Shops urged to work from own estimates and not change it if asked to cap paint costs
At the end of August ABRN received a number of calls saying the California Department of Insurance (DOI) had overturned insurance company mandated price caps on paint and materials. Unfortunately, the DOI's Deputy Commissioner of Consumer Services Woody Girion did not overturn anything.
"The department has never changed its position on the issue of capping paint and materials," says Tony Cignarale, chief of the consumer services division in the DOI. "Our position has always been that artificial and arbitrary caps on paint and materials is an unfair practice. That's been our position for years and years."
Girion did hold an informal meeting with a group of shop owners to discuss the issues surrounding price caps. Those owners left that meeting thinking price caps had been overturned. "Department of Insurance has declared that the arbitrary capping of paint costs is an unfair claims practice and is therefore illegal," read the headline on a press release from the Collision Repair Association of California (CRAC).
Cignarale also received a lot of calls from shop owners who thought the DOI had reprimanded insurance companies, but he stresses that no such action took place. Representatives of insurance companies as well as shop owners attended the meeting, which Cignarale described as a discussion containing "no formal decisions, no formal rulings and no changes to our interpretations of law." The insurers argued that capping of paint prices did not happen, but Girion said DOI investigations showed just the opposite. And he reiterated that it was against the law.
In arguing the need to stop paint price capping Gene Crozat, owner of G&C Auto Body in Santa Rosa, Calif., showed the difference between the price insurers were paying and the actual cost of refinish paint by handing out silver ingots. "That's the difference between what we are being paid and what we have to pay for paint," he said. "We can't afford to keep subsidizing insurance companies."
Girion and Cignarale agreed that the practice is unlawful and Cignarale added that insurers could not alter the variables in paint hourly rate calculations, but that the same methods and numbers must be used for the entire calculation.
CRAC is urging shops in California to work from their own estimates and not to change the estimate if they are asked to cap paint costs. The association says, "The unpaid balance is a short payment on the insurer's part and an unfair claims practice." The original estimate and the insurer's payment document the capping and can be submitted to the DOI as evidence of an unlawful practice. Crozat recommends that shops across the country adopt this practice to fight paint cost caps.
While the DOI has not changed anything, it is stepping towards seeking a solution to the problem. "There was never any cold hard statement that said, 'Hey, insurance companies you're on notice.' Woody and myself were trying to get both parties together to discuss the problem and see where there was some common ground and then regroup and decide what we do from here," says Cignarale.
