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ALLSTATE
WANTS SHOP DISCOUNT
Company
declines comment-says agreements confidential
March
26, 2001
Allstate
Canada Insurance needs more savings. Evidently not content with
the $14 million profit it made on $470 million (year 1999) in premiums,
the company is approaching shops in Ontario and New Brunswick and
strongly recommending discounts from the retail prices of parts
with the anticipation that if the shop wants to continue being part
of the Allstate "PRO" preferred shop program, they must sign a new
agreement.
Complaints
from Allstate's preferred shops about the company's aggressive behaviour
led to the Hamilton District Autobody Repair Association's (HARA)
inquiries.
HARA
asked Allstate to comment on concerns from shops over an unannounced
Allstate claims policy. HARA noted that shops are being asked to
provide Allstate with a 10% discount from list price on domestic
parts and a further 5% discount on foreign parts.
Allstate
was also asked about complaints from Allstate PRO preferred shops
who complained that they were being told that if a customer refuses
to allow the shop to repair the vehicle, that the discounted parts
must stay on the estimate that the customer receives in order for
the customer to take the estimate with the lowered pricing to another
shop.
In
response to a request for confirmation or denial, Allstate responded
with a curt "Agreements we have with any of our vendors are confidential"
and that customers are free to choose any facility to complete repairs.
"Our
fear is that this new policy of obligating shop discounts to cut
Allstate's costs will simply mean that shops will just "cost shift",
meaning shops will find other ways on the invoice in order to recapture
any losses they incur on this program" says John Norris of the Association.
Asking
for supplier discounts has become popular after companies such as
Daimler Chrysler, facing massive losses, started demanding discounts
from suppliers. This appears to be the first time, however, where
a major company is demanding supplier discounts while still being
profitable.
Allstate
Canada also made the news recently when the company successfully
went to court against the City of Toronto in an attempt to force
Collision Reporting Centres in the City to allow insurance companies
working in the buildings to recommend "preferred" shops to consumers.
Under the City by-law that Allstate Canada Insurance and other insurers
successfully defeated, the insurers could not recommend "preferred"
shops, but must offer all shops for repair opportunities that met
an industry accreditation standard for equipment, compliance and
licensing. Toronto City Council has voted to appeal that court decision.
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