Internal Nationwide Insurance Documents Confirm CIC’s Anti-Fraud Committee’s Finding (and should be an embarrassment to its leadership).

December 28, 2006 by John Shortell
Filed under: Collision Repair Industry 

Unless you pay absolutely no attention whatsoever to your industry, you’ve heard about the scandal that happened at NACE this year when the Anti-Fraud committee from CIC wanted to release the results of a survey they did that showed widespread insurer fraud in the form of under written estimates. The result of this fraud is probably billions of dollars stolen from policy holders every year, but it is impossible to know for sure because so many people never get their vehicles repaired. Insurers think that just because a person decides not to repair the vehicle they should not be entitled to the entire loss.

CIC’s leaders prevented a press conference that was supposed to be held at NACE by the CIC Anti-Fraud Committee. To be fair to those who made this decision, the Anti-Fraud Committee wanted to hold a separate press conference just for these survey results, and they apparently did not have prior authorization from the committee. CIC had already reviewed the findings in an open meeting with 300 members in attendance, along with members of the press.

In a statement posted on prodiscusions.com, Rick Tuuri, CIC’s chairman wrote, “Like it, agree with it or not, CIC committees are not called upon nor given the pervue to issue press releases or call press conferences without the consent of the body. The Anti-Fraud Committee did not have that consent.”

Apparently the issue was put to a vote by the membership and they voted not to allow the Anti-Fraud Committee members to have their press conference. More from Rick Tuuri, “CIC voted to continue to gather intelligence and data on this issue and to address it in the manner that CIC is designed to address issues. By working together for resolution.” As you have probably heard or read, all Hell broke loose when word got out that this damaging information was being suppressed. Accusations flew. People blamed. Name calling took place. It was quite the little tussle. It’s been written about in all the trade magazines, argued about on all the discussion boards.

What’s important to understand is that the entire premise of CIC’s actions concerning the issue of fraudulent estimates written by insurers is wrong. Here are “industry experts” (and I use that term very loosely) professing a concern about the “possible” trend of insurers intentionally under writing estimates when anyone, and I damn well mean ANYONE, who repairs collision damaged vehicles for a living and has to deal with insurance companies knows full well that there are some insurance companies whose entire business model is built on under paying initial estimates. We all know exactly who those insurers are, and to ignore these facts, or to pretend to want to ensure the “veracity” of this information is outright dishonest, or at the very least, horribly misguided.

I am no attorney, but it doesn’t take that disability to understand that it is illegal to intentionally under write estimates and underpay policy holders and claimants. All those estimates submitted are evidence of these crimes. We see this every day. It is not a rare occurrence. It is not a fluke. These are not mistakes. And everyone in this industry knows that one particular insurance company intentionally hires young kids fresh out of college as appraisers, and trains them at their own facility, all to ensure that their appraisers are, in fact, ignorant, and not culpable due to that ignorance.

CIC is acting exactly like every Department of Insurance in this country. Instead of acting on evidence of crimes, they look for “patterns of behavior.” CIC may be as culpable as any Insurance Department in protecting Insurers from Consumers instead of protecting Consumers from Insurers.

What would happen if corporations or individuals intentionally underpaid their federal taxes and got caught? Do you think the government would want to do an impartial survey of corporations and individuals to look for a pattern of fraud? One estimate intentionally under written is a problem, and more importantly, a crime. Perhaps CIC should treat it as such and do something to ensure insurance companies get punished for this behavior.

CIC has somehow nominated itself as a collision industry organization, and with the help of certain insurance worshiping individuals and trade publications, has elevated itself as an industry leadership committee with deity status, when in fact this so-called leadership does not lead or represent the majority of collision repairers in this country. CIC and NACE, for that matter, think the collision repair industry includes insurance companies and their needs and wants. I completely disagree with that view. This attitude has gotten us no where.

I do, however, agree with this statement Rick Tuuri made in that same statement on prodiscussions.com: “The Collision Industry Conference (CIC) is just that, a conference. It has no members, only attendees. It is a discussion forum that is self-leading. If you do not like the direction that CIC is taking, you can only change it by attending and participating.”

