In Better Hands...Without Allstate - BodyShop Business
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In Better Hands…Without Allstate

Our 18-year relationship with Allstate as a PRO shop ended after their demands became unrealistic. Could we survive, considering Allstate was 30 percent of our business? You bet.

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It was a Thursday morning, and I was listening to the news on the radio on my way to work. "Allstate agent and repair shop owner accused in $224,000 insurance scam."

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"Wow," I said to myself. "I know several agents. I wonder who it is?" After I opened the shop, I checked the local news on the Internet. To my surprise, it wasn’t an agent, as reported. It was our former Allstate PRO evaluator.

State police said that he and the shop owner split the $224,000. The shop owner would file phony supplement claims, and the PRO evaluator would approve them. The shop owner told authorities that the customers whose names he used didn’t know about the supplemental claims. This had gone on from July 1997 until June 2001 – during which they’d collected 157 fraudulent checks totaling $224,113.95.

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I found this turn of events interesting – especially since we’d been a PRO shop for Allstate for more than 18 years (up until recently, when we decided to part ways) and this PRO evaluator was one of the people who’d been lecturing me about keeping claims costs down. He’d come into our shop month after month with report after report – each new report showing that our estimates were higher than the average estimates in our local area. (After reading this news article, however, I couldn’t help but wonder if Allstate had been looking for reasons why repairs were high in this area and creating these reports to try and pinpoint the problem. And you know what, it was right under their noses.)

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After six months of Allstate picking apart our estimates, we reached a mutual agreement to remove ourselves from the program in July 2001. It was a difficult time. I’ve worked with Allstate for more than 30 years. They’ve called me for advice and for my professional opinion. (And still do.) I’ve repaired their company cars, and I’ve repaired their personal cars. We used to have a mutual respect for each other and for the work each of us performed.

When I heard that Allstate had acquired Sterling, I expected that a lot of PRO shops would have to fall by the wayside to make room for Sterling. Still, despite the fact that I knew it was coming, our parting ways with Allstate was scary. After all, Allstate had been about 30 percent of our business. (We also write for State Farm, GEICO, Ampac, USAA, Farmers and CAN, before Allstate acquired them and made us lower our rates.)

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The good news is, we’ve fared much better than our former Allstate PRO Evaluator. In fact, we’re better off now than when we were a PRO shop. We still do work for Allstate, but at a higher rate with no discounts. (Figure that out if you can.)

Because I’m certain other shops out there have gone through – or are currently going through – something similar to what happened to me, I want to tell you my story, especially since it has a happy ending.

I first began e-mailing back and forth with BodyShop Business Editor Georgina K. Carson (when she was still Georgina Kajganic) in May 2001. My e-mails – published below – tell the story of how we went from being a No. 1-rated PRO shop to basically being kicked off the program. Turns out it was one of the best things that could’ve happened to us.

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From: Banner Chevrolet Body Shop
Reply To: Banner Chevrolet Body Shop
Sent: Thursday, May 10, 2001 7:48 AM

We’ve been a PRO shop for Allstate for at least 15 years. Several months ago, they sent in some upper management with our local PRO damage evaluator to review our estimates written for Allstate. After a couple of visits, I could tell they had a hidden agenda. They were asking us to cut corners on estimates to lower our dollar amount charged to them.

Yesterday, they e-mailed us a news release stating that Allstate has acquired Sterling Collision Centers, Inc., a network of 39 auto collision repair stores in seven states. They advised us that there will be little change in our PRO shop network in the "near term," but I think we can see the handwriting on the wall.

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Our first unusual visit from Allstate came in December of 2000. Our PRO damage evaluator came in with a printout of how much Allstate paid us last year, a parts-usage summary, a claim profile summary, a summary report and a trend report. He said we weren’t using enough LKQ parts and enough aftermarket parts and that we were replacing with too many OEM parts instead of repairing them. (By the way, this same day State Farm came in and gave us a great review.)

I said to myself that he’s just doing his job, so I listened and assured him that I’d do everything to comply. He said we need to fax every estimate to LKQ Corporation and wait until we get a response before we complete our estimate. He also said that he’d make a 45-day evaluation with a review every 15 days.

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The next visit (which was unannounced, by the way) came two weeks later. Our PRO damage evaluator said were going in the right direction but still not where he’d like us to be.

The next unannounced visit brought in the Top Guns. Neither of these gentlemen had business cards nor did they wear Allstate shirts like all other employees. They wanted a private meeting as soon as possible, so I stopped what I was doing and went behind close doors. They stated that our average estimate was too high and wanted to know what we could do to lower them. I told them I’d work with them any way I could to remain partners in the PRO process. They said that our PRO damage evaluator had given us a good report and that they wanted to keep us on the program. They also said they liked the way I responded without making excuses like the other shops they’d visited in the area had. We reviewed some estimates, and they said we needed to repair more parts and use more LKQ parts and aftermarket parts. They said they’d give us 30 days to lower our average per estimate.

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At the next unannounced visit, they reviewed some estimates, said the repair time was too high and that we needed to lower them before repairs were made.

The most recent unannounced visit was on April 12, 2001. They took one estimate I’d just written to review. They said I should attempt to repair the bumper cover for 5 hours instead of using a reconditioned cover. If that didn’t work, then replace the cover. I’d also figured 2.5 hours to repair the radiator support, and they said all the technician had to do was tap it out with a hammer (a very technical statement) and that .5 hours is enough time.

