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 vehicles at the insurers’ preferred repair shops.

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

“It seems to be frequent information amongst auto repair shops that the ideal way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, good quality service, but by agreeing to charge under-marketplace labor rates and use less expensive, salvaged, employed, or even counterfeit components of questionable quality and security,” Blumenthal wrote.

“Unfortunately, a lot of consumers are also getting misled into thinking that they are required to have their vehicle repaired at a single of these shops,” Blumenthal wrote in the letter. “This has the harmful impact of limiting consumer decision, creating a serious security danger, and suppressing competitors in the auto repair market.”

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

The Honorable Eric Holder

Attorney Basic of the United States

Robert F. Kennedy Building

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Lawyer Basic Holder:

As a longtime advocate of customer choice, I create to bring to your consideration to troubling new proof that our nation’s best auto insurers continue to engage in anticompetitive and possibly illegal tactics to stress customers into repairing their vehicles at insurer-preferred repair shops. As uncovered in a particular investigation featured on Anderson Cooper 360 Wednesday evening, insurance coverage steering not only undermines a basic consumer proper, 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 immediately investigate such practices by the auto insurance industry and act swiftly to protect the security of shoppers and preserve competitors in the auto repair market.

As junk yard, remanufactured, and employed parts of substandard high quality turn into increasingly widely offered, auto insurers are adopting alarming new approaches to save cash 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 high quality repairs. It seems to be typical information among auto repair shops that the best way to land a coveted spot on an insurer’s preferred list is not necessarily by delivering constant, quality service, but by agreeing to charge beneath-industry labor rates and use cheaper, salvaged, utilized, or even counterfeit parts of questionable high quality and safety. Unfortunately, numerous shoppers are also being misled into pondering that they are required to have their automobile repaired at 1 of these shops. This has the dangerous impact of limiting customer option, making a critical security threat, and suppressing competition in the auto repair business.

According to a 1963 consent decree with the DOJ, a quantity of insurers have been ordered to cease: “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 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 vehicle or for labor in connection therewith, by use of a flat price.” More than 50 years have given that passed, and shoppers and auto repairers possibly remain victims of the quite very same misconduct insurers have been directed to cease doing 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 organizations and facilities listed in their direct repair applications or preferred lists. I would also like to request an update concerning 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 buyers and the auto repair industry, and compromising vehicle security.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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