Too many of us whine like babies, yet take no action.

Until our so-called “industry leaders” understand the reality that the collision repair industry and insurance industry have completely divergent interests, despite having a common customer; until they understand that becoming “friendly” with insurers, and cooperating with them will only lead to the collision repair industry’s accelerated demise; until they realize that acquiescing to insurer influence will only expose the collision repair industry as weak and a bunch of pushovers, they can not lead this industry. Anyone who thinks that playing nice with insurers will somehow help them see the evil of their ways and change their behavior is not in touch with reality. These are the same idealists who think that if we would just be nice to Islamic terrorists they would end their murderous behavior. They fail to understand the motives of their adversaries.

Because every one of us has a total understanding of the insurance industry practice of under writing estimates in the field, the entire fiasco with CIC and their Anti-Fraud Committee survey can be likened to the recent university study that determined that men and women are, indeed, different. That information also caused a firestorm and sent feminists and their queer, liberal male supporters into hemorrhagic fits. The plain truth can be devastating to those whose heads heads are firmly planted in the sand, or other dark and damp places. Like a family that never speaks of the father’s drunkenness because of the immediate negative consequences, there are many in our industry who refuse to talk about the dirty little secrets we live with. We all know that dad’s a useless drunk; it’s a tacit understanding, an unspoken truth. We ignore it to keep the peace.

Fortunately there are plenty of us out there who have been trying to organize an intervention and expose this drunk for who he is. While friends of the insurance industry ignore what is known to everyone–under writing estimates–those of us who aren’t so chummy with these rich giants are tasked with forcing an intervention. We are the ones who must illuminate this dark secret. Not to each other, like singing to the choir, but to those who can take action to punish or rehabilitate the offenders.

Hard evidence that proves an active intent on the part of the insurance industry to arbitrarily and illegally suppress claims dollars is hard to come by. But Nationwide’s aggressive behavior has recently caused many appraisers to quit or be fired. Few have left on friendly terms. Some are disgruntled enough to hand over documents that show the motives behind some of the worst written estimates in the industry. I happen to be the recipient of some of these documents and I’d like to share them with you. Perhaps someone could alert our distinguished leaders at CIC. Maybe they will find the strength to rethink their position regarding their cooperative relationship with their friends in the insurance industry.

All the documents I received are emails from Material Damage Claims managers from 2006. If anyone else gets hold of internal insurance company documents showing illegal or dishonest behavior, please make them available to your local associations so they can take action.

Most of these emails have performance reports attached to them and the comments are related to the performance of the Claims Manager’s team of appraisers. They are copied and pasted directly from the original source, so please excuse the typos and grammatical errors. This one discusses a year-to-date report from CCC.

Team,
 
Please review the attachment below and ask yourself why everyone’s 
refinish went up.  We just talked about the importance of the audit and 
the writing of items that are not confirmed ie blends, tint, etc.  You all 
know to blend with in panels when ever it applies so why with the 
exception of XXXXXXX did everyone’s refinish time increase.  I expect 
to see this trend the other way next report, I know you’re all able to 
drive this number.  Also, APU (Alternative Parts Usage) and repair % are low…..write repair VS replace on items that can be fixed, it saves refinish hours and drive up repair %.  Look for APU for every item you can and apply it, especially on the ones with no shop chosen yet.
 
Again, we need to write toward the audit for the next 3 weeks so stay 
focused.

This one is precious. The manager is talking about CSI scores. Some are very low. Gee, I wonder why. Mitchell supplies the CSI reports. CCC supplies the appraiser performance reports. How’s that for efficiency?

Team,
 
Below are your CSI scores for this past month.  I see a couple of very low 
scores and some that are excellent.  The two of you that are below 8.0 
need to review the comments and make sure you know why you’re low and take 
steps to improve your performance.  Look for an invitation to spend the 
day together and respond.

