Click here to read the story we found about auto thefts dropping in AZ.

Here’s a good investigative video on how some scam artists can try to “flood” the market with cars damaged by water. Click here for the video.

AutoClaims Direct CEO Ernie Bray and his wife Peggy along with their two sons at the Carlsbad Educational Foundation’s  ”Celebrate Carlsbad Day” event.  AutoClaims Direct supports the community of Carlsbad and local education.

How can a Material/Physical Damage manager contain costs, reduce leakage and ultimately run an effective claims department? We all know that claims is often seen as necessary evil of the insurance process. The underwriting and investment side of the business is where the money is made and claims is where the money flows out. Claims departments are often the last place to see technology upgrades or find a highly upbeat motivated workforce. The job is stressful, adjusters have to comply with a litany of insurance regulations and the customers are usually in a less than cheerful mood due to having been in an accident. Add in the stress upper management places on the claims staff to produce “numbers” that are often unrealistic and you have a prescription for disaster.

There are several key areas in which Physical Damage/Material Damage managers focus on an effort to contain vehicle repair costs. There are various ways this is attempted and often the process recycles itself every few years.

1. Parts Usage – There is a big push to utilize alternative parts. This is great when the situation calls for it but when one is dealing with a newer vehicle, attempting to add aftermarket parts to the repair can create a tense situation. Writing for used parts on other vehicles is a very cost effective way to repair a vehicle as the parts are OEM (made by the original manufacturer) yet lower in cost as they come from a used vehicle. Aftermarket parts are often a big point of contention due to some concern about quality, fit and safety. Aftermarket parts are sometimes a great solution for older vehicles and specific situations but shouldn’t be a standard mandate for any claims department. Oftentimes a manager will want to use Aftermarket for everything in order to dramatically reduce repair costs only to find battles erupt between the claims office, repairers and vehicle owners.  A policy of using common sense should prevail in the “parts” area where the credo of being fair to the vehicle should always be adhered to. In the end it saves everyone money and creates fewer headaches.

2. Repair Procedures and specific Operations- Some claims offices attempt to reduce or ignore certain repair operations or procedures in a perceived effort to contain costs. Often claims guidelines have the “all or nothing” approach.  For example, some will say no to color sand and buff, no mask for overspray, and many more No’s to a host of procedures. This immediately puts up a roadblock for any field appraiser who is attempting to negotiate repairs with an auto repair facility.  Claims managers may feel emboldened and strong to put up this no-no list, but a lack of flexibility often leads to animosity with shops and a higher ultimate severity. What happens is that repair costs suddenly jump, as a shop will increase times on judgment items that could have been eliminated had there been flexibility in the negotiating process. I’ve seen the average severity in some cases jump incredibly when there is no room for negotiating.

3. Lowball Independent Appraisal Fee  – Have you ever watched shows where a magician reveals to the audience how other magicians perform an illusion on people and all of the other magicians get upset because the trick has been revealed? Well, I’m going to let the cat out of the bag and ruin it for those independent appraisal companies who charge a lowball fee in order to get the business. What many claims managers don’t realize is that the lowball appraisal companies charge for photos, mileage; salvage bids, total loss forms and rarely perform re-inspections. They also often overwrite their appraisals in order to avoid a supplement causing your office higher appraisal severity. By simply utilizing a quality auto damage appraisal firm for a few dollars more, a claims manager may see their appraisal severity drop as much as $200 per file! Its counter intuitive and often difficult for claims managers to grasp that a cheap auto damage appraisal on the front end means big expenses on the other.

5. DRP Program - Some claims managers think that creating a group of Direct Repair Shops is the answer to eliminating the need for field appraisers or independents. They create a group of DRP’s and instantly think this is the answer to reducing costs. Little do they know that when the fox is guarding the henhouse there is a lack of accountability. While many shops operate with integrity, there is the risk of inflated costs and overwritten appraisals that would otherwise be contained when a different set of eyes views the vehicle in person.  A DRP program run in conjunction with a solid field team can work well, but no claims department looking to reduce costs and effectively manage the material damage process should place all of their hopes solely in a DRP based model.

When it’s all said in done, I am a firm believer in keeping it simple. When common sense is applied many problems can be solved very easily. Just write a quality, accurate, auto damage appraisal, which places the damaged vehicle back into “pre-accident” condition while being fair to the vehicle. By following those basic guidelines and using common sense, a claims departments appraisal severity can drop enormously without all of the drama.

With a bad economy, it appears people are going to great lengths to commit Auto Insurance fraud. This article goes into depth about the recent NICB report that was released. Click here for more.

Okay.. it sounds crazy..  A body shop worker steals a car from the repair shop he works at, crashes into a bus bench, a light pole and two signs. Ouch.. That car is going to need some more bondo. Click here for the story.

According to this article we found, the NICB stated California ranks #3 in the nation in suspicious auto claims. Florida ranked #1 followed by New York at #2. Click here for the article.

Adam Nazar CTO of AutoClaims Direct was honored last night in San Diego at the San Diego Business Journal Awards as a finalist for IT Executive of the Year!  Congratulations Adam!

According to this article, the CRA reminded the California DOI to advise insurers that they are required to warrant that all non-OEM replacement crash parts are at least equal to OEM parts in terms of kind, quality, safety, fit and performance. Click here for the full story.