Body shop owners and managers from all geographic regions of North Carolina recently participated in the survey, which asked shop owners and managers to rate insurers with regard to paying for proper repairs, timeliness of payments and fair settlements.
On a scale of one to 10 – with one being the lowest rating and 10 being the highest – 360 North Carolina body shop owners and managers rated 42 auto insurers in this informational survey conducted between January and October 2004. Sponsored by the Independent Auto Body Association (IABA), the survey reflects the opinions of the participating body shop owners and managers.
The average rating for all insurers in the 2004 survey is 5.89, down from the 6.41 average rating in 2002. It should be noted that more insurers were rated in the 2004 survey than in 2002.
Based on the survey results, there’s a good indication that more insurers are “tightening the screws” in the collision repair process. The good companies seem to be getting better and the hard-nosed companies seem to be getting worse.
Let’s take a closer look at both – the best and the worst.
The Highest-Rated Insurance Companies
Based on the survey results, the top five insurers in North Carolina are Farm Bureau, State Farm, Penn National, Utica Mutual and Amica Mutual.
Farm Bureau earned an average rating of 8.61 to capture first place, an increase over the 8.24 average rating it garnered for its first-place finish in 2002. Many body shop owners say that Farm Bureau is a great company to do business with because it doesn’t have a direct repair program (DRP) for collision repair and uses experienced adjusters who care about the customer. Farm Bureau also pays for OE parts.
State Farm landed the No. 2 spot with a rating of 8.49, quite an improvement over its third-place spot of 8.03 in 2002. State Farm continues to impress shop owners and managers with its efforts to make customer service a top priority.
“State Farm has changed for the better over the years,” says Alben Lokey, president of A&L Body Shop in Kinston, N.C. “State Farm’s philosophy today is, ‘We’re going to pay to fix the car like it’s supposed to be.’ ”
The “most improved” insurer is Penn National Insurance, with a third-place finish this year and an average rating of 8.15, compared to the 18th place finish of 6.13 two years ago. Penn National has obviously improved its working relationship with collision repairers and consumers, in part because it allows claimants to take their vehicles to any body shop they choose for the estimate and for the repair, and it doesn’t employ outside appraisers – it relies on the body shop’s estimate.
Bill Hamrick, property and material damage claims manager for Penn National Insurance in the Harrisburg, Pa., corporate office, credits the estimating system they use as a major factor in the improved relationship. “It’s a time thing,” Hamrick says, “We turn the estimate review around in 24 hours, and we pay the claim within the next 24 hours. So, normally the claim is paid within 48 hours. [With this estimating system] all of our adjusters can forward their estimates [electronically]. It reviews the body shop estimate. It saves mail time, driving time and other time delays that caused a one-week or two-week delay before body shops could get paid.”
Another factor in the top-three finish for Penn National Insurance is the insurer’s position on aftermarket crash parts.
“For any vehicle that’s still under the manufacturer’s warranty, we only put new factory OEM parts on the car,” says Hamrick. “We never use aftermarket parts on suspension components of any car.”
Amica Mutual – rated by Consumer Reports and J.D. Power & Associates as the top insurer for consumers – slipped from No. 2 in our 2002 survey to No. 5 in 2004. Although Amica still gets high marks from most shop owners and consumers, the survey suggests the company needs to pay attention to the pressure tactics of some of its adjusters.
Erie, Central Mutual, Cincinnati, Montgomery Mutual and GMAC all had consistently good ratings and rounded out the top 10 insurers in North Carolina.
Insurers With Average Ratings
Auto-Owners, Fireman’s Fund, Harleysville Mutual, Virginia Mutual, Kemper, Chubb, Hartford, Ohio Casualty, Safeco and Selective all had mostly average to good ratings to end up with final average ratings between 6.07 for Selective and 6.88 for Auto-Owners.
Hartford, with a 6.43, may have faired better had it not been for alleged steering violations and pressure tactics from some adjusters. Because of numerous negative ratings by some shop owners, Hartford’s good ratings by many shop owners were compromised.
Ohio Casualty – with a final average rating of 6.39, up slightly from its 6.33 rating in 2002 – will likely see a big improvement in its standing with repairers over the coming months and years. The company recently announced that it will no longer have a DRP, to the delight of many independent body shop owners.
