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Allstate Discount Request Enrages Shops

July 2001, Bodyshop Magazine

Allstate Insurance Company of Canada recently asked its preferred collision repair facilities in Ontario and New Brunswick to discount the prices of replacement parts to the tune of 10% for domestic parts and 5% for foreign parts.

The alternative, industry insiders report, was to lose standing as a preferred Allstate partner.

"For the vast majority, refusing the concessions is not an option," John Norris, executive director of the Hamilton Autobody Repairers Association (HARA) insists. "Shops are so dependent upon the insurance industry that losing preferred status would be devastating."

Already, the industry is facing a dreary profitability picture. The hourly labor rate has barely increased in ten years. Margins are currently eked out of part sales, which to date has been a lone bright spot for bottom line profits. But with overall margins already at 4% across the country, this latest concession could hit shops hard. For this very reason, and its reliance upon the insurance industry, shop owners are afraid to speak out on record against the proposed discount.

One Ontario shop owner says Allstate has stated their proposal is non-negotiable and that many shops will be forced to resort to creatively shifting estimate costs in order to make lost monies back.

Another operator says since the proposed discount is for new parts only, more repair shops will favor used parts, or allocate more labor hours into repairing damaged cars that would otherwise have received new parts. "I don't want to put new parts on Allstate cars anymore," says an angry Central Ontario shop owner. "I will do everything I can to avoid using new parts. I'll make back the money they are taking from me in other ways." In other words, shops that are intent upon retaining profits will opt for higher margin repairs or switch to used parts. Workmanship could suffer and the eventual resale of repaired cars -- no longer outfitted with new parts -- could diminish.

Norris does not believe most shops will resort to such unethical practices. "Still, the opportunity and the desire to walk down that path will now be greater than it ever has been," he adds. For its part, Allstate refuses to talk about confidential agreements.

Michael Haskell, Allstate Canada's president, says discounts are proposed to save claim costs and enhance company profitability for shareholders. Haskell refuses to comment upon the potential that bodyshops may cost-shift in an attempt to make back profits. "The ultimate question is to speculate on how bodyshops are going to react, and that's something I cannot do."

Bodyshop operators fear discount concessions will bring forward other insurers lining up for a similar deal. "The biggest fear is that now every insurance company will start asking for the same discount on the basis of the Allstate deal."

Faced with that possibility, one bodyshop owner insists options are limited heading into the future. "If all the major insurance companies start asking for this program, we are not going to be around in five years," he says.

IBC Says Auto Insurance Costs Continue Upward Spiral

Tuesday, July 17, 2001, Collisionweek Magazine

The Insurance Bureau of Canada (IBC) yesterday released its most recent Atlantic region figures for 1999 and 2000, confirming the steadily worsening losses being incurred on automobile insurance.

"Our actuarial estimates confirm the trends we've seen in recent years are continuing," said Don Forgeron, regional vice-president of the IBC. "Costs continue to increase significantly, all of which will soon negatively impact motorists in every province in the region."

In 2000, losses incurred by the auto insurance industry in Atlantic Canada were about $190 million. In 1999, the industry increased its original loss estimate to $150 million from $100 million. Analysts predict a continued rise in costs unless changes are made to the current auto insurance products offered.

"For several years, the average cost per claim rose while the frequency of claims and accidents fell," said Mr. Forgeron. "In recent years, the frequency of claims has started to rise again, creating the worst possible scenario, a higher average cost per claim and more of them."

Research shows that the types of claims with the greatest increase in cost are soft tissue injuries such as neck strains and sprains. Most the claims that are paid in these cases do not compensate the victim for what has been lost, but rather for pain and suffering. Research is now underway to help the industry determine the reasons why costs continue to rise, confirm the types of injuries that are contributing most to the current high costs, and look at the distribution of these costs. The bureau is also surveying public opinion to find out the level of understanding of industry issues and the tolerance for changes to auto insurance products.

"As consumers feel the effects of these rising costs over the next six to 18 months, government and industry leaders will be called upon to respond," added Mr. Forgeron. "In addition to meeting with government officials to ensure that they fully understand the problem, we're working to provide a range of solutions."

