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 may be pressuring buyers to repair their automobiles at the insurers’ preferred repair shops.

“Contrary to what shoppers may 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 widespread understanding amongst auto repair shops that the greatest way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, top quality service, but by agreeing to charge beneath-market place labor rates and use less costly, salvaged, utilized, or even counterfeit parts of questionable quality and security,” Blumenthal wrote.

“Unfortunately, several consumers are also being misled into thinking that they are essential to have their auto repaired at a single of these shops,” Blumenthal wrote in the letter. “This has the harmful effect of limiting customer choice, generating a significant safety threat, and suppressing competition in the auto repair industry.”

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

The Honorable Eric Holder

Attorney General of the United States

Robert F. Kennedy Creating

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer General Holder:

As a longtime advocate of consumer choice, I create to bring to your interest to troubling new evidence that our nation’s top auto insurers continue to engage in anticompetitive and possibly illegal tactics to stress consumers into repairing their autos at insurer-preferred repair shops. As uncovered in a specific investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a standard customer appropriate, but can also compromise the security of automobiles 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 protect the safety of shoppers and preserve competitors in the auto repair business.

As junk yard, remanufactured, and utilized parts of substandard top quality become increasingly broadly available, auto insurers are adopting alarming new methods to save money at the expense of customer safety. Contrary to what customers may be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with quality repairs. It seems to be typical knowledge among auto repair shops that the 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 below-market labor rates and use less costly, salvaged, utilised, or even counterfeit parts of questionable good quality and security. However, many customers are also getting misled into considering that they are necessary to have their vehicle repaired at one particular of these shops. This has the harmful effect of limiting customer selection, making a significant security danger, and suppressing competition 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 exercising control 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.” More than 50 years have since passed, and buyers and auto repairers possibly stay victims of the quite identical misconduct insurers have been directed to quit undertaking decades ago.

I urge the DOJ to investigate and make a determination as to no matter 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 in between insurance coverage companies 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 present signatories of the 1963 consent decree and regardless of whether they continue to be bound by the consent decree in light of organization transactions in the years since the decree was signed.

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