FPCA Auto Division: Auto Insurers Should Be Investigated, Says Conn. AG

Armed with petitions from auto repairers representing 48 of the 50 United States, Connecticut Attorney General Richard Blumenthal held a press conference on September 1, 2009, during which he called on U.S. Attorney General Eric H. Holder, Jr. to investigate and stop insurance company practices that may deny consumers the right to choose their own automobile repair shop. Attorney General Blumenthal also said he would seek to enlist other attorneys general in his effort.

To view a press release on the issue from the Office of Attorney General Blumenthal, click here.  

Related media coverage from National Underwriter is reprinted below. 

 

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Auto Insurers Should Be Investigated, Says Conn. AG 

Published on September 4, 2009 in NationalUnderwriter.com

Connecticut Attorney General Richard Blumenthal has asked the U.S. attorney general to look into the practice of insurers directing policyholders to preferred repair shops to fix their car after an accident. 

Earlier this week, Mr. Blumenthal called on U.S. Attorney General Eric H. Holder Jr. to “investigate and stop insurance company practices that may deny consumers the right to choose their own automobile repair shop.”

Mr. Blumenthal said he and several auto repairers are accusing insurers of forcing or steering consumers to “preferred repair shops,” contending such practices “may violate the law and a decades-old consent decree between the federal government and several insurance companies.”

Mr. Blumenthal said he has forwarded petitions to Mr. Holder from auto repairers representing 48 of the 50 states, seeking relief from such practices.

The petitioners say the U.S. Department of Justice entered into a consent decree in 1963 with several property and casualty insurer associations and their members, in which the insurers were ordered to stop:

• Sponsoring any appraiser.
• Directing, advising or otherwise suggesting that any person or firm do business with any independent or dealer-franchised automotive repair shop.
• Exercising control over the activities of any appraiser.
• Fixing or otherwise controlling the prices charged by auto repair shops for the repair of damage to the vehicle, or for labor in connection therewith, by use of a flat rate.

“Almost 50 years later, insurer steering is still a scourge,” Mr. Blumenthal said in a statement. “This outpouring of complaints shows that problematic practices persist, despite a 1963 consent decree and current law. Auto repairers and consumers are victims of the very same misconduct today: insurer control of appraisers, insurer financial incentives and steering of consumers to preferred auto facilities, and setting labor rates that repair facilities must use.”

He added that “both federal and state law enforcers should send a message-your car, your choice.”

Mr. Blumenthal said he will seek to enlist other attorneys general in his effort.

In response, Paul Magaril, regional manager for the Property Casualty Insurers Association of America, said in a statement that his group-representing over 1,000 insurers-flatly denies the Connecticut attorney general’s allegations, calling them “patently false and being ginned up by a special interest group.”

He said the special interest group-auto repair outfits-is using the attorney general “to line their own pockets at the expense of hard-working consumers…”

He said both insurers and consumers have the same goal-to get their cars repaired promptly and correctly, and back on the road. Insurer-directed repair shops offer a hassle-free solution, he said, adding that consumers always have the right to choose a different repair shop from an insurer’s suggestion.

“Consumers benefit from more, rather than less information,” according to Mr. Magaril.

“It is disappointing that Attorney General Blumenthal would seek to prevent consumers from benefiting from programs offering auto body repairs, good customer service and a process that can help lower costs,” Mr. Magaril said. “This seems motivated by a lobbying campaign by disgruntled auto body shops, who are only concerned about their own bottom lines and not about consumers.”

A spokesman for the U.S. Department of Justice said Mr. Holder would respond to Mr. Blumenthal after a review of his request and it would be up to the Connecticut attorney general to make the response public.

 

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