The bureau is working with governments to develop various options to reform the current auto insurance product so that costs remain stable and accident victims can be fairly compensated and in a way that is consistent with the views of Atlantic Canadians. Consumers can contact the bureau's consumer information center in Halifax if they have questions about their home or car insurance. The center can be reached at (902) 429-2730 or toll-free at 1-800-565-7189.

The Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents about 200 companies that provide more than 90 per cent of the non-government home, car and business insurance sold in Canada.

Copyright 2001 by CollisionWeek. All rights reserved. No part of this publication may be reproduced or transmitted by any means without permission in writing from the publisher.

APPRENTICESHIP RETENTION STUDY RELEASED FOR SKILLED TRADES

Over 350 apprentices surveyed for job retention factors

July 16, 2001

The results of a six month study of skilled trades apprentices, including the collision repair trade, shows that the biggest factors in retaining an apprentice were appreciation for a job well done and that they liked their co-workers. Wages were sixth on the list.

The study "Apprentice Retention in the Skilled Trades" was commissioned by the Industry Education Council of Hamilton and conducted by the Sir Wilfred Laurier University Business Consulting Program and funded by Human Resources Development Canada.

The 350 apprentices interviewed told the survey team that 30% had already switched employers at least once. Some interesting facts:

• 98% were male with 50% under25 years of age.
• 53% believe it would be easy or very easy to get another job in their trade.
• 68% were earning annual salaries in the range of $20,000 to $39,000
• 60% thought they were fairly paid by their employer.
• 85% expressed satisfaction with their skilled trade career choice, so retention is not related to overall career satisfaction as it is related to satisfaction with a specific place of employment.

Some further results:

• Apprentices want to be appreciated by their employer.
• Over 65% ranked "liking the people they work with" as the number one reason they stay with their employers.
• 74% said loyalty increases with job satisfaction.
• 93% of apprentices are proud of the work they do. They saw positive, effective and constructive communication as central to good management.
• Apprentices stay with employers who give them a level of responsibility equal to their ability.
• Apprentices want to work in a safe environment and produce products and services that are not harmful to the consumer.

The study is now available on line at www.skilledtrades.ca or at www.skilledtrades.ca/assets/forum/st_report_summary.pdf It can also be accessed on the collision repair industry site at www.ciia.com under "Training"

The Art of Earning-Hi-Tech Careers in the Collision Repair Industry

Local association helps produce and distribute CD-ROM

July 14, 2001

The Collision Industry Action Group is proud to announce that the new CD-ROM on attracting new workers to the trade is now available.

"The Art of Earning" is a new CD-ROM visual tool that provides information on careers available in the collision repair industry and successfully promotes a positive industry image.

The beta version of the CD-ROM was shown by Co-Chair of the Attracting and Retaining People Committee of the Canadian Collision Industry Forum, CIAG's John Norris, to audiences in Winnipeg and Calgary and shown to the industry for the first time in its bi-lingual version in Montreal in May, 2001. Just recently released by the Automotive Industries Association and the Canadian Collision Industry Forum(CCIF) the CD-ROM is designed for viewing at school skills days, shop open houses and through apprenticeship branch offices throughout Canada. The idea for a CD-based presentation tool came from the AIA Paint, Body and Equipment Council members after they received numerous requests from high schools to visit and speak to students about the collision repair business. Council members soon realized that they needed an effective visual tool to assist them to deliver a clear message to young people.

The presentation includes information on training, skills ands salaries. As well, a virtual shop tour, interviews with apprentices, technicians, and shop managers and a full "next steps" section provides opportunities for learning about the trade.

"Our goal is to get a copy of this CD-ROM out to all levels of the repair industry. With this kind of tool available we can now begin to take the industry into the classroom to address key industry challenges of recruitment and industry image", stated Ken Friesen, Chairman of CCIF

Copies of the cd-rom are available from AIA Canada at (613) 728-5821 . As well, copies have been forwarded to trade associations across the country, government apprenticeship offices and community colleges that deliver collision repair training in Canada.

INDUSTRY ASSOCIATION SUCCEEDS IN CHANGING WSIB POLICY

No penalties, interest if shops register now

July 12, 2001

After lobbying for the change in penalty registration process throughout last year, the collision repair industry trade associations are pleased to announce that the Workplace Safety and Insurance Board (WSIB) has now accepted our position.