USAA, earning a 5.63 rating, appears to be the company with a dual personality. According to shop owners, the company plays favorites among claimants. The survey shows USAA does a good job in fair and timely claims settlements with its own policyholders but isn’t so fair and timely when it comes to a claimant who’s not insured with USAA. Therefore, USAA’s score was pulled down by negative ratings for alleged steering and strong-arm tactics by some adjusters.
Liberty Mutual, with an average rating of 5.58, also had its share of criticism from many in this survey. Brad Herman, owner of Herman’s Body Shop, Inc. in Lenoir, N.C., says, “Body shops have a hard time getting paid from Liberty Mutual when a finance company is involved.”
According to Herman, Liberty Mutual puts the name of the finance company on the check, along with the claimant and body shop, and “normally the finance company is out-of-state, and it’s a nightmare trying to get paid.”
Allstate: Still Low but Improved
Newsflash for all North Carolina body shop owners: Allstate has improved! In the 2002 survey, Allstate came in next to last with a 3.94 rating. This year’s survey shows Allstate with a considerably improved, although still low, rating of 4.73.
Says Al Lokey of A&L Body Shop: “Allstate is doing better.
Allstate’s policies will not force-place aftermarket parts. If the customer doesn’t want to use aftermarket parts, Allstate will pay for OEM parts.”
While some shops gave Allstate good marks, many shop owners and managers didn’t. For example, one Durham, N.C. body shop manager, who wishes to remain anonymous for obvious reasons, says, “Allstate is not good. Allstate does not want to negotiate – it’s their way or the highway. They cut and cut and cut. On re-inspections, they cut. After the job is completed, they cut. Allstate has no flexibility. It’s like they have to cut something.”
Insurance Companies With the Lowest Ratings
Based on the survey results, the worst five insurers in North Carolina are Nationwide, Highlands, Discovery, GEICO and Progressive.
Nationwide once again has the dubious distinction of receiving more low marks than any other insurer in North Carolina. Nationwide holds last place – 42 of 42, with an average rating of 2.21, considerably worse than its last-place finish of 3.47 in 2002.
Nationwide seems to be a real adversary from the body shop’s point of view. Perhaps it’s because of its “strong-arm tactics” to control costs, as alleged by some body shop owners. Nationwide is one of the few insurers to receive written comments on the survey. Respondents wrote comments including, “terrible,” “steers business,” “the worst” and “minus one, awful.” These comments reflect poorly on North Carolina’s largest automobile insurer and show much animosity from many body shops across the state.
“We’ve had customers here for 30 years that have always had Nationwide Insurance,” says Brad Herman, of Herman’s Body Shop. “Now, when they call Nationwide’s toll-free 800 number, they’re told they HAVE to go to a ‘Certified Blue Ribbon Shop’ to get an estimate … and the Blue Ribbon Shop will NOT give a copy of the estimate to the customer.”
GEICO and Progressive had mixed reviews. While some shops gave good ratings to these discount insurers, most body shop owners and managers strongly dislike the way these insurers do business and so indicated with extremely low ratings.
Progressive came in at number 38 out of the 42 insurers rated with a rating of 4.38, down considerably from the 5.57 average rating in 2002. Progressive is accused of strong steering tactics and unfair settlement practices by numerous body shop owners and managers.
GEICO – making tremendous gains in its number of policyholders, thanks to the “Gecko” lizard on all those commercials and other advertising – received some high marks, but overall its claims performance does not bode well for quality repairs, according to the survey results. GEICO’s average rating is 4.29 – which puts the insurer near the bottom, 39 out of 42, as one of the worst insurers in North Carolina from the shop owners point of view.
“GEICO wants to cut a whole lot of corners,” Herman says. “They don’t look at the big picture. They don’t want to pay to give the customer a good, safe repair in order to return the vehicle to its pre-accident condition.”
Similarly negative comments were given about Discovery Insurance, which received an average rating of 2.37, just ahead of Highlands and Nationwide, in the “worst of the worst” category.
“Discovery’s claims department is very disorganized and confused,” says Lokey. “They don’t know what’s going on.”
Writer Mike Causey is a writer and consultant for the automotive industry. He’s a Registered Lobbyist representing the Independent Auto Body Association (IABA), the Glass Industry Legislative Coalition and consumer groups. As a writer and speaker on collision repair-, insurance- and consumer-related issues and legislation, Causey is available by appointment to speak to your association or group. He can be reached by e-mail at [email protected] or by phone at (336) 210-1947.