More pep talk about refinish times:

 A few of you gave up refinish this report and XXXX your refinish looks 
great.  Look at APU and Repair and you’ll see how you are personally 
trending so you can correct. Keep in mind refinish needs to be below 7.8 
APU at or above 43% to 45% and repair at or above 48% to 53%
 

More “suggestions” to help keep paint times down:

Team, 
 
Please review your most recent CCC data below.  If your avg paint times are high keep in mind blend, tint, and full paint on a repaired paned are all open to negotiation and should only be considered once you confirm the additional time was needed.  Also always consider after-market and recycled parts but if a repair is viable it just might reduce the need for edging, blending, and underside refinish so a repaired part that costs the same as a replacement part may still represent savings in the refinish times.

And still more pep talk:

CCC data……keep an eye on refinish, apu usage, repair % and average cost per claim. 
We need to continue at this pace until the end of the year so please stay focused. 
 
Thanks  

Now I know there are some out there who will have a hard time finding the problems with these emails, so I will point them out. An appraiser must, by law, approach every claim without bias, and must write a fair and accurate estimate. This is not possible if your boss is grinding you with refinish percentage and aftermarket percentage crap. And this sentence, “Look for APU for every item you can and apply it, especially on 
the ones with no shop chosen yet.” is the real problem and directly addresses the issue of purposely under writing estimates in the field. Just because a customer has no shop chosen doesn’t give the insurance company the right to short the insured or claimant. That sentence right there show clear intent to under pay the claim. Sure, Nationwide will come up with more money if the vehicle makes it into a repair shop. But remember, that vehicle owner has no obligation to have his vehicle repaired. The insurance company is legally obligated to pay for the loss. That loss does not vary depending on the circumstances, but apparently the folks at Nationwide have decided that it does.

Personally I could care less if some trailer dweller with a 1991 Ford Escort takes a check from an under written claim and buys himself an new television or an entire book of lottery tickets. But the insurance industry has been getting away with this behavior for many, many years. It causes nothing but headaches and lost productivity when we have to supplement every freakin job that comes through our doors because the insurance industry is betting that a fair percentage of their payouts will never make it into a body shop bank account.

Fairness is a desirable trait, and that principle of fairness is what makes a Constitutional Republic the finest model of government ever tried. It is this fairness and rule of law that makes Capitalism the efficient machine that drives our daily lives. It is what makes the United States the greatest nation in the history of our earth. Without this fairness our system fails. And without participation from every one of you helping to ensure the insurance industry conducts business fairly, our industry is destined for a fascist type of existence; privately owned repair shops essentially run by corporate giants.

Please, do something!

 

 


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12 Comments on Internal Nationwide Insurance Documents Confirm CIC’s Anti-Fraud Committee’s Finding (and should be an embarrassment to its leadership).

  1. rose on Thu, 28th Dec 2006 2:42 pm

    2. I was negotiating a claim with Snoopy one day and he told me I was being difficult. I told him if he and the bird would write their estimates the way they were supposed to in the first place, we wouldn’t be having this conversation, now would we?

    He paid the claim.

  2. Terry Blevins on Thu, 28th Dec 2006 4:54 pm

    3. In my hometown of Brownwood, Tx. this year produced an hail storm on May 6th. My bodyshop worked on between 125 – 140 hail beaten cars/trucks between then and now. very few were good PDR candidates.. some side panels would PDR tho.. all this is said to lead up to this appauling statement…. EVERY ONE NEEDED A SUBSTANCIAL SUPPLEMENT !! ranging from 20 to 150% of the original estimate totals.

    I’ve said it since I’ve entered the industry over 20 years ago… I believe it is an unwritten rule by insurance companies to under estimate damages in hopes that the customer “pockets” the check and it is even more prevailant during an hail storm.

