Bray’s Report

According to a local wholesale Ford parts dealership we contacted, it was confirmed that Ford has announced a new program offering discounts on the most common sheetmetal body parts. Auto collision repair facilities need only to purchase the parts from a participating Ford, Lincoln, Mercury wholesale dealer to realize the savings. The part discounts now make Ford OEM parts a much more competitive option when compared to aftermarket sources. With Ford coming off one of the company’s worst quarters ever, increasing sales of it’s factory parts could be seen as a way of minimizing even further losses.

Earlier this year the buzz within the auto claims industry was the question of how gas prices would affect claim volume. As anticipated an educated guess would be that with fewer miles driven, fewer claims would follow. With the surge in gas prices in the 2nd quarter of 2008 and a study released a few days ago showing nearly 10 billion fewer miles driven compared to last May, the first signs of a decrease in vehicle accidents is appearing. As national insurers release their quarterly results,  further trends may evolve. Allstate just reported in the 2nd quarter that claims involving autos decreased by 4.2% and bodily injury claims fell 7.6%.  The general consensus among claims professionals we have spoken with throughout the U.S. seems to be that volume has dropped at a yet unknown rate. One interesting factor though in the Allstate report was that while claims were trending downward, auto property damage (APD) settlement averages were up 2.6% and BI payments rose 7.1%. Some of the increase in APD severity may be due to rising parts prices of metal and plastics.

As the 3rd quarter is unfolding, oil prices have dropped due to decreased demand and some states have seen a slight relief in gas prices over the past few weeks. With Labor Day on the horizon and if gas prices continue to slide, drivers may take to roads again. Could this alter trends seen from the first half of 2008?

In a recent release by Farmers Insurance, they are now offering automobile coverage for pets.  The coverage is limited to injuries or death sustained during a crash or theft of an insured vehicle.

Click Here for More.

This is the question I pondered yesterday as I was walking through a parking lot when a vehicle to my left began to roll out toward me. Actually, it wasn’t rolling, the owner was driving forward silently in their “hybrid” vehicle. While these electric cars may save gas, will such vehicles cause more vehicle to pedestrian accidents and parking lot collisions? After doing some research, there doesn’t seem to be any studies regarding the frequency of hybrid collisions however I did find a few articles relating to the lack of noise issue. There is now proposed legislation in congress to require these electric hybrids to emit some noise to warn people. As usual there is opposition from “anti noise” groups opposing such legislation. Time will tell if the noise issue truly has any impact on accident frequency as studies will likely turn up in the years to come.

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Here’s two links below:

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Hybrids cars may pose threat to the blind.

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HR Bill 5734

We’ve all heard of mobile glass companies, PDR services to remove small hail dents but collision repair in your front yard? Well, in a release we just found the other, there is a company now attempting to do just that. collisiononwheels.com claims to be able to do just that. They apparently work with CCC’s estimating platform and claim to have several insurance companies inquiring. It would be interesting to see how such an operation handles EPA air standards and liability insurance with this type of mobile operation

Click Here for the press release.

U.S Department of Transportation releases statistics on seven months of declining travel. 

Click Here For The Release.

In a recent article regarding the shift by U.S. consumers toward smaller vehicles due to gas prices, The Institute for Highway Safety President Adrian Lund indicated,”You’re better of in a bigger vehicle than in a smaller one.”

While their studies indicate rollovers will likely decrease with a shift away from SUV’s and trucks but vehicles that are smaller and lighter have less room inside to protect occupants. 

Click here for the story.

Allstate, one of the nation’s largest auto and homeowner insurers encountered big losses due to it’s exposure to mortgage related investments. 

Click here for the full story.

SACRAMENTO ― With summer vacation looming and many Californians traditionally driving more frequently or longer distances, Insurance Commissioner Steve Poizner warned area drivers to be alert for staged auto collisions. In 2007-2008, 14,623 referrals out of 23,734 insurance fraud referrals received by the California Department of Insurance – 61 percent – were for suspected automobile insurance fraud.

“Insurance fraud is like a $500 tax on every man, woman and child in California, and auto insurance fraud is a major part of this problem,” stated Commissioner Poizner. “Staged collisions are not victimless, even when no one is injured, and an aware public is part of a great defense against these dangerous criminals.”

More than $182 million could have been lost by insurance companies in 2007-2008 if the auto insurance fraud was not discovered. Actual loses, however, are subsequently built into the insurance companies’ pricing structures.

In Sacramento there were 802 suspected fraudulent claims (SFCs) in 2007-2008. That’s down from 856 SFCs in 2006-2007 but up from 788 in 2005-2006. In Sacramento County, potential losses were $5.6 million in 2007-2008 up from $5 million in 2006-2007 and comparable to the $5.8 million in potential losses in 2005-2006.

There are primarily three schemes typically used in staged collisions:

o      Panic stop

o      Start-and-stop

o      Swoop-and-squat

People who create these pre-planned accidents, also known as stagers, look for high value targets, such as commercial vehicles, expensive luxury vehicles, and vehicles owned by cities or counties. They are considered “high value” because of the virtual guarantee of insurance coverage.

The following signs may tip-off a driver of fraudulent activity:

o      The other car is packed with passengers;

o      The other driver has a relatively new insurance policy;

o      The other car is in poor condition or has a “salvage” title;

o      Traffic was flowing smoothly and the other driver stopped suddenly;

o      The other driver and/or the passengers make extra effort to avoid conversation
        about the other vehicles in the area;

o      There is a witness that substantiates everything the other driver says; and

o      The other driver and his passengers all claim injury despite relatively minor
        collision damage to the vehicles.

If someone suspects he is the victim of a staged collision insist on a police report; document as much information from the collision scene as possible, using a cell phone to take photographs or video; ask the peace officer to positively identify everyone involved, report it to CDI at 800-927-HELP (4357) or go to: www.insurance.ca.gov.

In the first 7 months of 2008, British and German made vehicles led the way in the highest severity for vehicle damage. The average German made car’s severity is $ 3927.41 and British made at $ 4314.09.  OEM part usage was also 83.12% and 92.81% respectively. In comparison, U.S. made vehicles had an average severity of $ 2739.41 and Japanese made at $2893.89. OEM usage on both U.S and Japanese made averaged around 66%.  The higher severity on the British and German made cars are due to the fact they are usually luxury type vehicles with a nearly non existent source of aftermarket parts. Many require the OEM parts to be shipped to the U.S. which increases costs considerably.

Source: AutoClaims Direct Inc.  DirectLink. 2008