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At this point, I knew we were dealing with more than just an estimate. We went back into the office, I made changes to the estimate and then they told me that they were changing our PRO status from a 1 to a 3, which means we wouldn’t come up first on Allstate lists but would be available if requested by a customer. This was to be a 90-day probation with weekly follow-ups.

I haven’t heard from Allstate in four weeks. The estimate in question not only required a reconditioned cover but also a reinforcement and more time on the radiator support than I’d originally figured. And they didn’t dispute the supplement. There was no way this vehicle could’ve been repaired the way they wanted me to write this estimate.

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Thank you for your time,
Ronnie de St Germain
Banner Chevrolet Inc.
New Orleans, La.

From: Banner Chevrolet Body Shop

Reply To: Banner Chevrolet Body Shop

Sent: Tuesday, May 15, 2001 7:38 AM

Dear Georgina,

All Allstate PRO shops received an e-mail that stated, "as most of you may or may not know, Allstate is requiring all of our PRO shops to be I-CAR GOLD by the end of this year."ÊAfter finding the requirements for a shop to become I-CAR GOLD, I found it to be impossible for any shop, without I-CAR certification now, to become GOLD by the end of the year. The reason being – I-CAR doesn’t have enough classes scheduled to accomplish this.

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Anyway, I signed up myself, my assistant manager and one body technician for the first course available at a total cost of $540. This class was on "Steering and Suspension" and has two parts that last three to four hours per night. We attended the first class last night.

I recently met with a good friend and former employee who now runs a shop in a different area than ours. He asked me if Allstate has been harassing me. I asked him why, and he told me that they came into his shop several times in the last six months and that the last time, they spent five hours going though his paper work. Finally, they made him write a check for $5.12 because he use a reconditioned bumper on a car when an aftermarket bumper was available for $5.12 cheaper. Then I told him my story.

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Thanks for listening,
Ronnie

From: Banner Chevrolet Body Shop
Reply To: Banner Chevrolet Body Shop
Sent: June 28, 2001 7:36 AM

We finally parted ways with Allstate. We’re still repairing cars with Allstate drive-in estimates and making more money because we’re at a higher labor rate than when we were a PRO shop for them. Go figure. I just received a copy of the list of Allstate PRO shops from a friend who happens to be an Allstate agent. It shows that of the seven dealerships on their list, four have been removed and none of the eight independents were removed. Pretty interesting.Ê

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Yesterday I received a phone call from the Encompass regional supervisor (formerly CAN, purchased by Allstate) to verify my labor rates. He asked me if I was still a PRO shop for Allstate, and I told him no. When I asked him if I’d still be writing for Encompass, he answered, "You haven’t done anything wrong to me so I’m keeping you on as a PRO shop for us."Ê

The parting was pretty simple, from my point of view, because my mind was made up that they were going to do whatever it takes to remove us. The "big boss" and our local evaluator came in, again unannounced, and reviewed two claims. They looked to me like two mice planning to steal cheese from a mouse trap. They were talking about the two claims just loud enough for me to hear them. Then, after about 30 minutes, they asked if we could speak in private. They told me one estimate had a 2-hour labor dispute and the other had a part dispute. The "big boss" then leaned back in his chair and said, "I think it might be time for us to part for awhile so we can decide what we really want. What do you think?" I said, "Good idea."

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He gave the "let’s part on good terms" speech and said he hopes that we have no hard feelings against Allstate.

So now the drive-in estimates and field estimates are $3 per labor hour more and the paint material is $2 an hour more – and they don’t get a 10 percent discount on parts. This is the largest increase we’ve had from Allstate in five years.

It gets better. When we call in a supplement, they have 48 hours to respond, and they have to take the pictures (saves us money on 35mm film), keep logs and make sure payment is made. Now their people have to do the work that we were doing for them.

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As far as filling the gap, GEICO has a drive-in claim service in our office and we’re on their DRP. Several years ago, when they started, they only came in on Tuesdays and Thursdays. Now they’re here Monday – Friday from 8 a.m. to 4:30 p.m. They have different appraisers here each day, and we advise them of our work load when they come in. They let their customers know all the different DRPs in the area, but with us having an Enterprise Car Rental office in our body shop, it helps to make the customer’s decision a lot easier.

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We’re also a DRP for State Farm and have a real good relationship with them. For some reason, they don’t have all the meetings with their DRPs like Allstate did (which used to be difficult when I had to leave the shop for a half-day meeting).

Before I would agree again to be a PRO for Allstate, the rules would have to change. I’d expect the same rate as State Farm and to be treated as a partner, not a puppet. After looking at the agreement we had with Allstate, I found it was one-sided. I’d been with Allstate since the beginning of the PRO shops, when they were the only insurance company offering such a service. But over the years, their demands have outweighed the benefits. I find that we can give a little more now to our other DRPs and get a lot more in return.

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Writer Ronnie de St. Germain has worked in the automotive repair field for 37 years. He’s GM trained, I-CAR trained and ASE certified and is a member of National Auto Body Council, the Louisiana Collision Association, the MVP Roundtable and manages a large metropolitan dealership body shop.

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