A news release Wednesday from Property Damage Appraisers boasts of saving insurance companies $330 million, calling into question its credentials as an “objective third party.”

Unfortunately, this victory lap for insurers and PDA means collision repairers, OEMs and others in the parts supply chain lost $330 million.

“When we can help insurance companies keep premiums down, we know that we’re providing the best service possible,” PDA CEO Tom Dolfay said in a statement. “At PDA we like to call our philosophy ‘smarter estimating.’ Although it seems intuitive and quite logical, not all companies emphasize saving their clients money. We understand the value PDA brings to the table, and we require our team to create more efficiency in the repair process for our customers.”

The insurance companies are apparently the babes in “perilous” woods, not the customers or the repair shops, according to PDA.

“The insurance industry can be a perilous landscape filled with hidden costs and fees, ” PDA states in the release. “That’s why one of Property Damage Appraisers’ (PDA) main goals is to write an accurate and fair appraisal that’s economical for the insurance carrier as well as a fair settlement to the vehicle owners and the repair facility.”

Parts, independence and premiums

PDA chalks up $290 million of the savings between 2010-15 to an “improvement” in calling for non-OEM parts, which is an improvement for insurers and the non-OEM supply chain but not so hot for shop margins, the OEM supply chain and consumers who might have liked to have had the real thing.

It prefaces this by stressing its neutrality:

“When a vehicle is damaged and a PDA estimator manages the repair process, they work as an objective third party to ensure costly details are not overlooked.”

The objectivity line coupled with PDA’s statistics of parts and refinishing time savings for insurers seems a little awkward given state laws like Connecticut’s requiring appraisers to be neutral.

Now, the Connecticut Supreme Court did rule that independent appraisers could side with employer insurers on labor rates without violating the regulation that:

Every appraiser shall: (1) Conduct himself in such a manner as to inspire public confidence by fair and honorable dealings; (2) approach the appraisal of damaged property without prejudice against, or favoritism toward, any party involved in order to make fair and impartial appraisals; (3) disregard any efforts on the part of others to influence his judgment in the interest of the parties involved; (4) prepare an independent appraisal of damage.

However, the court seemed to agree with an interpretation by Insurance Commissioner Tom Sullivan which held that an appraiser still had to be objective when judging which parts needed repair and how long the repair would take, writing:

There is a perfectly logical and reasonable way to reconcile the defendant’s right to negotiate labor costs with the appraiser’s ethical duty to ‘‘disregard any efforts on the part of others to influence his judgment in the interest of the parties involved’’ … and that is to recognize that the appraiser’s role is limited to an assessment of the auto parts in need of repair and the number of hours to complete the auto body repair job, whereas the rate that an auto body repair shop is to be paid is the subject of negotiation between the insurer and the shop, with the appraiser sometimes acting as a negotiator on behalf of his or her employer, the insurer. There is nothing about this division of authority that is suspect or unfair, or that otherwise contravenes the requirement of § 38a-790-8 that appraisers conduct themselves in an upstanding and independent manner.

Refinishing labor time would certainly fall under this definition; it’s unclear if assessing auto parts in need of repair would mean objectively looking at the quality of the replacement parts as well.

The PDA notes the longer warranties of some aftermarket parts, which is irrelevant if, as collision repairers and OEMs warn, an aftermarket component doesn’t perform as well during a crash. (Ask a victim of something recalled for safety purposes if they care that the part was under warranty. By the way, aftermarket manufacturers aren’t typically obligated to recall anything, according to the NHTSA.)

Parts certifiers CAPA and NSF — in themselves controversial programs — have noted that there’s a lot of sub-par aftermarket parts out there, and PDA wouldn’t say whether its appraisers recommend only certified parts or not.

PDA also didn’t directly answer whether the news release compromised their ability to be an “independent appraiser” in general and under state laws like Connecticut’s. It answered that and our other questions, noted at various points in this article, with this statement:

“To sum things up, PDA writes all appraisals based upon standard industry practices and our clients guidelines to deliver a fair, quality appraisal,” spokeswoman Rebecca Renfroe wrote in an email.

PDA’s news release also cited the Property Casualty Insurers Association of America as saying non-OEM parts “saved consumers more than $2.2 billion in insurance costs in 2010.” But that’s a little misleading, unless the consumers are insurers.

The PCI in 2013 estimated that if non-OEM parts went away tomorrow, “this may result in an additional $2.34 billion in insurance costs per year that could be passed on to drivers in the form of higher premiums.”

So that’s a theoretical “could,” the kind of hypothetical that insurers seem to dismiss whenever shops complain about the effects of an underwriter’s practices. (Like the aftermarket parts concern above.)

But let’s say all of those costs are truly passed to customers and only OEM parts are used.

“On average, this means about $24 added to the overall premium per insured car each year,” the PCI wrote in 2013.

The horror. For only $2 a month, you get a brand-new original instead of a used or knock-off version.

Refinishing

Collision repairers might also be concerned by PDA’s support of partial refinishing, which it says along with other refinish practices saved $40 million.