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

U.S. Senator Richard Blumenthal (D-Conn.) is urging the Department of Justice (DOJ) to investigate a not too long ago aired CNN report’s allegation that auto insurers may be pressuring customers to repair their cars at the insurers’ preferred repair shops.

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

“It appears to be typical knowledge among 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 place labor prices and use more affordable, salvaged, utilized, or even counterfeit components of questionable good quality and safety,” Blumenthal wrote.

“Unfortunately, several shoppers are also getting misled into thinking that they are needed to have their auto repaired at a single of these shops,” Blumenthal wrote in the letter. “This has the dangerous impact of limiting customer option, producing a critical safety threat, and suppressing competition in the auto repair business.”

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

The Honorable Eric Holder

Attorney Basic 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 selection, I create to bring to your consideration to troubling new proof that our nation’s prime auto insurers continue to engage in anticompetitive and possibly illegal tactics to stress shoppers into repairing their automobiles at insurer-preferred repair shops. As uncovered in a unique investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a simple consumer appropriate, but can also compromise the safety 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 shield the safety of customers and preserve competition in the auto repair industry.

As junk yard, remanufactured, and employed components of substandard high quality turn into increasingly widely obtainable, auto insurers are adopting alarming new techniques to save funds at the expense of consumer safety. Contrary to what buyers might be led to think by their insurers, repair shops preferred by insurers do not necessarily equate with high quality repairs. It appears to be frequent knowledge among auto repair shops that the greatest way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, high quality service, but by agreeing to charge under-market labor prices and use more affordable, salvaged, employed, or even counterfeit components of questionable high quality and safety. Unfortunately, a lot of consumers are also getting misled into pondering that they are needed to have their car repaired at one of these shops. This has the harmful effect of limiting customer option, generating a serious safety threat, and suppressing competition in the auto repair industry.

According to a 1963 consent decree with the DOJ, a number of insurers have been ordered to quit: “sponsoring any appraiser directing, advising or otherwise suggesting any particular person or firm do company with any independent or dealer-franchised automotive repair shop working out manage over the activities of any appraiser and fixing or otherwise controlling the rates charged by automotive repair shops for the repair of harm to the car 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 really exact same misconduct insurers were directed to quit undertaking 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 in between insurance organizations and facilities listed in their direct repair applications or preferred lists. I would also like to request an update relating to DOJ’s understanding of the existing signatories of the 1963 consent decree and 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 focus to this critical matter harming buyers and the auto repair business, and compromising vehicle safety.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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