialized professionals
who work with consumers and insurance companies to repair collision-damaged
vehicles.
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