Alleging “a culture of unsafe business practices” in its handling of vehicle repairs, Louisiana’s attorney general has filed suit against insurance giant State Farm.
Attorney General Buddy Caldwell’s lawsuit, filed Aug. 19 in the 19th Judicial Court in East Baton Rouge Parish, alleges State Farm has “engaged in a pattern of unfair and fraudulent business practices aimed at controlling the auto repair industry and forcing unsafe repairs on vehicles without the knowledge or consent of Louisiana consumers,” according to information released by the AG’s office.
In his announcement, Caldwell said the company’s practice is to ensure that “consumer vehicle repairs are performed with cost-savings as the primary goal rather than safety and reliability.”
The suit accuses State Farm of violating Louisiana’s Unfair Trade Practices Act and Monopolies Law by “using scare tactics to steer Louisiana consumers to State Farm’s preferred repair shops and forcing shops to perform vehicle repairs cheaply and quickly, rather than in accordance with consumer safety and vehicle manufacturer performance standards.”
Caldwell alleges that the company steers claimants to repairs shops that have partnered with State Farm under signed agreements that require them to comply with repair standards set by the insurer, such as how long the repair should take and what parts may be used.
“In some cases, we’ve found that these parts are nothing more than used junk yard parts. In others, we’ve found them to be foreign knock-off parts of questionable quality,” Caldwell said in his written statement.
In an emailed response to a query from Insurance Journal, State Farm Public Affairs Director Phil Supple said the “description in this lawsuit is not in line with State Farm’s mission to serve the needs of its customers, and our long, proud history of achievements in advancing vehicle safety. We are reviewing the lawsuit and will have more to share soon.”
Supple pointed to State Farm’s long-term involvement with the Insurance Institute for Highway Safety and the insurer’s role in helping facilitate safety improvements such as vehicle airbags and child passenger safety seats, as well as fostering research and education aimed at protecting young drivers.
In 2012, State Farm wrote one-third of all private passenger, commercial auto liability and physical damage policies in Louisiana, with premiums totaling more than $1 billion, according to the document filed with the court.