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 recently aired CNN report’s allegation that auto insurers may possibly be pressuring customers to repair their autos at the insurers’ preferred repair shops.

“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,” Blumenthal wrote in a letter sent to U.S. Lawyer Common Eric Holder final Friday.

“It seems to be frequent information amongst auto repair shops that the very best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, quality service, but by agreeing to charge under-marketplace labor prices and use cheaper, salvaged, utilised, or even counterfeit parts of questionable top quality and security,” Blumenthal wrote.

“Unfortunately, several buyers are also becoming misled into considering that they are essential to have their auto repaired at a single of these shops,” Blumenthal wrote in the letter. “This has the dangerous impact of limiting customer choice, producing a serious security threat, and suppressing competitors in the auto repair business.”

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

The Honorable Eric Holder

Attorney Basic of the United States

Robert F. Kennedy Constructing

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer Common Holder:

As a longtime advocate of consumer choice, I create to bring to your attention to troubling new proof that our nation’s leading auto insurers continue to engage in anticompetitive and possibly illegal techniques to pressure buyers into repairing their autos at insurer-preferred repair shops. As uncovered in a particular investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a fundamental customer proper, but can also compromise the safety of automobiles on our nation’s roads—endangering motorists and their passengers.

I urge the Division of Justice (DOJ) to immediately investigate such practices by the auto insurance coverage market and act swiftly to shield the safety of customers and preserve competitors in the auto repair industry.

As junk yard, remanufactured, and used parts of substandard top quality turn out to be increasingly widely available, auto insurers are adopting alarming new ways to save funds at the expense of customer safety. Contrary to what shoppers might be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with high quality repairs. It seems to be widespread knowledge amongst auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering consistent, high quality service, but by agreeing to charge below-market place labor rates and use less expensive, salvaged, used, or even counterfeit parts of questionable top quality and security. Regrettably, a lot of consumers are also getting misled into considering that they are necessary to have their vehicle repaired at a single of these shops. This has the damaging effect of limiting consumer choice, creating a significant safety threat, and suppressing competitors in the auto repair business.

According to a 1963 consent decree with the DOJ, a number of insurers were ordered to cease: “sponsoring any appraiser directing, advising or otherwise suggesting any particular person or firm do business with any independent or dealer-franchised automotive repair shop working out control over the activities of any appraiser and fixing or otherwise controlling the rates charged by automotive repair shops for the repair of damage to the vehicle or for labor in connection therewith, by use of a flat price.” Over 50 years have since passed, and buyers and auto repairers possibly stay victims of the very identical misconduct insurers were directed to stop performing decades ago.

I urge the DOJ to investigate and make a determination as to 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 amongst insurance coverage companies and facilities listed in their direct repair applications or preferred lists. I would also like to request an update regarding DOJ’s understanding of the current signatories of the 1963 consent decree and regardless of whether they continue to be bound by the consent decree in light of enterprise transactions in the years given that the decree was signed.

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

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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