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 possibly be pressuring buyers to repair their cars at the insurers’ preferred repair shops.

“Contrary to what shoppers may be led to think 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 frequent expertise among auto repair shops that the greatest 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-marketplace labor rates and use more affordable, salvaged, employed, or even counterfeit components of questionable high quality and security,” Blumenthal wrote.

“Unfortunately, numerous buyers are also getting misled into pondering that they are essential to have their car repaired at one particular of these shops,” Blumenthal wrote in the letter. “This has the harmful impact of limiting customer decision, making a critical security threat, and suppressing competition in the auto repair market.”

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

The Honorable Eric Holder

Attorney Common of the United States

Robert F. Kennedy Creating

950 Pennsylvania Avenue NW

Washington, DC 20530

Dear Attorney Common Holder:

As a longtime advocate of consumer choice, I write to bring to your focus to troubling new evidence that our nation’s top auto insurers continue to engage in anticompetitive and possibly illegal tactics to stress customers into repairing their cars at insurer-preferred repair shops. As uncovered in a particular investigation featured on Anderson Cooper 360 Wednesday evening, insurance steering not only undermines a standard customer right, but can also compromise the security of automobiles on our nation’s roads—endangering motorists and their passengers.

I urge the Division of Justice (DOJ) to instantly investigate such practices by the auto insurance coverage business and act swiftly to protect the security of shoppers and preserve competitors in the auto repair sector.

As junk yard, remanufactured, and employed parts of substandard top quality turn out to be increasingly widely offered, auto insurers are adopting alarming new ways to save cash at the expense of customer safety. Contrary to what consumers might be led to believe by their insurers, repair shops preferred by insurers do not necessarily equate with good quality repairs. It seems to be frequent 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 consistent, high quality service, but by agreeing to charge under-marketplace labor prices and use more affordable, salvaged, utilised, or even counterfeit components of questionable good quality and security. However, numerous shoppers are also getting misled into thinking that they are necessary to have their auto repaired at one particular of these shops. This has the harmful effect of limiting consumer selection, generating a critical safety danger, and suppressing competitors in the auto repair industry.

According to a 1963 consent decree with the DOJ, a quantity of insurers had been ordered to quit: “sponsoring any appraiser directing, advising or otherwise suggesting any person or firm do enterprise with any independent or dealer-franchised automotive repair shop exercising handle over the activities of any appraiser and fixing or otherwise controlling the costs charged by automotive repair shops for the repair of damage to the car or for labor in connection therewith, by use of a flat price.” Over 50 years have given that passed, and consumers and auto repairers possibly stay victims of the extremely exact same misconduct insurers were directed to quit doing 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 between insurance coverage companies and facilities listed in their direct repair programs or preferred lists. I would also like to request an update regarding 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 company transactions in the years given that the decree was signed.

Thank you in advance for your prompt focus to this crucial matter harming consumers and the auto repair market, and compromising vehicle safety.

Sincerely,

RICHARD BLUMENTHAL

United States Senator

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