    My personal belief is that a class action law suit will crop up at some point based on unfair claims settlement.

    problem is proof, but it seems like the proof has actually been written and now might show up to allow just such a lawsuit to begin.

    i hope this happens because about 30-45% of my office time is spent dealing with supplements and could be drastically reduced if the adjusters would simply be allowed to do their job as so many are very capable…

    I’m the guy that will not only stand up beside you in the battle, I’ll help lead the way. NO CONSESSIONS.

    BODYSHOPS !! Do what you charge for, AND CHARGE for everything you do. quit supporting the insurance companies.

    I had an insurance adjuster tell me once that we (bodyshops) were our own worst enemy. The insurance industry has pitted bodyshops against each other in the name of “not being competative” to continually subsidize the insurance companies by giving concessions because the bodyshop down the street “doesn’t charge us for that” …

  3. Terry Blevins on Thu, 28th Dec 2006 6:08 pm

    4. one more thing…. while I was on the allstate pro program for a while, one of the evaluation segments was our severity … that is , how much our average collision repair job was costing them through our shop. while all my numbers on customer service were well above the rest of the area shops the DRP coordinator continued to focus on that severity rate… He was adamant that I simply had to get my severity numbers down… My response was simply: I didn’t wreck a single one of those vehicles, I wasn’t a passenger when it was wrecked… hell, I didn’t even witness any of the wrecks… I only intend to repair them and be paid for every operation and that he needed to start offering more prayers to God who was ultimately responsible for severity. Shortly afterwards, I removed myself from their Pro Program.

    they were dangling the carrot in front of my face of how much work they were sending to me and wanted me to give concessins .. parts discounts and cut labor rates…. and i bought into it for several years… fact was this: it is illegal for them to steer work .. right??… so whats the benefit of being on their program?

    I finally realized that I don’t like carrots…

    Since telling Allstate, State farm, Metlife and others that I would no longer be on their programs, My shop is very full and much more profitable. I don’t rely on them to “steer” work to me illegally (which they don’t do ! or do they? hell, they don’t remember what they said last..or to whom) nor do I need them to guarantee my work as they tend to tell customers, any bodyshop worth its own beans guarantees its own work. I am spending my advertising dollar to educate the public about their rights as consumers and it is paying off HUGE.

    Let your area market reflect an advertising campaign that educates the public as to their rights, and they will come to you if your shop has a good reputation.

  4. George A. Moore on Thu, 28th Dec 2006 8:30 pm

    5. I have spent the better part of 30 years in the collision industry. I have had a small 4 man shop. I have managed larger shops. I have worked for a major carrier as a licensed appraiser and have gone through the policy schools and training for claims. I have ran dealership body shops and have taught autobody repair at the college level. I even worked as an independant appraiser on a per claim basis.
    I remember getting told by my claims manager to, and I quote” when you are working the drive-in claims,only write the bare minimum for damages,because our numbers show us that 60% of the cars you see will get repaired. Why give them a thousand dollars when you can get away with five hundred or less”. I was also told to cheat on the sales tax
    and parts prices to keep numbers down. If the shop caught you then I was to pay the difference.

    I have had my own collision shop for last 15 years and have had at one time at least a dozen DRP agreements with insurers. My last one was with State Farm and after the new take it or leave criteria was offered to us I decided to leave it. Any one who signed this piece of crap in my opinion is commiting financial suicide. The sad state of affairs in this industry will continue to get worse as long as bodyshop owners continue to absorb the costs and duties of the insurers that once were theirs. After the initial fear of losing business because of the loss of the State Farm program, which by the way was fair in my opinion to the shop,insurer and most importantly the customer, we are just as busy with all the other business out there. We as a shop did not lower our standards and our customers know that and we will have their support and loyalty because of that.

  5. Rick Collins on Fri, 29th Dec 2006 12:35 am

    6. You said that fairness is a desireable trait.where is the fairness in this? When you cut paint times you also cut material percentages which are already at a substancial loss on most large jobs now!
    How many shops have had insurance reps call to tell you that they won’t pay your shop labor rate because it is not what the area supports! Isn’t that price fixing or controlling? Some small shops in your area might be able to eek out a profit on that. But a shop that cares enough to provide for its employees is struggling to make ends meet! The small shops that take these concessions are not paying workmans comp ins.,IRA,hospital ins.,vacations, holiday pay,or overtime. Hellooooo!!! insurance co. profits are still climbing while our industry is suffering at the corporate giants expense!!!!!

