The National Association of Insurance Commissioners (NAIC) today released a press statement defending its members from insurer criticisms of slow administrative filing processes. Kansas Insurance Commissioner and President of NAIC, Sandy Praeger, refuted the criticism from “high-paid insurance lobbyists” and noted the irony of insurance representatives complaining of slow action on the part of the state insurance regulators.

?It is ironic that as they complain about process delays, consumers tell us that some insurance companies are slow to pay claims. In fact, 60 percent of consumer complaints reported to the NAIC by states are the result of claims handling problems caused by insurance companies. A large majority of them due to slow claims payment processes or outright denials.?

Commissioner Praeger had some other searing comments for the insurance industry, and noted that slow approval often lay with insurers’ failures to comply with state laws or to offer sound products.

?Insurance products are often complicated. They contain separate premium rates for every zip code, application forms with confusing questions, and an abundance of advertising materials promising everything from peace of mind to health and wealth,? said Praeger. ?When insurers carefully review their requirements and submit good applications, the approval process is very fast. When companies fail to comply with state laws or offer questionable products, it takes time to review and correct their work to make sure that products deliver the benefits promised to consumers.?

?State regulators invest heavily in tools like SERFF to provide the industry the speed-to-market that companies need to compete,? said Praeger. ?It is time for the industry to address speed-of-payment to consumers.?

Consumers will be cheering statements such as these, especially because some insurers take considerable time investigating claims or simply tell consumers, “We don’t pay for that.” Given the fact that state laws have rendered all drivers on the roads a captive market for insurers, consumers have every right to expect strict accountability of insurers by state insurance regulators. NAIC would serve consumers well if it started looking into actual grass-roots-level claims handling practices of insurers. I have little doubt regulators would be troubled by what they might find.

Technorati Tags: insurance, consumer, consumer protection, insurance commissioner, NAIC, lobbyist

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For those interested in the next meeting to discuss the Collision Repair Code of Ethics, make plans to attend the Northeast Regional Autobody/Automotive Trade Show in Suffern, NY.

Northeast Regional Autobody/Automotive Trade Show Rockland Expositions, Trade Show and Exposition Services and Rental Equipment

If you would like to see the changes that were made to the COE since October, 2007, click here for the CR Code of Ethics version 6 with tracked changes.

If you just want to see what it contains now, without the mark-ups, click here for CR Code of Ethics version 6.

Technorati Tags: collision repair, code of ethics, Northeast Trade Show, ACAR, professionalism, autobody, auto body, accident

How many unsafe vehicles have to come out of “Direct Repair Program” or “Concierge” shops before consumers, legislators, and governmental officials say “Enough is Enough!  We want cars traveling our roads to be safely repaired!”?  Yet another Progressive concierge-repaired vehicle was discovered recently to have been unsafely repaired.  In this instance, the driver was lucky that the second accident didn’t result in dire injury.

Officials: Car Repair ‘Steering’ Cuts Corners - I-Team News Story - WFSB Hartford

I know I have been trying to help the Attorneys General and Departments of Insurance across the country understand what an enormous problem insurer involvement in the repair process is because it leads to corner-cutting and other problems that have a tremendous negative impact on consumers  to enable insurers to save money.

States require us to buy auto insurance if want to be able to drive.  We are a captive market for them.  So, why aren’t our government officials looking at all of these problems and allegations of unsafe repairs in these insurer-repair shop networks?  Why are we having to twist their arms to get assistance?  Do we really have to wait until someone is killed or horribly injured before we make changes?  Let’s hope not.  Especially because that death might be your loved one.

Technorati Tags: insurer, auto insurance, collision repair, accident, body shop, direct repair program, concierge

California joining other locals to stop insurance company referrals to “preferred” body shops.

Steered wrong? | Santa Rosa Press Democrat // News for California’s North Bay and Redwood Empire

Technorati Tags: insurer, auto insurance, collision repair, auto body, accident, legislation

“Chicago — Choosing the best body shop to repair
your car is never an easy decision. Now, some customers complain that
some insurance companies are steering them to body shops that might not
be best for their cars. Larry Yellen has this investigation.”

MyFox Chicago | Are Insurance Companies Steering Car Owners to Bad Body Shops?

In many instances the answer to that question is, “Yes”.

Take a look at the story that aired on Chicago’s Fox News Station on February 26, 2008. The insurance industry spokesperson states that a consumer always has the right to choose the body shop and that the insurance companies have essentially “vetted” the body shops for the quality of their work. What she doesn’t say is the insurance company will hound you to death as a consumer to take your vehicle to a “preferred” shop for repair, and will try to achieve that by having the claim representative say things like, “we can’t guarantee the repairs”; “it will take two weeks for an adjuster to even look at your car”; or “that shop charges too much and you will have to pay out-of-pocket for repairs.” What the industry representative doesn’t tell us is that we have the right to choose any body shop we want, AND have the insurer pay for the repairs, AND not be pressured by the insurer about which shop we chose.

What she also doesn’t say is that insurers don’t actually go out and look at the repair work each shop performs, nor ensure they have the proper equipment, training, education, and materials to safely and properly fix each vehicle. Instead, insurers simply rely on the statements in the “direct repair program” document the insurer forces collision shops to sign that says the shops “warrant” to the insurer they have the necessary equipment, personnel, experience, etc. to properly repair vehicles. Many DRP shop owners with whom I’ve discussed the various insurer networks have frankly told me they never read the document before they signed it. They just knew if they didn’t sign the document and join the insurer’s network, they should close the doors to their businesses now. In other words, they don’t even know or care what they agreed to — as long as they have work and can keep their businesses open. As a result, many of these shops owners would have agreed to have Big Foot or pink elephants doing the repairs if that’s what they had to say to get on the insurer’s program.

Technorati Tags: collision repair, car accident, insurance, repair network, consumers

eAutoclaims has created “Collision Repair Centers” of America to try to get a piece of the direct repair program action. But when you dig deep enough, the consumer-friendly-looking site turns out to be just another face of the insurance business.

crcofamerica.com - Would you trust your family’s safety with anything less than a CRC Auto Repair?

Apparently faking consumers into thinking they are joining a “consumer organization”, eAutoclaims has created its own “direct repair program” for consumers to join that tries to cover up the fact that this is a network of repairers put together by an insurance claim processing entity. But if you scratch the surface, you’ll find eAutoclaims lurking behind this face.

Take a look at the “terms and conditions” page which spells out that any agreement is between the user (this is under the “Consumer Agreement”) and eAutoclaims.

Worse still are the terms eAutoclaims makes the repair shops sign to get into the program. It repeatedly states that only eAutoclaims can “authorize” the repair to the consumer’s car — which is a direct violation of some states’ laws.
Consumers need to be aware that there are websites and companies all over the internet and country posing as consumer organizations that are actually business-oriented entities that seem to be designed to pull the wool over unsuspecting eyes.

Don’t be like Little Red Riding Hood and ask Grandma what big teeth she has. If you see anything that looks like big teeth, RUN. After all, if it’s just Granny, you can figure that out while running away, but if it’s the wolf, you’ve already been eaten.

Toothpick, anyone?

Technorati Tags: insurance, AutoMuse, cars, trucks, vehicles, collision repair, auto repair

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Yesterday, the U.S. Supreme Court denied Allstate Insurance Company’s last chance to override a Texas law that prohibits insurance companies from owning collision repair shops.  Docket for 07-775

Allstate, and its wholly-owned subsidiary Sterling Collision Centers, Inc. (OK, I’m being lazy — Sterling is actually a wholly-owned subsidiary of Allstate Non-Insurance Holdings, Inc. — which is an indirect affiliate of Allstate) have been fighting with Texas since 2003 over the enactment of Tex. Occ. Code § 2307.002 that states “an insurer may not own or acquire an interest in a repair facility.”  The Texas Legislature enacted the statute because of grave concerns involved with the inherent conflict of interest present when an insurer collects premiums and provides the collision service to the policyholders as well.

Allstate and Sterling have been fighting tooth and nail to have the Texas statute declared unconstitutional — without riveting success — and despite having pulled out Allstate’s moldy wallet to spring for the likes of Kirkland & Ellis (the Washington, D.C. office, no less) and Mr. Pricey himself, Ken Starr.  Yes, Ken Starr of Monica Lew… well, probably the less said, the better.

The district court decision found that Allstate actively referred unsuspecting claimants to its Sterling shops — even when those shops were providing poor service and some were given failing marks by Allstate’s own surveys.   Yet, Allstate had a financial interest in making Sterling profitable, so claims representatives continued to shove insureds and third parties to the Sterling shops, many of whom naively patronized the collision repair facilities on Allstate’s recommendation.  As a result, the court had no trouble appreciating the Texas Legislature’s concerns and desire to protect consumers.

Allstate claimed that the statute violated the Dormant Commerce Clause of The U.S. Constitution.  I know, I know, lawyers everywhere are now dusting off their Con. Law textbooks — except for the 11 of you legal geeks who actually dwell on the DCC and use it daily (I’ll bet you have pocket protectors).  Allstate/Sterling’s argument was that the Texas statute had a negative impact on interstate commerce because it discriminated against large insurers and chains of collision repair facilities in favor of local ones, and was passed to accomplish that discriminatory goal. 

Needless to say, there are many sexier issues being presented to the Justices than the DCC, so it was always likely that our highest court would pass on this one.  But, you just never know with the Big Black Robes.  The bottom line, however, is that the U.S. Supreme Court “just said, NO” to Allstate and Sterling.  Now Texas can go back to doing what it does best:  producing oil so, hopefully, our gas prices will go down.

The Automotive Service Association (ASA) deserves a big round of applause for all of its efforts in supporting the Texas Attorney General and by its action intervening in the case on his side from the beginning.  Most people probably don’t know that the Texas A.G.’s office didn’t even file a Brief in response opposing the the Petition for Certiorari.  (I don’t mean that critically, just stating facts.)  Fortunately, ASA did — and the organization deserves considerable credit for its efforts and all the money spent to help support a law keeping insurers out of the repair business and keeping collision repair businesses focused on serving the interests of its true customer, the consumer.

Technorati Tags: insurance, collision repair, Allstate, Texas, law, Supreme Court

Well, it’s about time someone senior at Progressive got told the company’s claims adjuster mantra, “We don’t pay for that.” Buh-by, Brian J. Passell. Guess we’ll keep you’re salary and kickers to help pay for our tanking stock prices. Progressive Announces Management Change - Forbes.com

Passell is the guy who brought us the “Concierge Program” — fanfared with a company press release so full of fiduciary language statements that I could hear the lawyers salivating from one end of the country to another. Here’s the April 8, 2003 press release title:

Progressive To Customers: We’ll Take Care Of Everything
Company is First Auto Insurer To Handle Entire Claims/Repair Process From
Soup to Nuts, Provide One-Stop Convenience and Peace of Mind

‘We have knowledge and access to resources that many of our customers don’t have.
Our intent is to use that experience to provide a superior level of service everywhere
we do business,’ said Passell.

Do you think these guys ever run anything by legal before they blurt out something that just sounds good to their own ears? Didn’t think so.

Progressive reported a 27% drop in third quarter profits in 2007, and in January 2008 reported another 41% decrease. Progressive chalks up the decline to lower prices for auto coverage that reduces premium revenue. Hm. Couldn’t have anything to do with the fact that Progressive is getting sued all over the country for the way it treats customers, handles claims, and treats collision repair shops? Or maybe the fact that the Connecticut Attorney General, Richard Blumenthal, has held press conferences in the last month decrying the unsafe and dangerous repairs Progressive is passing out of its Concierge Program shops? Nah. It must be that pesky competitive auto insurance market.

Technorati Tags: collision repair, insurance, auto, claims handling, motor vehicles, Progressive,

Again this year, Connecticut Attorney General, Richard Blumenthal, is trying to ensure that repaired vehicles returned to his State’s and the nation’s highways are safe.

At yesterday’s press conference Connecticut’s Attorney General demanded that consumers be permitted to exercise their free choice in selecting the shop to repair their vehicles. Standing next to college student, Lyn Moreau, who’s vehicle had been unsafely repaired at a Progressive “concierge” facility, Mr. Blumenthal stressed that legislation is necessary to stop insurers from directing consumers to use “preferred body shops”.

Consumers deserve to choose where a car is repaired. No insurer should straightjacket or corral consumers, forcing them to use a so-called preferred shop. This legislation, which I have advocated for years, would preserve consumer choice and industry competition - deterring anticompetitive relationships between certain insurers and auto repairers.

AG Blumenthal was joined in his call for legislative reform by Republican State Senator Leonard Fasano, demonstrating that this problem is a concern for both political parties. Senator Fasano said,

It is clear we can no longer rely on existing laws to protect consumers following an auto accident. Consumer protection is a bipartisan issue. It’s time to make our laws stronger so people like Lyn Moreau will no longer be at the mercy of the insurance giants.

And that’s just where Lyn Moreau found herself in her dealings with her insurer, at its mercy. Unfortunately, she didn’t get any. After initially recommending she use its “concierge” facility, Progressive allowed the vehicle to be handed back to Ms. Moreau in an unsafe condition. She discovered the safety problems when she took her vehicle to a different body shop, and that shop told her the bad news. When Moreau addressed the issue with Progressive, her insurer told her to take her vehicle back to the “recommended” repair shop that butchered it originally. So much for that “Lifetime Repair Guarantee” Progressive claims it gives you if you patronize one of its direct repair shops.

Most interesting is that under Progressive’s “direct repair program agreement” with repair shops, Progressive retains exclusive authority to write all of the repair estimates and supplements, thereby dictating the manner in which a vehicle is to be repaired. It would certainly be interesting to see if Progressive was responsible for “writing” the unsafe repairs, or whether the shop simply cut corners.

Nonetheless, Progressive woos consumers to use the concierge service and maintains that it inspects the vehicle after it is returned from the repair shop to ensure the quality of repair. Lyn Moreau’s vehicle repair is evidence that the Progressive concierge quality inspectors can’t tell safe repairs from dangerous ones — which should scare all of us.

More on this story at the Hartford Courant.

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In yet another shocking display of hubris, Allstate Insurance Co. — you know, “the good hands people” — defied the Florida Insurance Commissioner’s subpoena to produce documents pertaining to the insurer’s relationships with insurance trade associations, risk modeling companies, and others. Mind you, the Florida insurance agency asked to see these documents as part of its determination as to whether Allstate should be permitted to raise its rates. That’s right. Allstate started this by asking for higher premiums, but it wants those higher premiums without anyone looking into its relationships with others. One could say that Allstate just wants the State of Florida to “take its word” for the fact that it really needs more money.

When Allstate failed to comply with the State’s subpoena, the Insurance Commissioner pulled Allstate’s license to write new policies in Florida. Whack! This penalty adds to the list of defiant acts taken recently by the insurer. In the State of Missouri, a court fined Allstate $25,000 a day for refusing to produce a copy of the McKenzie & Company report that is the subject of the book, “From Good Hands to Boxing Gloves”. Allstate was ordered by a Missouri court to produce the report in a pending case. Allstate flatly refused. The court held Allstate in contempt and ordered the $25,000 per day fine until the insurer produces the report. So far, the fine continues to accrue.

It should be plain to everyone that an insurer as arrogant as Allstate, one that has no qualms about defying legitimate orders from government entities and courts, will have no difficulty treating its insureds with contempt as well. If you think you are likely to receive a fair claim settlement from this insurer, think again. We, as consumers, are fleas to such an insurer, incapable of inflicting any real pain to it. If $25,000 per day fines or the inability to write new policies don’t affect the company’s behavior, consumers have no chance at all.

This is just another good example of why this country needs meaningful insurance reform and a repeal of the McCarran-Ferguson Act exempting insurers from the application of the federal antitrust and other laws.

CollisionWeek News - Florida Pulls Allstate’s License to Write New Auto Policies