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
"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
The Property Casualty Insurers Association of America (PCI) has
already spoken out against Blumenthal's call for an investigation
"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.
for full text of statement from the Connecticut Attorney General's
HERE for full text of statement from the Property Casualty Insurers
Association of America.
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