Larry Montanez Plays Devil’s Advocate on NE Labor Rates, Citing Consumer Contract and Lack of Complaints Regarding Other Insurers
by Chasidy Rae Sisk
Many collision repair industry professionals have taken up arms in reaction to State Farm’s decision to lower labor rates in parts of NJ and NY, but amidst the outrage, a very recognizable voice is strangely absent. Industry advocate Larry Montanez of P & L Consultants has taken a contrarian stance on this situation as he appeals to the industry to consider what he thinks is a more logical approach. Montanez says, “State Farm is lowering labor rates to what they consider to be a reasonable amount based on what they say is their market research. Conversely, they did originally claim that their extensive market rate survey is what placed their labor rate at $65, and now a bunch of shops are crying foul as State Farm decreased their labor rate from $65 per hour to $50 per hour, because that’s what other insurance companies pay shops for the same work, but the shop’s contract is with the consumer, not the insurer. State Farm is a third party that has no control over what the body shop charges as a rate.”
“It’s a nothing story,” Montanez insists, reminding shops, “You are supposed to charge your posted rate, and if you’re doing that, you are probably already suing all the other insurance companies for their suppressed labor rates and unwillingness to pay anyway so there’s no difference in what State Farm is doing.” One big question Montanez asks is “How can you (any shop) complain about State Farm reducing their labor rate if you aren’t upset enough to sue other insurers for the same thing? It makes no sense, and a jury is not going to find in your favor—unless you’ve been suing for suppressed labor rates, you’ve got no leg to stand on!” Many of the shops that Montanez consults with charge their customers their posted rates which can range from $75 to $175 per hour for labor, depending on the type of operation, so this has no impact on how they do business. “State Farm has decided they belong at the same rate as everyone else is accepting. Basically, they gave many shops a gift by paying $65 an hour, but according to some financial experts for repair professionals, it was still short, and now
almost everyone is whining that they took the gift away. We as an industry need to condemn them all for doing the same things, not just complain about one, or it is smarter to keep our mouths shut so we don’t sound foolish!” Although Montanez may be the most forceful voice behind this logic, he is not the only industry professional who noticed that State Farm’s decision can be at least partially blamed on the shops themselves. When one industry publication printed this story online, there were a handful of people who pointed out the invalidity of their peers’ outrage. Names referenced are screen names. Ernie wrote, “I don’t pay attention to the pigeonholes insurance companies try to force us into. I’ll use estimating platforms to estimate but not to invoice. My bill is an accurate invoice for what is owed. I don’t care how the insurance company has to reinterpret my invoice—I just focus on the bottom line... More often than not, State Farm will pay as long as you are doing what you are invoicing for.” Matertech noted, “I see the prob-
lem as the shops themselves unfortunately. I don’t think they should complain about a decrease when they had already been accepting less ($16 per hour less) from other insurers. You have to know that State Farm would figure that out through subjugation and data mining the shop’s own estimating data.” Pete Suszczynski agreed, “Not playing devil’s advocate, but the same shops are repairing vehicles happily at GEICO and other insurance companies’ labor rates which is what State Farm dropped to. Maybe it’s the repairers’ fault as well.” Montanez believes, “They’re arguing the wrong thing! Why weren’t these shops suing other insurance companies for paying less than State Farm? Now, they’re crying because they lost a more reasonable rate from one company that they didn’t hold others to. Now, they have to work hard to obtain what is needed to operate their businesses instead of working smart by holding everyone accountable. They need to handle this the right way, but they don’t actually want to make a difference. If you will See Devil’s Advocate, Page 67
CRASH Network Launches “Insurer Report Card”
Collision repair professionals now have a unique opportunity to grade the performance of the insurance companies in their state with the launch of CRASH Network’s “Insurer Report Card.” “Insurer rankings based on surveys of consumers offer one, somewhat limited perspective on those companies’ performances,” John Yoswick of CRASH Network said. “Those consumers on average have an auto claim once a decade. But shop owners, managers and estimators interact with these companies every day. No one else is in a better position to know which insurers demonstrate an understanding of, and commitment to, quality repair for their customers. We think consumers should know that, too.” The “Insurer Report Card” gives collision repairers the ability to share their unique insight by grading each insurer based on how well those carriers’ policies and practices ensure quality repairs and customer service. By giving the insurers a grade from “A+” to an “F,” shops can help CRASH Network bring this information to consumers so they know which insurers will treat them the best—and which may have some room for improvement—when they have a claim.
“Because each state has a different mix of insurers, the Report Card allows repairers to grade insurers specific to their state,” Yoswick said. “To my knowledge, that makes this different than anything done before on a national basis. We will be collecting data on more than 120 different insurers across the country, not just the usual ‘Top 10.’ We want consumers to know, for example, if some smaller, regional insurer that may not run ads on TV constantly is really great at taking care of its customers so that drivers may consider that at renewal time.” The “Insurer Report Card,” open only to collision repairers, can be completed in as little as three minutes (though shops also have an opportunity to spend additional time to explain why they gave each insurer the grade they did), and all individual shop identification information will remain confidential. Shops that complete the Report Card and provide optional contact information will be sent results at no charge once they are compiled. Shops can click here (www.Crash Network.com/irc) to grade the insurers. For more information about the weekly CRASH Network bulletin, visit www.CrashNetwork.com.
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