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SCRS responds to USA Today article on repair costs

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Jan. 3, 2012—The Society of Collision Repair Specialists (SCRS) recently released a statement in response to a USA Today article published in December 2011 titled “Auto Body Shops Say They, Not Insurers, Should Set Costs," which discussed whether body shops or insurance companies should set repair prices.

The SCRS’ statement counters points raised in the USA Today article. The SCRS also provides information supporting the assertion that the property and casualty insurance industry's influence over collision repair market pricing has impacted both consumers and the small businesses that make up the collision repair industry.

Key components highlighted in the SCRS’ statement are as follows:

• Property and casualty insurance carriers have become increasingly involved in activities that extend beyond the business of insurance, and are interjecting themselves into collision repair business activities.

• The responsibility to compensate for fair and reasonable costs of a loss is significantly different than defining what is fair and reasonable.

• Average gross collision appraisal values have remained stagnant when comparing the first and third quarters of 2009, 2010 and 2011. Data indicates the average appraisal value has remained flat for the last seven to eight years. Meanwhile, consumer auto insurance premium costs continue to rise. The Insurance Information Institute recently reported that private auto insurance is the most profitable line of insurance coverage in the United States.

• The insurance industry's approach to establishing a singular prevailing labor rate charge for all businesses within a market fails to recognize the existence of a reasonable variance between competitive businesses.

• When repair shops enter into a DRP contract with an insurance carrier and an authorization to repair contract with a vehicle owner, it is not as simple as insurers promoting poor quality work. It becomes a question of who has more influence over the repair facility's decision-making in the repair process, and whose interest drives those decisions.

The SCRS said the question is not whether insurance carriers directly impact collision repair market pricing, but rather whether their approach and purpose is appropriate.

Visit the SCRS’ website to view the organization’s full statement.

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