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 lately aired CNN report’s allegation that auto insurers might be pressuring shoppers to repair their vehicles at the insurers’ preferred repair shops.

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

“It appears to be widespread understanding 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, quality service, but by agreeing to charge below-marketplace labor rates and use more affordable, salvaged, utilized, or even counterfeit parts of questionable quality and security,” Blumenthal wrote.

“Unfortunately, a lot of buyers are also becoming misled into pondering that they are needed to have their auto repaired at one of these shops,” Blumenthal wrote in the letter. “This has the harmful effect of limiting consumer choice, generating a serious safety danger, and suppressing competitors in the auto repair industry.”

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

The Honorable Eric Holder

Attorney Common of the United States

Robert F. Kennedy Building

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer Basic Holder:

As a longtime advocate of consumer choice, I write to bring to your interest to troubling new evidence that our nation’s prime auto insurers continue to engage in anticompetitive and possibly illegal tactics to stress shoppers into repairing their autos at insurer-preferred repair shops. As uncovered in a unique investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a basic customer appropriate, but can also compromise the safety of autos on our nation’s roads—endangering motorists and their passengers.

I urge the Department of Justice (DOJ) to quickly investigate such practices by the auto insurance coverage industry and act swiftly to shield the safety of shoppers and preserve competition in the auto repair industry.

As junk yard, remanufactured, and used parts of substandard top quality become increasingly extensively obtainable, auto insurers are adopting alarming new approaches to save cash at the expense of consumer security. Contrary to what shoppers may possibly be led to think by their insurers, repair shops preferred by insurers do not necessarily equate with high quality repairs. It seems to be frequent expertise among auto repair shops that the very best 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 below-marketplace labor prices and use less costly, salvaged, used, or even counterfeit components of questionable quality and safety. Regrettably, several shoppers are also being misled into considering that they are essential to have their auto repaired at one particular of these shops. This has the harmful effect of limiting consumer option, producing a severe security 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 quit: “sponsoring any appraiser directing, advising or otherwise suggesting any individual or firm do organization with any independent or dealer-franchised automotive repair shop working out control more than the activities of any appraiser and fixing or otherwise controlling the prices charged by automotive repair shops for the repair of harm to the automobile or for labor in connection therewith, by use of a flat rate.” Over 50 years have given that passed, and consumers and auto repairers possibly remain victims of the very identical 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 current federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts among insurance companies and facilities listed in their direct repair applications or preferred lists. I would also like to request an update with regards to DOJ’s understanding of the present signatories of the 1963 consent decree and whether they continue to be bound by the consent decree in light of enterprise transactions in the years considering that the decree was signed.

Thank you in advance for your prompt interest to this critical matter harming consumers and the auto repair industry, and compromising automobile safety.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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