  6. David Boyle on Fri, 29th Dec 2006 7:50 am

    7. Nobody commits more insurance fraud than the insurance companies themselves. The corporate greed that has become a way of life in this country will soon be the demise of this great country if we continue down this path. I have called a conspiracy nut many times by differant insurance appraisers and even by some of my customers alike for my views of the insurer’s. I don’t know what it will take to wake up the majority of our industry to stand up for themselves instead of waiting for someone else to coddle them and take care of all of the issues at hand. Unfortunately I feel that things are going to get much worse before they get better.

  7. Scott Anyan on Fri, 29th Dec 2006 2:44 pm

    8. Amen, I personally want to thank you for all your efforts to try to fix this *&&^%$ up industry.
    Shop Owners – Wake up insurers are not and never will be your friend.
    Teach your customers not to take advice from someone who owes them money.

  8. Kerry Froysell on Mon, 1st Jan 2007 10:16 am

    9. Just a thought. Most of us know the problems we face in this industry. The problem as I see it is the fact that without legal information being available to us to use against appraisers in our daily battles, appraisers have the ability to force repair times and methods of repair on us. Most of us are so busy keeping up with daily tasks that we don`t have the time needed to follow through researching laws and regulations governing our trade, or access to a list of firms in our states that specialize in insurance and/or DMV laws/regulations. I always thought it would be nice to have lists of available firms or organizations to seek help as there seems to be endless methods used against us by insurers.

  9. Dana on Tue, 2nd Jan 2007 6:55 am

    10. BASIC QUESTION: Can an insurance company just put down any number for a repair estimate on an official MV Title Application (with regard to acquiring a salvage title)? According to Florida statutes, it’s a misdemeanor, but no one seems to care or ever get charged.

    I bought what I thought was a salvage car, but was in reality a junk/parts car. It should’ve had a certificate of destruction instead of a salvage/rebuildable title (Florida), but avoided it because the appraiser iilegally low-balled the repair costs on the MV form.

    I contacted the insurance company BEFORE I got the copies of the MV forms and the insurance company told me one figure for estimated repairs ($37k), while the number they put on the MV form was half that! Of course, it REALLY costs 10 grand more than the highest figure to fix the car (an exotic that cannot be repaired at any garage, needs full engine replacement and specialized software resetting).

  10. Jennifer on Sat, 12th May 2007 6:23 pm

    11. Has anyone had any experience with Allstate’s PRO Program? Does Allstate have the right to refuse to allow an insured to use the PRO program? any thoughs appreciated.

  11. charles Lesemann on Thu, 7th Jun 2007 6:24 pm

    12. Hi:
    Three and a half years ago our house burned down and we los everything. A few days after the fire Nationwide Insurace cancelled our policy. Every since that day our live has been pure hell; the economic difficulties and psychological gamage are hard to imagine unless one has been a victim of this kind of fraud. We have an attorney who has been litigating in our behalf and just now …3 and a half years later Nationwide is finally going to be subjected to depositions which they have already cancelled giving some lame excuse. A few days ago Nationwide said they might be interested in settling because they were tryuing to settle all their lawsuits.Our losses have been estimated at 400 thousand. They have made an offer of 200 thousand which is a slap in the face to us. Do you of anyone in a similar situation or have any kind of advise for us?
    Thank you very much,
    C Lesemann

  12. Antone P. Braga on Tue, 30th Dec 2008 10:17 am

    13. Insurance information resource

    What Do YOU Expect? BRACE YOURSELF Because You Never Know! How can you possibly feel secure unless you know what to expect in case of loss?

    Available in major book stores and libraries
    Visit http://www.DisasterPrepared.net for more information.
    © 1977-2008

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