Conn. Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops

U.S. Senator Richard Blumenthal (D-Conn.) is urging the Division of Justice (DOJ) to investigate a recently aired CNN report’s allegation that auto insurers might be pressuring buyers to repair their vehicles at the insurers’ preferred repair shops.

“Contrary to what buyers may possibly be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs,” Blumenthal wrote in a letter sent to U.S. Attorney General Eric Holder last Friday.

“It appears to be frequent information among auto repair shops that the ideal way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, quality service, but by agreeing to charge beneath-market labor prices and use more affordable, salvaged, employed, or even counterfeit parts of questionable high quality and safety,” Blumenthal wrote.

“Unfortunately, several customers are also getting misled into considering that they are required to have their automobile repaired at one of these shops,” Blumenthal wrote in the letter. “This has the harmful effect of limiting customer option, producing a critical security risk, and suppressing competitors in the auto repair business.”

The following is the complete text of Blumenthal’s Feb. 20 letter to Lawyer General Holder:

The Honorable Eric Holder

Attorney Common of the United States

Robert F. Kennedy Developing

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Attorney Common Holder:

As a longtime advocate of customer option, I create to bring to your consideration to troubling new proof that our nation’s leading auto insurers continue to engage in anticompetitive and possibly illegal tactics to pressure shoppers into repairing their cars at insurer-preferred repair shops. As uncovered in a special investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a standard consumer appropriate, but can also compromise the security of cars on our nation’s roads—endangering motorists and their passengers.

I urge the Division of Justice (DOJ) to quickly investigate such practices by the auto insurance coverage market and act swiftly to protect the security of consumers and preserve competitors in the auto repair sector.

As junk yard, remanufactured, and utilized components of substandard good quality turn out to be increasingly broadly offered, auto insurers are adopting alarming new approaches to save money at the expense of consumer safety. Contrary to what consumers could be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with top quality repairs. It seems to be common expertise amongst auto repair shops that the ideal way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, top quality service, but by agreeing to charge beneath-market labor rates and use less costly, salvaged, utilised, or even counterfeit components of questionable quality and security. However, a lot of shoppers are also getting misled into pondering that they are required to have their car repaired at one of these shops. This has the dangerous impact of limiting customer selection, creating a severe security danger, and suppressing competitors in the auto repair market.

According to a 1963 consent decree with the DOJ, a quantity of insurers had been ordered to quit: “sponsoring any appraiser directing, advising or otherwise suggesting any person or firm do business with any independent or dealer-franchised automotive repair shop working out handle over the activities of any appraiser and fixing or otherwise controlling the prices charged by automotive repair shops for the repair of damage to the automobile or for labor in connection therewith, by use of a flat rate.” More than 50 years have because passed, and buyers and auto repairers possibly remain victims of the quite exact same misconduct insurers have been directed to stop carrying out decades ago.

I urge the DOJ to investigate and make a determination as to regardless of whether such practices violate the 1963 consent order or any other present federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts between insurance firms and facilities listed in their direct repair programs or preferred lists. I would also like to request an update regarding DOJ’s understanding of the existing signatories of the 1963 consent decree and regardless of whether they continue to be bound by the consent decree in light of business transactions in the years because the decree was signed.

Thank you in advance for your prompt consideration to this essential matter harming consumers and the auto repair business, and compromising car safety.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

 
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Conn. Senator Urges DOJ to Investigate Auto Insurers’ ‘Preferred’ Repair Shops