Conn. Attorney Calls for Federal Steering Investigation
September 2, 2009

Connecticut Attorney General Richard Blumenthal held a press conference yesterday calling on the U.S. Attorney General to investigate alleged steering practices of auto insurance companies throughout the United States.

"Practices pressuring consumers to use insurers' preferred repair shops suppress consumer choice and disregard legal duties," said Blumenthal. "I have long sought legislative and administrative solutions to this untenable situation. We're asking the federal government for an immediate review and remedy to stop coercive and deceptive tactics. Effective enforcement is critical."

Blumenthal said he will call on other states to join his fight-and referenced the 1963 Consent Decree, an agreement made by the federal government and several insurance companies in which those that signed agreed to abstain from certain practices. (CLICK HERE for full text of decree.)

"Almost 50 years later, insurer steering is still a scourge," says Blumenthal. "This outpouring of complaints shows that problematic practices persist, despite a 1963 Consent Decree and current law. Auto repairers and consumers are victims of the very same misconduct today: insurer control of appraisers, insurer financial incentives and steering of consumers to preferred auto facilities, and setting labor rates that repair facilities must use. Both federal and state law enforcers should send a message: your car, your choice."

This is not the first time the industry has heard this particular decree referenced this year. North State Custom owner Greg Coccaro, who has long been involved in a legal battle with Progressive Insurance, also called for an enforcement of the decree during his keynote speech at the Independents' Days Conference earlier this year. (CLICK HERE for related story.)

Blumenthal was joined by auto repair shop owners and members of the Connecticut Auto Body Association at a press conference yesterday to announce the action. He also has sent petitions from auto repair business owners throughout the country to the U.S. Attorney General for review; the petitions, signed by automotive repair representatives in 48 states, seek relief from "onerous and arbitrary insurer practices that harm auto repairers and deny consumers the unfettered right to choose the most appropriate repair facility for their car."

The petitioners allege that the decree ordered insurers to stop "directing, advising or otherwise suggesting that any person or firm do business with any independent or dealer-franchises automotive repair shop;" and "fixing or otherwise controlling the prices charged by automotive repair shops …;" and more.

"I am calling for federal review of the current property casualty insurer system of compensation for auto repair services and determination as to whether such practices violate the 1963 consent order or current federal laws," says Blumenthal.

Blumenthal had not responded to calls for further comment at press time.

The Property Casualty Insurers Association of America (PCI) has already spoken out against Blumenthal's call for an investigation of steering.

"The Property Casualty Insurers Association of America (PCI), which represents over 1,000 insurance companies, flatly denies Attorney General Blumenthal's allegations," says regional manager Paul Magaril. "They are patently false and are being ginned up by a special interest group using the Attorney General to line their own pockets at the expense of hard working consumers seeking to get their vehicles repaired after an accident. It is puzzling that Attorney General Blumenthal is promoting action that suppresses competition. This will hurt, not help consumers. "

He adds that the action called for by Blumenthal "seems motivated by a lobbying campaign by disgruntled auto body shops who are only concerned about their bottom lines, and not about consumers."

Mike Lundon with the Auto Body Association of Connecticut had not yet responded to a call for comment at press time.

CLICK HERE for full text of statement from the Connecticut Attorney General's Office.

CLICK HERE for full text of statement from the Property Casualty Insurers Association of America.

Need more info and analysis about the issues?
CLICK HERE to subscribe to AGRR magazine.