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Concerns over AsTech, GEICO pricing agreement for scans and calibrations raised at CIC

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Business Practices | Collision Repair | Insurance
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As news swept through a Collision Industry Conference (CIC) meeting Wednesday about an agreement AsTech made with GEICO to standardize pricing of its repair scans, attendees crowded a mic raising concerns. 

“I’ve been a long-time user of you guys, and I can tell you that comes to an end when I get back tomorrow,” said Bob McSherry, owner of North Haven Auto Body in Connecticut. “Why would you enter into an agreement on my behalf with an insurance carrier?” 

AsTech representatives, also in attendance at the meeting, took the time to answer questions — ones that often raised more questions by attendees. 

News about the agreement started to quietly make its rounds in the days before the meeting, following  GEICO recently sending a notification to some shops announcing the agreement. 

The notification starts with a hint that GEICO is trying to set an industry market price for scans in the industry. 

“Over the past several years, and with the advent of new technologies in vehicles, the frequency of the need to diagnose, program, and calibrate vehicles has increased to ensure all advanced systems are functioning correctly after repairs,” states the email, which was provided to Repairer Driven News by a reader.  “As dealers, sublet vendors, and in-house calibration and scanning systems have worked hard to ensure these needs are met, a variety of price points have emerged and the complexity of tracking price points depending on vendor and calibration type has created some challenges in estimating.” 

GEICO said the agreement is a way to “reduce friction for diagnostic, programming, and calibration operations.” 

Jason Vilardi, asTech insurance and estimatics vice president, also used the word friction when responding to McSherry. 

“I understand the position,” Vilardi said. “We look at it for all our customers, not necessarily certain customers out there. We’ve seen a lot of friction out there with all our shops.”

Vilardi said the company believes the agreement will streamline the process for customers. He added current customers shouldn’t feel a change in the reimbursement process. 

“With our customers, we’re going to make sure that they’re made whole,” Vilardi said. 

GEICO added in its email that its position on the necessity of scanning a vehicle remains unchanged and that all claims will be evaluated on a case-by-case basis. 

“We will base consideration for pre-/post-scans on the recommendations from the patented and proprietary asTech Rules Engine,” GEICO’s email says. “The Rules Engine uses data from tens of thousands of scans to determine when a remote OEM scan is needed or when a local OEM-compatible scan can be used, which has been verified to yield equivalent results to that of an OEM tool. GEICO shops using the asTech Rules Engine will be eligible for an OEM or OEM-compatible scan if they correctly follow the Rules Engine process in selecting the appropriate scan for the vehicle.” 

GEICO adds that shops utilizing AsTech’s All-In-One will receive prioritized access and special pricing. It notes the pricing structure will not address every scanning and calibration operation and “some negotiations may still need to be supported by good documentation.” 

“Shops not using the asTech® All-In-One device may need to supply additional documentation to justify procedures or pricing that deviates from those provided,” the email states. 

Mike Anderson, owner of Collision Advice, raised concerns about GEICO making a decision based on the tool’s recommendation on whether an OEM or aftermarket tool could be used for the scan. 

“So they’re determining that,” Anderson said. “Not the shop, not the consumer, not the OEM certification program, but their software device. So if that’s accurate, I have concerns over that because it’s pulling the collision repair specialist or expert out of that equation.”

Vilardi said GEICO’s endorsement is based on the work they’ve done to prove their recommendations on which scan tool is sufficient. He said this includes running hundreds of thousands of scans over 23,000 different vehicles, makes, models, and trims while comparing OEM and aftermarket tools.

Shops are not required to use a particular tool, Vilardi said. 

“If the shop wants to do OEM scans only, great,” Vilardi said. “I mean, that’s the gold standard, and if that’s what they want to do, we can accommodate that. If they want to go another route, there’s another route out there for them.” 

He added GEICO didn’t say it was going to 100% follow the tool. He said GEICO will look at the tool as one of the facts. 

