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Insurance Consumer Advocate Network
warns about HMO-izing Collision Repairs !

Tempe, AZ (06/12/00) - In 1963 a suit was filed by then U.S. Attorney General (Robert Kennedy) against members of the property and casualty insurance industry. The suit alleged insurance companies were violating their exemption to antitrust 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 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 unnecessary accelerated depreciation . . . inferior hoods mandated by the insurance industry have either sliced through host vehicle windshields on subsequent minor frontal collision involvement and/or simply flipped open (obscuring drivers' view) on host vehicles in normal operation and . . . unsuspecting consumers have purchased dangerously repaired vehicles with no knowledge 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 is 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 Billion 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 ? ? ?

A copy of the 1963 Consent Decree is available on-line at www.theCCRE.com . When there, click on "Know the Law" . . . then click on "1963 Consent Decree".

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