8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                ----------------

                                    FORM 8-K

                                 CURRENT REPORT

                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


       DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) SEPTEMBER 25, 2003


                          INSURANCE AUTO AUCTIONS, INC.
             (Exact name of registrant as specified in its charter)

          ILLINOIS                      0-19594                  95-3790111
(State or other jurisdiction of  (Commission File Number)      (IRS Employer
        incorporation)                                       Identification No.)


              850 E. ALGONQUIN RD., SUITE 100, SCHAUMBURG, IL 60173
                    (Address of principal executive offices)


                                 (847) 839-3939
              (Registrant's telephone number, including area code)


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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.


         (c) Exhibits.


          EXHIBIT NO.                          EXHIBIT
          -----------   --------------------------------------------------------
             99.1       Press Release dated September 25, 2003 of Insurance Auto
                        Auctions, Inc.



ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS.

         The following information is furnished pursuant to Item 12. "Results of
Operations & Financial Condition" in accordance with SEC Release No. 33-8216.

         On September 25, 2003, the Company issued a press release announcing
preliminary third quarter results. A copy of the press release is attached to
this Current Report on Form 8-K as Exhibit 99.1.

         The information in this Form 8-K and Exhibit 99.1 attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, nor shall it be deemed incorporated by reference in any filing under
the Securities Act of 1933, except as shall be expressly set forth by specific
reference in such filing.




                                        2

                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.


                                                Insurance Auto Auctions, Inc.

       Dated: September 29, 2003

                                                By:     /s/ Thomas C. O'Brien
                                                        ------------------------
                                                         Thomas C. O'Brien
                                                         Chief Executive Officer


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                                INDEX OF EXHIBITS


    EXHIBIT NO.                             EXHIBIT
    -----------    -------------------------------------------------------------
       99.1        Press Release dated September 25, 2003 of Insurance Auto
                   Auctions, Inc.


                                        4

EX-99.1

                                                                    Exhibit 99.1

                         [INSURANCE AUTO AUCTIONS LOGO]



AT THE COMPANY:                           AT ASHTON PARTNERS:
Scott Pettit                              Chris Kettmann
Chief Financial Officer                   General Inquiries
847-839-4040                              312-553-6716
www.iaai.com



       INSURANCE AUTO AUCTIONS ANNOUNCES PRELIMINARY THIRD QUARTER RESULTS


SCHAUMBURG, Ill., September 25, 2003 -- Insurance Auto Auctions, Inc. (Nasdaq:
IAAI), a leading provider of automotive salvage and claims processing services
in the United States, today announced preliminary financial results for the
third quarter of 2003. The Company expects to report a small loss for the
quarter, versus net earnings of $0.6 million, or $0.05 per diluted share, for
the same quarter a year ago. These expected results include business
transformation costs, before tax, of $1.2 million, or $0.06 per diluted share.
The Company also expects similar results for the fourth quarter.

"Our third quarter volumes were lower than expected on a same store basis,
consistent with the trend we saw in the second quarter. This, coupled with the
high fixed cost nature of our business, negatively impacted our financial
results for the quarter," said Tom O'Brien, CEO. "We forecasted higher volumes
for the third quarter based on a consolidating report that incorrectly included
cancelled vehicle assignments. The problems with this report have been
corrected. Also impacting our results was that the new branches, although
profitable, did not achieve as favorable of pricing levels as in existing
branches. Nevertheless, we believe the actual shortfall in volume continues to
be a direct reflection of the lower frequency of claims throughout the
industry."

O'Brien continued, "This decline in volume and the higher than projected costs
of implementing our new IT operating system were the primary causes for the
decline in year-over-year earnings results. As we discussed before, we
experienced delays in implementing the new system. These delays have required
the continued use of our IT consultants, resulting in increased costs in rolling
out the new system to our branches. We have addressed those issues and continue
to move forward with the system roll out. Consistent with the timetable
communicated last quarter, we fully anticipate completing the system roll out by
the end of the year. We have also begun to take the additional steps necessary
to eliminate the business transformation costs associated with the system


implementation and expect to realize the savings in 2004 that we anticipated
when the project began."

Commenting on expectations for the second half of the year, O'Brien said, "For a
number of reasons, we have made the decision to lower our guidance for net
earnings to approximately $0.20 per diluted share after business transformation
costs, depending on volumes and proceeds. Those reasons include the lower than
forecasted volumes in the third and fourth quarters due in part to industry
trends and the volumes contained in our consolidating report, assumptions made
with regards to pricing levels in new branches, and expected higher severance
costs as a result of downsizing the back office organization. These issues
highlight the importance of the new system and the improved visibility on
incoming unit volumes and overall pricing that it provides, allowing the
management team to better manage the business and communicate more effectively
with stakeholders."

O'Brien concluded, "Though we are disappointed that we needed to reduce our
earnings guidance at this time, we remain confident in our long-term future.
This has been a very challenging year due primarily to our unrelenting focus on
the system implementation and the obstacles it has presented. We believe we are
in a better position now than ever before from a market share perspective
because we have proven our ability to win business in the current marketplace.
We remain confident in our long-term ability to compete. The strategic
initiatives we have implemented over the past 18 months, including the new IT
system and related customer interface and internet capabilities, business
process re-engineering initiatives, and strategic expansion, have put us in a
position to generate higher returns at IAA over the long term. We look forward
to providing our shareholders with additional details on our third quarter
earnings call scheduled for late October."

ABOUT INSURANCE AUTO AUCTIONS, INC.

Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive total
loss and specialty salvage services in the United States, provides insurance
companies with cost-effective, turnkey solutions to process and sell total-loss
and recovered-theft vehicles. The Company currently has 74 sites across the
United States.

SAFE HARBOR STATEMENT

Certain statements in this document contain forward-looking information that is
subject to certain risks, trends and uncertainties that could cause actual
results to differ materially from those projected, expressed, or implied by such
forward-looking information. In some cases, you can identify forward looking
statements by our use of words such as "may, will, should, anticipates,
believes, expects, plans, future, intends, could, estimate, predict, projects,
targeting, potential or contingent," the negative of these terms or other
similar expressions. The Company's actual results could differ materially from
those discussed or implied herein. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the
Company's annual report on Form


10-K for the fiscal year ended December 29, 2002 or subsequent quarterly
reports. Among these risks are: changes in the market value of salvage; the
quality and quantity of inventory available from suppliers; the ability to pass
through towing costs; that vehicle processing time will improve; legislative or
regulatory acts; competition; the availability of suitable acquisition
candidates and greenfield opportunities; the ability to bring new facilities to
expected earnings targets; the dependence on key insurance company suppliers;
the ability of the Company and its outside consultants to successfully complete
the re-design of the Company's information systems, both in a timely manner and
according to costs and operational specifications; and the level of energy and
labor costs.

 ADDITIONAL INFORMATION ABOUT INSURANCE AUTO AUCTIONS, INC. IS AVAILABLE ON THE
                         WORLD WIDE WEB AT WWW.IAAI.COM