“If you need to deviate then you justify why you need to deviate to whoever that is, the customer, and whoever to get it covered,” Vilardi said. 

Anderson said he was concerned the agreement would add “friction,” instead of reduce it. 

He said third-party payers could now be led to believe that there are alternatives to OEM scans that are equally as good and less expensive. 

“I can remember when the insurance companies used to say, ‘Hey, there’s a radio we found in this state and you need to buy this radio and this is what this is, what you’re going to pay for it.’ I know in another country where a paint manufacturer cut a deal with an insurance company so then you had to use that paint. I just worry about the precedence this is starting. We need to have an open dialogue and discussion on this.” 

Aaron Schulenburg, Society of Collision Repair Specialists executive director, reiterated McSherry’s question by asking why a standardized pricing agreement was made with a company that doesn’t purchase AsTech’s products, or perform scans or perform repairs. 

“The answer that I heard was that they have endorsed your product,” Schulenburg said. “What I’m curious about is, was the standardized pricing agreement predicated on the endorsement of your product? So was this, ‘We’re going to be endorsed and there’s standardized pricing as a result of it?’” 

Vilardi responded that he “wouldn’t say it was predicated on it.” 

He added that it was a part of the whole discussion. 

“A customer is still in the same position they were beforehand,” Vilardi said. “They’re not making less money from us on a scan today than they made yesterday. Although the price is less, the cost is less. They will be made whole in their numbers.” 

He clarified a customer will be made whole in their margins when asked by an audience member. 

“If a customer got an invoice today, they have a certain cost level, let’s say, on it,” Vilardi said. “Well, that cost level obviously now is different.” 

Jon Dulude, AsTech Business Development vice president, also added more of the company’s perspective during the meeting. 

“This is not our price,” Delgado said. ”We’ve agreed to provide these services at that price. We have the ability to lower our prices, obviously, a little bit to accommodate getting the right repair information to the shops that need it.”

The company spent a lot of money creating the Rules Engine, Delgado said.

“It gives us a database that qualifies that those scans are reading the vehicle correctly,” he said. “We know that there’s a small percentage that do OE scans. We are big proponents of OE scans. This drives OE scans, believe it or not.” 

Later in the meeting, Schulenburg said setting a standardized price is different from promoting the value of a business. 

“All I will say is I think it’s one thing for a company to sell their services and promote why those services are valuable to another company,” he said. “It is a different thing for a company to create standardized pricing for another business with another company. Those are two different issues. And we keep talking about the standardized pricing and the response keeps coming back to the value of the service. Nothing wrong with promoting the value of the service. I believe that there is something wrong with creating standardized pricing for another business.” 

Jeff Butler, owner of Haury’s Collision and Vintage and Collision Consulting, both located in Washington, said the agreement is an example of a third party vertically inserting themselves into the process to set, control, or fix a price. 

“I strongly object to third parties engaging in negotiating, setting prices, coming up with agreements or fixing or controlling a market price on behalf of me, my industry, my customers, and anything like that,” Butler said. “I object to that kind of behavior in the marketplace. That is control market price in my opinion and not a free market.”

Michael Bradshaw, vice president of K&M collision in North Carolina, noted that asTech’s scans include operations such as steering angle calibrations that are often considered additional operations by other scan tools. 

Vilardi responded that those operations have always been a part of scans for asTech. It wasn’t changed for the GEICO agreement. 

“I hope you can certainly understand from an industry perspective when somebody is communicating that certain things are included, that is a completely separate process in a normal repair environment,  how that creates a concern and miscommunication and misconception among those within the industry,” Bradshaw said.

During the meeting, CIC Chairman Dan Risley offered any GEICO members possibly in the audience the option to respond to questions raised by audience members. His offer was met with silence.

IMAGES

Jason Vilardi, asTech insurance and estimatics vice president, answers questions about an AsTech agreement with GEICO for a standardized price during a Collision Industry Conference (CIC) meeting on July 10, 2024. (Teresa Moss/Repairer Driven News) 

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