This new policy from WSIB means that any employer who was not previously registered with the Board can now contact the Board voluntarily and will only need to pay premiums retroactive as far back as January 1, 2001.

Previously, the Board had insisted that shops be charged for up to the last seven years of missing premium remittance.

WSIB has adopted this position in order to accommodate unregistered shops , but just for a limited time.

WSIB has agreed that they will not charge a voluntarily registering facility any premiums due from a previous year, and they will waive all penalties, interest and provincial offenses charges associated with the registration.

Registering your collision repair business with the Board is a legal requirement and included as a mandatory portion of both the Toronto shop accreditation program and the new CISCO self-management accreditation proposal.

Shops that do not step forward to register, will be subject to investigation by the WSIB Special Investigations Branch and may be charged the outstanding amount due on all premiums, plus interest and penalties

Also shops may also be found guilty of a provincial offense and fined up to $25,000 (up to $100,000 if a corporation) or put in jail for up to six months.

All unregistered shops are urged to register with WSIB as soon as possible.

CANADIANS AMONG GLOBAL AUTOMOTIVE SCHOLARSHIP RECIPIENTS

Collision repair students among winners

July 12, 2001

A total of 132 students will receive the annual Global Aftermarket Symposium Scholarship in 2001, including 20 Canadian students from schools across the country. The Global Automotive Aftermarket Symposium Scholarship is funded through proceeds from the annual Global Automotive Aftermarket Symposium. The two-day program brings together numerous industry executives to examine issues and trends facing the aftermarket. The scholarships are focused on providing assistance to individuals pursuing automotive studies at technical colleges and vocational schools or college-level programs.

The scholarship is unique in that students may receive two financial grants: one to assist in tuition payments while they are in school; and an equivalent matching grant for all scholarship recipients who graduate from their program. Graduates must provide proof of employment in the automotive aftermarket for at least six months following graduation.

The Co-Chair of the Attracting and Retaining People Committee of the Canadian Collision Industry Forum (CCIF), John Norris, advises that their Committee is looking very seriously at these scholarships with a view to encouraging industry donations across Canada. The issue is on the agenda of the CCIF meeting on July 21 in Vancouver.

The Canadian recipients are:

• Deanna Barth, Edmonton, Alberta
• Alberta Tara Cooper, London, Ontario
• Alicia Corey, New Minas, Nova Scotia
• Erin Friesen, Surrey, B.C.
• Julie Gagnon, Chicoutimi, Quebec
• Jennifer Gatschene, Orillia, Ontario
• Catherine Goudreau, Laval, Quebec
• Chris Hopkins, Saskatoon, Sask.
• Michael Horm, Westbank, B.C.
• Robyn Jutras, Burnaby, B.C.
• Allison Kennedy, Hampton, N.B.
• Pamela Kinch, Summerland B.C.
• Hemraj R. Kishun, Toronto, Ontario
• David. C. Nelson, Minnedosa, Manitoba
• Adam Nicholls, Brandon, Manitoba
• Keith Nicholls, Ottawa, Ontario
• Mathew Spence, Vancouver, B.C.
• Paul Vaillancourt, Ottawa, Ontario
• Jeff Young, Stephenville, Nfld
• Ryan Young, Barrie, Ontario

HAMILTON POLICE HAVE STOLEN AIR BAGS- LOOKING FOR OWNERS

July 11, 2001

Hamilton police have seized a number of surgically removed stolen vehicle air bags as part of an investigation into the recovery of about $50,000 worth of electronic equipment and other goods.

A 21 year old Granville Avenue, Hamilton man is facing numerous charges in connection with the thefts. Immigration Canada has also issued a warrant to deport the accused who has been living in Hamilton illegally for three years- to Poland once the charges have been resolved.

The man was arrested after returning to a Future Shop store and requesting to see in the box of a Sony PlayStation game that he had just returned. Inside the box was a loaded .22 caliber semi-automatic handgun.

The accused is also wanted in Chicago for burglary, weapons and drug offenses.

Hamilton Police are looking for the owners of seven air bags, including:

• Mazda-driver's side
• Mazda-passenger side
• Ford Probe-driver's side-black
• Pontiac-driver's side-black
• Pontiac-driver's side-grey

and two unidentifiable surgically removed passenger side air bags.

