PCI Responds to CBS News Story on Insurer-Owned Repair Shops

February 13, 2004

The Property Casualty Insurers Association of America (PCI) issued a stern response to a Wednesday, Feb. 11 CBS Evening News story that reportedly contained unfair allegations from the auto body industry that insurer-owned auto body shops are a “colossal conflict of interest.”

Carl Parks, PCI’s senior vice president, federal government relations, was interviewed for the story. “The reporter did allow us the opportunity to make our case that when it comes to auto repairs, insurers and consumers have exactly the same interests – happy, satisfied customers. However, the story contained unsubstantiated allegations that insurers are somehow trying to cut corners on these repairs in an effort to increase profits or under serve consumers. That simply isn’t the case,” said Parks.

Parks pointed out that consumers have the right to have their car repaired anywhere they like. Insurer-owned body shops and direct repair networks provide consumers the opportunity to have their cars repaired at a business where the quality of the work is not only guaranteed by the body shop, but also by the insurer.

“Insurers want consumers to receive quality repairs. The inability of insurers to find this on a consistent basis nationwide is one factor that has spurred companies to create direct repair networks and invest in auto body repair facilities,” said Parks.

The CBS News story focused on the experience of one California consumer with one body shop – Caliber Collision, which is owned by a consortium of insurance companies.

“Some segments of the auto body repair industry are attempting to paint everyone with the same brush,” commented Parks. “That is unfair and misleading. It all comes down to competition and consumer choice. Consumers will decide to use the repair shop that they feel is best. Insurers should not be prohibited from providing consumers options that can eliminate much of the guesswork on auto repair questions, guarantee quality repairs, and keep costs down.”

The most glaring oversight in the story, said Parks, was the failure to understand the need for insurers to provide their customers the best possible repair job. “Insurers have a huge stake in making sure their customers get the highest quality service at the best possible price. Customers link their satisfaction with collision repairs to their insurance company. An unsatisfied customer will take their business elsewhere.”

The story concluded by indicating that 10 states are considering legislation to ban or restrict insurers from owning repair shops.

Parks said that the Texas legislature passed a law last year that prohibited the expansion of insurer-owned body shops in the state. However, last month a federal court judge issued an injunction against enactment of the law saying that it fails to protect consumers or promote fair competition.

“The judge said that the state cannot protect businesses from competitors so that they can maintain their profit margins,” said Parks. “And we agree with that conclusion.”

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