When Allstate Corp. purchased Sterling Collision Partners Inc. in 2001, it sought a direct role in the fight against insurance fraud.

Sterling, a network of 39 collision repair stores in seven states founded in 1997, has been working with insurers to change the auto collision repair market which it says is highly fragmented, low-tech, and largely serviced by sole-proprietor shops. At the time of the sale Sterling Chief Executive Officer Jonathan McNeill said, "We are very excited about this new relationship. Allstate will be a terrific partner. Like Sterling, they understand that it is good business to reduce repair times and improve the facilities' efficiencies while delivering superior customer service."

Sterling executives saw the purchase by Allstate as an opportunity to take the company to the next level of re-invigorating this sector of the insurance industry. Sterling CEO Jonathan McNeill noted that the two companies share a vision with regard to expanding into other markets and are committed to customer satisfaction.

According to the press release announcing the sale to Allstate, the auto collision repair market is estimated in excess of $25 billion in annual revenues.

Sterling, the Allstate-owned collision facility consolidator, is proposing to invest tens of millions of dollars in California to build as many as 20 of its Sterling Autobody Repair Centers around the state.

"The Allstate-Sterling relationship is an innovative, consumer driven partnership enabling the insurer and body shop to work in unison for the benefit of the consumer,” according to Allstate Insurance Company Field Vice President for California Hank Barge.

"Together, Allstate and Sterling will eliminate the redundancies and fraud that exist in today's auto collision repair process. Customers are the beneficiaries of a coordinated repair process with a dual focus on their needs. The result of this partnership is a superior, more cost effective, and quality customer experience," Barge said.

Allstate Survey Shows Californians Fed Up With Auto Repair Fraud

Poor quality work, cheating, and inflated pricing in auto body repair shops are big concerns among California consumers, according to a recent poll conducted by COMsciences, Inc. for Allstate Insurance Company.

Californians overwhelmingly support increased competition in auto repair as a way to stem widespread fraud, increase the quality of work, and lower prices.

Fully 85 percent of those polled believe that cheating is a major reason repair costs are so high in the state. In fact, an overwhelming majority (74 percent) feel they are often cheated by auto body repair shops that do poor quality work or charge for work that was never even done. Ninety percent said consumers should have more choices in where to bring their car for bodywork, including shops owned or associated with insurance companies. Eighty-seven percent believe that the insurance industry should play a leadership role in combating industry fraud.

"For Allstate, this leadership means playing a more direct, hands on role in the auto repair process,” Barge commented. The survey's statistics appear to show that California consumers agree. “According to the survey, 87 percent of Californians feel that insurance company owned repair shops, which are now available in other states, should be available to California motorists,” Barge said.

How rampant is fraud in California? The California Bureau of Automotive Repair says there is a 43 percent incidence of fraud in California automotive repairs. An Allstate press release indicates puzzlement that a bill currently before the California State Legislature seeks to ban insurance companies like Allstate from owning auto body shops in California.

Attempts were made to restrict insurance companies from owning auto body shops. Senate Bill 1648 has yet to pass both houses in California. If passed the bill would “deny California consumers the option of an additional, reliable, less expensive, and superior repair option. The bill is anti-consumer, anti-business, and perpetuates the existing fraud in the state's auto repair industry. California consumers should stand strong and voice their opposition to this measure." Barge said.

Allstate says that Californians agree. Survey results show the majority (60 percent) of those surveyed are opposed to legislation preventing insurance companies from owning auto body repair facilities.