We have seen a tremendous change in technology and manufacture design. It has been our agenda to keep up with it all without compromising our integrity.

“What ever happened to the indemnified dollar”?


The auto insurance/body repair industry has evolved to such a degree, that the average claim for an auto accident had been hovering around $2,500.00, for what as seemed forever. But this number has skyrocketed within the last few years, so what happened? Well there are several reasons for it and the actuary’s best analysis, will say that it is because of the new technology. But the real reason is that there is a lack of accountability within the claim process.

 In California and for whatever reason, many years ago, “Prop 103” drove away all of the arbitrary ways that claims were managed within the insurance claim’s departments. In 1990 a new version of how claims would be settled, came to the State of California, through the “Unfair Claims Settlement Practices”. This ushered in all sorts of guidelines that outlined and mandated what manner auto claims would be handled going forward. It was meant to bring accountability, where little or none existed, other than the “Professional Code of Conduct”, that at times, seemed to be missing as well.

 Not only that, but time had come, in the late 60’s and early 70’s, when the “Mom & Pop” shops’ were selling out to big business, not knowing how much of their community of enthusiasts’ would miss the explosion of the new industry that transcended over the next few decades. These new business’s, now had big mortgages to pay and profit was the only thing that mattered.

 The body and paint labor rates shot up from $10 per hour to $20 at a rapid pace and quite frankly doubled within the 70’s and tripled in the 80’s. There was nothing regulating the industry and big business realized this “gem” in fact. It wouldn’t be long before every aspect of this industry would grow exponentially. So too, the schemes to make more money!

 Enter the “California Auto Body Association” (CAA). This organization has done much good over the years, but at its core, is a unifying cause/effort, that has set out to insure its right to make money as they (their members) see fit. They had set its sight on making sure that the insurance industry gets its marching orders from the repair facilities themselves. In order to affect their resolve, they had to do something with the “Bureau of Automotive Repair”.

 Back in 2004 or 2005 the Bureau had released its clandestine report on the auto body industry and on a major franchise in particular, called M2 Collision Centers. Those findings sealed their (the Bureau’s) fate and M2’s as well. The investigation had revealed that the shops’ involved, had defrauded the insurance industry by 47%. The results reverberated throughout the entire industry and M2 found that they had to shut down and immediately went out of business. The shock wave put the CAA into action. They found an ally in the California State legislature that brought forth the de-fanging of the “Bureau of Automotive Repair” and rendered them powerless to do what they had done, ever again. In fact, a whole lot of legislation has been brought forward since then, to keep the insurance companies from ever getting control of the “Indemnified Dollar”!

 Prior to all of this, the insurance world had implemented an industry wide idea called the “Direct Repair Program”, this was meant to circumnavigate the problems that the insurance companies were having, while trying to secure a reasonable “agreed price of repairs”. Like I had mentioned earlier, big business was taking over and had big payrolls, they had to figure out how to make money! The only way that they could do this was to steal it! They got very creative in their pursuits. The insurance companies thought that they could find a benefit in this new idea, but the result was the beginning of the first notable raise in our insurance premiums. These premiums are the end result of an out of control repair industry. Our premiums have systematically gone higher and higher to what they are today!

 The whole idea was to send a majority of wrecked cars to these shops’ and get discounts on parts, labor rates and paint materials. The shops would benefit from the quantity and the insurance company could protect the “Indemnified” dollar from the outlandish estimates that were all over the place.

 You would have thought that lessons would have been learned by now, but this concept is still in place for many indemnifiers.

 There is hope for the “Indemnified Dollar” and a solution within reach! Please let us here at “Zapien’s Logistics” help you get control of your indemnified dollar. We bring an accountability that is “Discernible, Itemized and Measurable”, without compromising the integrity of your companies effort to remain attractive for the insurance services that best serves your business model.

 Please give us a call and let us put together a plan that best serves your book of business.

 Best regards,

 Fred Zapien

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