Ontario Proposed Standards for Auto Repair: A Fair Deal?

For over four years, elected representatives from over a dozen collision repair and auto refinish trade associations across Ontario have been meeting to design a self-managed industry model for accreditation and standards for shops. The concern over public safety, unsafe repairs and enhancing the image of the autobody repair industry, motivated these meetings.

With 2800 collision repair and auto body shops in Ontario, there is currently no consistently enforced standard for compliance, equipment or customer codes of practice for shops to follow, so a number of cars can be repaired by shops that do not have the necessary equipment and training to safely bring the car back to pre-accident condition. This problem exposes consumers to possibly faulty repairs and may lead to another accident or not having enough structural strength in the vehicle if it is involved in another accident, to properly protect the passengers.

At these Collision Industry Standards Council of Ontario (CISCO) board meetings, standards were developed to include legal compliance to current laws and regulations, minimum equipment standards to perform the required repair and improved customer service. These standards are not difficult, and rely heavily on standards currently in use in western Canada.

BEGINNING FOR STANDARDS

With the input from a variety of partners in government and the insurance industry, and after eighteen town hall consultation and information meetings, CISCO compiled a 118-page report which was sent to the Ontario government in February of this year. The report recommended an accreditation program operated by a self-managed industry board, including representation from insurers, shops, government and the public.

The Insurance Bureau of Canada (IBC) has in writing supported the proposed standards, and its planned enforcement. As well, on April 25 of this year, Mark Yakabuski, vice president of Ontario for the IBC wrote to the minister of Consumer and Business Service, Tim Hudak, to urge action to soon implement the CISCO accreditation and standards program for collision repair facilities. In that letter, Mr. Yakabuski stated: “For the last number of years, insurance representatives have worked with the elected representatives of CISCO, and with some government officials, to help develop an accreditation and standards regime for the collision repair industry. In our view, the proposal put forward by CISCO details very effective programs in these areas and we encourage the government to move forward to implement these ideas.”

The IBC’s only concern was their representation on the governing body. In June of 2002, Conservative MPP Frank Klees introduced the Collision Repair Standards Act (2002) or Bill-165 for first reading at Queen’s Park. This private-member bill would provide the framework for a strong consumer protection package of standards that the collision repair industry and its partners could all be comfortable with, in moving all shops to a minimum level for required equipment, legal compliance, and trades training requirements with adherence to a consumer “Bill of Rights” that would provide for full disclosure as well as transparency to the consumer.

THE KLEES BILL

The proposed legislation provides that all collision repair and auto body shops in Ontario must meet the standards set by an industry advisory board – standards that are widely expected to mirror other similar standards programs in public insurance provinces like Manitoba, Saskatchewan and British Columbia.

It is expected that shops must prove that they pay business taxes, are properly municipally licensed, handle hazardous wastes like paint and solvents properly, and that they possess the proper equipment for the type of repair being undertaken. Shops require trades-licensed staff to operate the equipment and perform a safe repair. After careful consideration from all involved parties, including the insurance industry, accreditation of collision repair facilities was a win-win situation. The collision repair industry’s image improves, shops that do not meet legal standards are obligated to conform, safety issues are addressed and the public is assured of safe repairs from licensed trained technicians with proper equipment.

INSURER & SHOP RELATIONSHIPS

Insurers will now know which auto repair shops meet the minimum standards, while their clients will receive proper and safe repairs that will reduce their liability. The headaches that insurers often have with “chase shops” that use aggressive towing solicitation, or illicit operations and their abusive conduct, including their abusive invoice amounts, is addressed with industry enforcement in a self-managed model.

In none of the discussions in the last four years, did the industry board at CISCO, nor in their report to government, discuss possible price increases in labor rates at shops as we all felt that was outside of any possible authority that may be available, and may indeed be anti-competitive. Nor did we in all that time discuss or even mention “direct repair programs” or “DRPs” run by insurers. Vendor relationships with insurers are the responsibility of each individual facility to either enter into or not. These individual business arrangements can be entered into, and have for many years been entered into, by repair faculties. DRP relationships and activity have nothing to do with accreditation of facilities or the self-management of the industry.

Despite the CISCO board not even having considering these issues, nor mentioning them in our report to government, these issues have been raised by insurers as reasons for not supporting the movement to shop accreditation and standards. I wish to emphasis that the CISCO board – and the report submitted to the government – identify only the issues that the industry self-management board should be involved in. DRP, and price fixing and/or “price maintenance” are not one of those issues.

CUTTING ABUSE

CISCO does feel, however, that the best method to influence a facility to comply with minimum standards would be to ensure that insurance companies can not pay a repair claim to a non-compliant shop. I would think that insurers would welcome the opportunity to have identified for them facilities that were improperly equipped to handle the repair that they were billing for, had no trades-licensed or skilled techs to perform the repair safely, and were polluting the environment or charging for labor and parts that were not put on the car. This requirement to only pay shops that met standards should not be interpreted as an attempt to negatively impact insurance company DRP programs. We all would hope, and certainly your customer would expect, that you are recommending a repair facility that met industry standards.

As such, CISCO is disappointed in the “attacks” which have been made by the insurance industry against the Klees bill and the proposed accreditation of repair facilities. A clear, identifiable and fair set of standards to better serve the public would be in the best interests of all, especially the motorist. The collision repair industry under CISCO would like to encourage insurer support for this positive move to help us all improve our abilities to serve our mutual clients ensuring honest, safer repairs from collision repair facilities that meet reasonable and fair industry standards.