Friday Fun: Car vending machines, Consumer Reports rates insurers and auto lending fraud on the rise

One of Carvana's 'car vending machines' in Nashville. Another is slated for construction in North Carolina.

By Jeff Sanford

Toronto, Ontario — February 2, 2017 — It’s been another interesting week in the collision repair sector and the wider automotive world. This week’s edition of Friday Fun takes a look at an insurance company that just wouldn’t let a client go, another “car vending machine” about to land in North Carolina, the latest on auto lending fraud and much, much more!

– A client of one of Canada’s best-known property and casualty insurance companies had to call Global TV to force action on an account. According to the complainant, over four months the insurer, “… refused to believe the mother of a 33-year-old woman who died and kept billing her for auto insurance premiums.” The complainant, Kim Douglas of Orillia, Ontario, was quoted as saying, “They were not pleasant about it, they were ignorant.” According to the report, Nicole Douglas, 33, died in a Toronto hospital on September 10. The family contacted the insurance company and told them they wanted to stop paying on the auto insurance policy of the deceased. Douglas accused the company of continuing to make withdrawals from the deceased’s bank account to January 19, 2017 even after a stop payment order had been put on the account and the death certificate forwarded to the insurer. Eventually Douglas contacted Global, which contacted the company, COSECO Insurance, a subsidiary of Co-operators Insurance. According to the story, on multiple occasions, Douglas said she was told by the insurance company that, ‘We can’t take your word for it,” and that “we need the client” to confirm the cancellation. Within four hours of being contacted by Global News, COSECO and the Co-operators admitted what it did was wrong, according to the story. “An internal investigation revealed that human error resulted in some confusion and a delay in cancelling this policy,” company spokesperson Leonard Sharman was quoted as saying. “We have now made the necessary corrections and are processing a refund back-dated to September 22. We deeply regret that due to our internal miscommunication, the family was contacted more than it should have been, during a very difficult time.”

– A dealership in Charlottesville, North Carolina is on track to see a new kind of development: a “car vending machine.” The service will be offered in partnership with online auto dealer Carvana. The company is targeting a site near a local commuter rail line. According to a report by The Charlotte Observer, “… the Carvana location would include an 8,20 square foot auto store, part of which would be a 71-foot-tall ‘car display’ located at the front of the building.” The way the system works, “Customers buy their cars online, through the company’s website. Then, they can choose to pick their car up at the ‘vending machine’.” A similar car Vending Machine in Nashville is, “…a beautifully designed glass building that contains a Welcome Center, a five story glass Tower storing up to 20 cars, three customer Delivery Bays and an automated delivery system that moves a customer’s vehicle from the Tower and into each Bay.”

– A story from our US content partner, Repairer Driven News, notes that, “Aluminum OEM certification seen as worthwhile, results in higher pay.” The study was undertaken in October of 2016 and involved more than 500 collision repair experts. The data suggests that shops that have been certified by an automaker in aluminum collision repair reported, “… optimism about the decision.” The data also suggests that, “… OEM-certified shops are being paid more for aluminum work than uncertified repairers.”

– An independent collision repair chain in the United States has developed its own in-house mobile app, allowing clients to get an estimate “minutes after a collision…[and] from the comfort of their own home.” H&V Collision Center introduced the mobile estimating device to allow customers to get free and confidential estimates on damage to their vehicle in minutes. According to a press release, “H&V is the only collision repair shop in the Capital Region of upstate New York to offer the Mobile Estimating Tool.”

Consumer Reports has published six different ratings of car insurance companies since 1992. The publication has made available a chart of the rankings. Based on national surveys of readers of the magazine the results, “… reflect [the] overall satisfaction with auto insurers, as well as factors such as service and claims handling.” According to a write-up on the results, “Over those years, we’ve learned several important things.” For one, “car insurance companies tend to perform consistently over time, with their scores usually varying by only a few points from survey to survey. And while the companies generally tend to perform well—typically earning scores of 80 or higher on our 100-point scale—some regularly appear near the top.”

– German media is reporting this week on the emission cheating scandal at Volkswagen and has uncovered new allegations that, “… if proven, reach a completely new dimension of a scandal,” according to a report. The story goes on to note that, “Months after the dieselgate scandal broke in 2015, Volkswagen seems to have slipped regulators cars for … approval that were [different as to] what later was sold.” German reporters have uncovered written communications from German regulator KBA to Volkswagen that apparently suggests that, “Due to the uncertainty that production vehicles are always used for type approval examinations and that the technical service can reach its findings in an unfettered manner, the KBA will perform random tests and will commission another technical service for the test.” That is, the regulator couldn’t confirm that the cars submitted to it were of the same type being sold, and so had to move to random checks of vehicles on the road.

– The owner of a US-based collision repair shop owner has been charged with rolling back odometers on vehicles with the help of city employees. According to a local newspaper, “Following an extended investigation, the owner of a now-defunct Chesapeake auto shop was charged earlier this month with rolling back the odometers of more than 100 vehicles and selling them to unsuspecting buyers.”

– As more and more buyers rely on extended terms to access auto financing it seems the amount of auto lending fraud is rising. A report finds that, “… the annual value of auto loan originations that contain some element of misrepresentation may be as high as $6 billion in 2017, which is twice as much as 2016 estimates.” The white paper, Estimate Auto Lending Fraud, finds that auto lending fraud risk has, “… been rising for several years, but remains hidden in credit losses. With 2016 auto lending originations soaring to historically high levels, the downstream impacts are now revealing themselves in higher fraud losses.”

– Tesla’s habit of upgrading its vehicles through software updates has, “…upended the product life cycle in the car industry … With this system, any product can be open-ended and continuously in the making,” according to a story on LSE Business Review. “Traditionally, cars are sold as finished and complete products, with a price premium attached to the specification and quality of design and craftsmanship. The buyers do not expect new cars to improve or change once they are rolled out of the dealer’s premises. Only occasional maintenance services, software updates or repairs are carried out to keep cars functional. To stay competitive, car makers design and introduce new models to market every four to seven years. The models are refreshed with minor functional and cosmetic changes around halfway through a model’s life cycle … This traditional model is challenged by the Californian car company Tesla. Similarly to your smartphone, Tesla releases frequent software updates to improve and change functionality of the cars they have designed and manufactured, thereby modifying cars continuously even if they are already sold and in use,” the story reads.

– The owner of the record-setting Spirit of America jet car, Craig Breedlove, has reached an agreement with the Museum of Science and Industry over a lawsuit alleging his car was damaged during its 50 years on display. Terms of the settlement were not disclosed, according to a joint statement released by Breedlove and the museum.

– A new report finds that, “Scientists pay the lowest car insurance rates. They pay as low as $870 on the average. Retired persons pay slightly more at an average of $920. Pilots and navigators also belong to the low car insurance rates bracket.” It seems occupation affects car insurance rates. Those in high insurance brackets are “business owners,” who average around $1400 in car insurance premiums. Also paying higher rates are “executives”, attorneys, lawyers and judges who average around $1370.

– A report in the Toronto Star notes that, “Toronto’s red-light camera program is headed for a major expansion, a year after the devices appear to have resulted in a record number of charges against drivers.” Toronto officials recently announced plans, “… that could see the number of cameras, currently installed at 77 locations across the city, effectively doubled. The expansion is being billed as part of the city’s new $80-million road safety plan, which Mayor John Tory has championed with the aim of eliminating traffic deaths and serious injuries.” Tory was quoted as saying, “I think the objective here is to get people to slow down and drive safely in school zones, places like that, to stop this carnage that’s been happening on the roads and to get (the number of traffic deaths) down to zero.”



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