If you think one of these air bags is yours, or you have paid out a claim on these bags and want them back, please call Defectives Peter Thom or Ron Collingwood at ----(905) 546-2905

Competition Bureau Charges New Brunswick Chemical Company

OTTAWA, July 10, 2001

The Competition Bureau announced today that charges have been laid against Laurentide Atlantic Limited of Richibucto, New Brunswick for misleading the public.

The charges allege misleading information on labels of various lines of paint. Following an investigation, the Bureau found that labels did not accurately reflect the amount of paint in the packages, contrary to section 7.(1) of the Consumer Packaging and Labelling Act. Labels help consumers make informed choices.

The Competition Bureau is an independent law enforcement agency that ensures all Canadians enjoy the benefits of a competitive economy, low prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

I-CAN PRESS RELEASE STATE FARM CRIMINAL FRAUD CONVICTION UPHELD PENALTY REDUCED TO $1.056 BILLION U.S.

July 1st 2001

In a fourty page decision, issued on April 5, 2001 the Fifth District Appellate Court of Illinois upheld the criminal fraud conviction of State Farm Insurance for having mandated the use of inferior aftermarket crash parts in the repair of consumers' vehicles. While upholding the trial court conviction, the appellate court determined there was an over-lap of financial penalties and reduced the original trial court award of $1.186 billion (plus accruing interest). This net remaining award is one of the largest verdicts ever upheld on appeal and represents an average reimbursement of $223.40 (U.S.) for each of the 4.7 million members of the plaintiff class.

The class members in this case are defined as U.S. residents (except those in Arkansas and Tennessee) who were insured by State Farm, made a claim for vehicle repairs under their policy between July 28, 1994 and February 23, 1998 and either had Aftermarket Crash Parts installed in their vehicles or received compensation based upon the cost of such parts. Employees of State Farm, its officers, its directors, its affiliates and residents of California with policies issued or executed prior to September 2, 1996 are excluded from this class. The full fourty page decision can be assessed online at www.lchb.com/images/state_farm.pdf State Farm may now petition the Illinois Supreme Court for review. If that petition for review is denied, or if it is accepted and State Farm were to lose at that level, State Farm could then apply for review to the United States Supreme Court. The U.S. Supreme Court had previously denied State Farm's petition to review the class certification of this case.

Elizabeth J. Cabraser, one of the trial and appellate attorneys for the plaintiff class, has commented on this decision saying " the appeals court opinion was a victory for consumers who are unable to obtain meaningful relief from large corporations on their own and a vindication of the class action device."

In its opinion upholding the trail court's verdict, the appellate court noted that" State Farms' guarantee that it would replace non-OEM parts at no cost to the unsatisfied policyholder upon demand was bogus" The opinion went on to say "State Farm 's promise to pay for parts of "Like Kind and Quality" to restore a vehicle to its pre-loss condition" was breached when it specified and paid for inferior non-OEM parts." It is no a mater of legal record. Aftermarket Crash Parts are deemed "inferior" to OEM Crash Parts !

PREMIUMS:

The appellate court opinion went on to say " State Farms' actuary testified that any damages awarded would be paid from the company's reserves and would not affect premiums and that the amount awarded would not affect the company's financial viability or its ability to pay dividends or future claims."

The Insurance Consumer Advocate Network (I-Can) views this on-the-record testimony from State Farms' own actuary as flying in the face of the auto insurance industry's continuous assertions that legislative restrictions on the use of Aftermarket Crash Parts would result in auto insurance premium increases. Auto insurance lobbyists freely distribute anecdotal comments to legislators about premium increases when not under oath. However, State Farms' premium calculator expert (actuary) testifies under oath that NO PREMIUM INCREASE would be necessary. I-Can is inclined to believe the under-oath testimony of State Farms own actuary. This is especially true in light on the fact that State Farm, with a $1.186 billion judgement against them, and having already abandoned the practice of specifying the use of Aftermarket Crash Parts, declared a record $1 billion Premium Refund Dividend to be returned to their policyholders in June 2000 (eight months after the trial court decision)

HARA
Hamilton District Autobody Repair Association
"To represent the best interests of the industry, providing opportunities for growth for environmentally sound, profitable businesses having competent and trained professionals serving the public."

WE'VE MOVED (as of February 1, 2001)

HARA's new office address is: