"Don't HMO-ize Collision Repairs", warns Consumer Group
13 June 2000
Insurance Consumer Advocate Network Warns About HMO-izing Collision Repairs! TEMPE, Ariz. - In 1963 a suit was filed by Robert Kennedy, then U.S.
Attorney General, against members of the property and casualty insurance
industry.
The suit alleged insurance companies were violating their exemption to anti-
trust laws by illegally "steering" damage repair work to preferred repair
facilities, controlling the scope and method of repairs and engaging in a
conspiracy to artificially suppress claim settlement payments. That suit was
resolved by virtue of a Consent Decree entered into on October 22, 1963 (one
month prior to the President's trip to Dallas). In effect, the defendants used
the 1963 Consent Decree to say "We did not do that and we promise not to do
it anymore!"
Over the past twenty 20 years Insurance Consumer Advocate Network feels
the the auto insurance industry has systematically ignored the promises made
in that consent decree. They have "steered" repairs toward their own network
of "partner" repair facilities who had relinquished control of their respective
businesses to their new life partners. The insurance company "bean counters"
began making decisions as to What Damage will or will not be repaired ...
How Damage will be repaired ... What Parts will be used and ... How state title
branding laws will be "skirted" on total loss vehicles. During this period
repaired vehicles have broken in half in subsequent minor collisions; repaired
vehicles have suffered an un-necessary accelerated depreciation;
inferior hoods mandated by the insurance industry have either sliced through
host vehicle windshields on subsequent minor frontal collision involvements
and/or simply flipped open (obscuring drivers' view) on host vehicles in normal
operation; and unsuspecting consumers have purchased dangerously repaired
vehicles with noknowledge of any significant collision history.
The insurance company "bean counters" are in control. Apparently paying
for a few wrongful deaths is cheaper than fixing 1,000s of cars properly.
Thankfully, this is Not the view of All insurance companies. Unfortunately,
it Is the view of many Major insurance companies.
Now the collision repair industry is spawning their own "bean counters."
Investors are buying up major collision repair facilities that have insurance
"Partner" agreements. These body shop chains are referred to as "Consolidators."
In effect, the "bean counters" for the consolidators are courting the "bean
counters" for the insurance industry in an effort to make their respective
investors happy.
This HMO-izing of the collision repair industry is not on the horizon. It
is already the 11th hour and the skies are beginning to darken for consumers.
Last week Conning & Company, an insurance services firm based in Hartford,
Connecticut, funded by the insurance industry (and itself a heavy investor in
body shop "Consolidators") issued a press release disclosing the surprising
(?) results of their collision repair industry study. The study and the press
release are entitled "the Managed Auto Repair Initiative." That study, and
its companion press release, actually has the audacity to endorse HMO-izing
the collision repair industry. The study and press release were a sales pitch
to the chicken rancher explaining why the Fox should have greater control of
the Hen House.
If you substitute consumers & legislators for the rancher, and body shops
for the hens in this analogy, you'll understand why legitimate collision
repair facilities take exception to this outrageous "P/R Spin" attempt.
When you realize that State Farm Insurance Company has been found guilty
of Fraud (and is facing a $1.2 Billon judgment) for having engaged in exactly
the kind of conduct this study endorses, it makes reasonable people stop and
pause. This study makes about as much sense as the insurance industry's
"Spin" made back in 1963 ... "We did not do that and we promise not to do it
anymore!"
Consolidators who believe there is profit in letting the auto insurance
industry dictate to you should take note of the headlines over this past
weekend: "Safelite Auto Glass Files Bankruptcy." Safelite did what they
were told by their insurance "Partners." Lesson Learned?
Those interested in learning more about the Insurance Consumer Advocate
Network may access additional information on-line at http://www.iCan2000.com.
A copy of the 1963 Consent Decree is available on-line at http://www.theCCRE.com.
When there, click on "Know the Law" ... then click on "1963 Consent Decree."
