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 could be pressuring customers to repair their automobiles at the insurers’ preferred repair shops.

“Contrary to what consumers might 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. Lawyer Common Eric Holder last Friday.

“It appears to be frequent 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, good quality service, but by agreeing to charge under-marketplace labor rates and use less costly, salvaged, utilized, or even counterfeit components of questionable quality and safety,” Blumenthal wrote.

“Unfortunately, many buyers are also becoming misled into thinking that they are necessary to have their car repaired at one particular of these shops,” Blumenthal wrote in the letter. “This has the damaging impact of limiting consumer choice, generating a serious 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 Constructing

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer General Holder:

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

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

As junk yard, remanufactured, and utilized parts of substandard high quality become increasingly widely available, auto insurers are adopting alarming new ways to save funds at the expense of customer safety. Contrary to what buyers may be led to think by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs. It seems to be frequent knowledge 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 consistent, top quality service, but by agreeing to charge under-market labor prices and use less expensive, salvaged, employed, or even counterfeit components of questionable top quality and safety. Regrettably, numerous customers are also getting misled into thinking that they are essential to have their automobile repaired at one of these shops. This has the damaging impact of limiting consumer selection, generating a serious security danger, and suppressing competitors in the auto repair market.

According to a 1963 consent decree with the DOJ, a number of insurers had been ordered to stop: “sponsoring any appraiser directing, advising or otherwise suggesting any particular person or firm do organization with any independent or dealer-franchised automotive repair shop working out handle more than 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.” Over 50 years have since passed, and customers and auto repairers possibly remain victims of the very identical misconduct insurers have been directed to cease 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 existing federal laws. As you investigate this matter, I urge you to use your authority to investigate the contents of contracts between insurance coverage firms and facilities listed in their direct repair programs or preferred lists. I would also like to request an update with regards 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 company transactions in the years since the decree was signed.

Thank you in advance for your prompt focus to this important matter harming customers and the auto repair sector, 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