Connecticut AG Wants Car Repair Practices Investigated

September 2, 2009

Connecticut Attorney General Richard Blumenthal is urging his federal counterpart, Attorney General Eric Holder, to look into reports that some auto insurers improperly steer consumers toward certain body repair shops — allegations that one industry group dismissed as bogus.

Blumenthal said the practice denies consumers’ right to choose their preferred shop and vowed to enlist attorneys general from other states in his efforts. Blumenthal, along with several auto repairers, said practices that force consumers to preferred repair shops may violate the law and a decades-old consent decree between the federal government and several insurance companies.

“Almost 50 years later, insurer steering is still a scourge,” Blumenthal said. “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.

“We’re asking the federal government for an immediate review and remedy to stop coercive and deceptive tactics… Effective enforcement is critical,” he said.

Blumenthal was joined by auto repair shop owners and members of the Connecticut Auto Body Association at a press conference yesterday to make the announcement. They claim that the U.S. Department of Justice entered into a consent decree in 1963 with several property casualty insurer associations and their members in which the insurers were ordered to stop practices that could be viewed pushing consumers toward specific repairers and exercising undue control over the auto repair industry.

Paul Magaril, regional manager for the Property Casualty Insurers Association of America (PCI), called the allegations patently false.”

The allegations, Magaril said, 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 added: “Consumers always have the right to take their vehicles to the shops they choose and we believe consumers should have the ability to make an informed decision when selecting their auto repair facility.”

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