Japan Tsunami Fails to
Halt collision Parts Flow
The latest iteration of Mitch- ell’s Industry Trends Report (ITR) begins with an ex- amination of the impact of
the Japanese tsunami on vehicle parts pricing. Greg Horn, ITR editor-in-chief and
Mitchell’s vice president of industry relations, alludes to stories of salvage
yards hoarding parts and asks some
questions that have weighed heavily on the minds of all involved in
the collision parts industry—from
repair shops to insurers—since the
Although many presumed that aftermarket parts usage would increase,
and that OEM components would
be increasingly difficult to come by, Horn
quickly dispels these notions in the opening feature of the 4Q publication. He then
leverages the Mitchell Collision Parts Price
Index (MCPPI)—a metric similar to the
Consumer Price Index (CPI)—to identify
trends in parts prices versus inflation and
assess the impact of the tsunami on parts
“The tsunami in Japan was incredibly
tragic and affected so many,” said Horn.
“After having a chance to absorb the dra-
matic impact on their Nation, we wanted
to see how it would affect the collision
repair community. Our in-depth analysis
using the MCPPI indicates the tsunami
had little net impact on parts pricing.
tured parts increased slightly, he added.
“Spot shortages and hoarding may have
occurred immediately after the tragic
events in the spring but had little material
impact on Japanese vehicle parts prices.”
Mitchell created the MCPPI specifically for the collision repair industry and
designed it to analyze and track parts
price changes using the data for the top
20 most replaced collision parts.
Mitchell used the most up-to-date MCP-
PI data to examine the most frequently re-
placed collision parts. The company
contrasted that with a subset of Jap-
anese-only vehicle parts to reveal the
true impact of the tragic tsunami this
past spring on Japanese vehicle parts
pricing, including whether costs in-
creased as a result of shortages.
“Delving into insurance claims data
helps the P&C and collision repair
industries assess marketplace condi-
tions and adjust accordingly, which is criti-
cal since parts comprise approximately 42
percent of average repairable estimate dol-
lars and directly impact estimate severity,”
Horn explained. Being aware of the impact
of significant events and being armed with
the latest collision repair information and
analysis helps our clients increase customer
satisfaction, thus improving their business
performance.” —By Christina Bramlet
Beyond the Tsunami
In Q3-2011, the average gross appraisal value
for comprehensive auto coverage estimates
processed through Mitchell servers was
$2,694—compared to $2,600 in Q3-2010.
The low supplement amount reflects
the heavy hail appraisals written
during the quarter.
Isolating the Japanese vehicle parts index
and breaking out the subset of Japanese
make by part type shows that the Japanese vehicle index mirrors broader market trends. In the aggregate, parts prices
increased, even in a year where inflation
has slowed to the lowest rate since we began measuring the index.
“OEM-indexed parts decreased in
price, while aftermarket and remanufac-
What resources and strategies will be the most beneficial to
insurers in detecting and deterring fraud?
The most effective tools in detecting fraud are well-trained, edu-
cated, and experienced claims and SIU staff. It is essential that the
claims staff is educated in recognizing potentially fraudulent claims
and the obligation to refer a case to the SIU for further investigation.
The SIU has the tools and access to the entire claims database and
other databases that will assist it in completing a thorough fraud
investigation and determine if it is necessary to report a loss to the
local Department of Insurance Fraud Investigators.
Once the preponderance of evidence convinces the insurer that a
fraud has been attempted, the company must be committed to re-
jecting the claim and defending any suit by the fraud perpetrator
through trial and all appeals; never agreeing to a settlement.
If the insurer determines there is a fraud ring, then it is also useful
to bring suit against the ring of perpetrators if they have assets that
can be seized after obtaining a judgment to take the profit motive
out of the crime.
How has fraud changed during your years of experience?
I’ve been involved with insurance claims since 1967 and have found
that generally insurance fraud hasn’t changed all that much. There
are just some different variations on the usual schemes. People come
up with new ideas and get greedy, but those are fairly easy to catch
and defeat. If anything has changed, it is that insurers are more willing
to fight, to take cases to trial and refuse to pay claims they believe are
frauds. I also notice that the U.S. Department of Justice is working to
prosecute more Medicare and Medicaid fraud perpetrators.
What are some tips for insurers for recovering from fraud
Do a thorough investigation; retain competent counsel; and sue them.
If they are prosecuted and convicted, then appear in court and de-
What has been your most surprising or interesting fraud
They are uncountable, but the most interesting is a reported deci-
sion that established the grounds for rescission of an insurance pol-
icy in California, Imperial Casualty and Indemnity Co. versus Sogomonian,
198 Cal. App. 3d 169, 243 Cal. Rptr. 639 (Cal.App.Dist. 2 02/04/1988). I
did write an e-book with more than 80 of my favorite stories.