The pending merger between CCC and Mitchell has been temporarily halted due to an injunction granted by a Federal District Court in the District of Columbia. 

In tough economic times people are driven to do the craziest things. In a small sector of some auto claims departments, managers have been trying various methods to lower loss adjustment expenses including the antiquated “Desk Redline”. A proven failure time and time again, this recycled procedure is often brought back in a drastic effort to “save” on front end costs yet sends millions out on the back end.

This method is implemented when claims departments utilize in-house staff to sit at a desk with auto damage estimating software and ask repair shops and vehicle owners to email photos of the damage with a copy of a shop’s estimate for review. The “Desk Estimator” then reproduces the estimate or reviews it for variances and attempts to negotiate a repair cost over the phone. This allows the insurer to bypass the cost of having a field appraiser involved. At first glance this seems like a plausible solution to save on fixed loss adjustment expenses however, the truth is more frightening. The average loss paid out for repairs is $437 higher per file than the average estimate completed by field appraisers according to a sampling of data compiled by AutoClaims Direct. The average “Desk” supplement percentage was much higher than field appraisers by a whopping 14%.   Additionally, the average supplement was $212 higher per file. These factors combined demonstrate that while occasional “redlining” of shop estimates may be necessary, it is not a good idea to implement as a standard operating procedure.  With the average severity being $437 higher on “Desk Redlines”, just 2300 files would add up to well over a million dollars in overpayments. Instead of a redline this could give many claims offices a flatline in today’s marketplace.

Many people we spoke with who work on the auto body repair side and insurance side said the biggest and most important factor in accurate estimating is placing a set of trained eyes on the damaged vehicle in person.  A picture is great, but the depth of dents and the “visual” a live inspection provides is essential. Insurers have little ground to stand on if nobody on their side has seen the damage in person.  Additionally, insurers who rely on auto repair shops to provide photos and estimates are walking on dangerous ground considering a report conducted by the California Bureau of Automotive Repairs some years back called “Fraud On Wheels”. The study found that nearly 39% of all bodywork in California involved some form of fraud.  With a tough economy, shops that commit fraud are unlikely to change their ways anytime soon.

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With the cost to repair vehicles increasing and the value of used cars dropping, the auto insurance industry along with auto repair shops are seeing more total losses. Click here for the full story.