BEDFORD, TX — The issue of parts procurement is being addressed by the Collision Division Operations Committee of the Automotive Service Association (ASA). Of particular interest is a pilot plan introduced recently by Farmers Insurance Group to some of its participating repair facilities. The ASA operations committee’s Insurance Subcommittee is reviewing Farmers’ plan to provide replacement air bags to repair shops participating in its Circle of Dependability (COD) program. The subcommittee is examining potential liability issues and implications resulting from the loss of potential parts profit for repairers.
Harry Moppert, chairman of ASA’s Insurance Subcommittee and owner of Moppert Brothers Collision Services Group, Morton, PA, said, “We do not believe this program is in the best interest of the motoring public.”
Two ASA Collision Division Operations Committee members were contacted by Farmers when the insurer launched the pilot plan in their area.
“COD coordinators have been contacting shops to inform them of the plan and urge compliance. I have been contacted by Farmers as have other repairers in my area,” said Darrell Amberson, AAM, ASA Collision Division director and president of Lehman’s Garage, Bloomington, MN. “I have concerns over the potential failure of an air bag purchased by a third-party provider from an unknown vendor. This brings up the issue of repairer liability, and I think it would be wise for any participating shop to check with their liability insurance provider or legal counsel. I am also concerned for the repairer’s eroding parts profit margins.”
Under the pilot program, as described to Amberson, collision repair shops would classify air bags as “reconditioned” on the COD estimate for Ford vehicles. Shops would then fax an estimate to Delray Lincoln Mercury, a dealership in Florida. The replacement part would be shipped to the repairer, but Delray would bill Farmers directly. Repairers are asked to add a line on the estimate indicating “air bag program” with a $25 charge for administrative services.
“Although this was explained to me as a ‘90-day pilot program,’ I am concerned about the general concept of insurers purchasing parts directly and removing the ‘middle man.’ This shouldn’t become accepted practice in our industry,” said Mike Schoonover, owner, Schoonover Bodyworks Inc., St. Paul, MN, who was also contacted by Farmers. “We need to get back to the basics of fixing vehicles correctly, quickly and efficiently, while working with the insurers to reduce costs and provide excellent customer service. This is a monumental issue our industry needs to address immediately.”
The subcommittee will continue to monitor this issue, including the pilot plan proposed by Farmers.
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