When attorney Erica Eversman speaks to government representatives and consumer groups about “steering,” they often think she’s talking about the simple act of driving. She’s quick to enlighten them about what many in the collision repair business consider the most corrosive practice in the industry today. As principal of Vehicle Services Inc., Eversman doesn’t have to mince words about the insurance industry’s practice of telling—either directly or with not-so-subtle word tracks—their policyholders where to go for car repair.
The issue is contentious, with insurers obviously wanting to boost their bottom line by keeping costs down, and shop owners clearly wanting to protect their profits by having a fair, fighting chance to win business. Stuck in the middle? The customer. As Eversman points out, the more that insurance companies “weasel their way in to being directly involved in the collision repair process and [to making] decisions about what repair should be performed and how much we should pay for it” the more likely they are to be treading on the laws designed to protect consumers.
The question at hand: Is steering unstoppable? At times it seems so—FenderBender called 100 collision repairers across the country at random to ask about experiences with steering. About 60 agreed to consider the questions, but even given the chance to answer anonymously, only four were willing to respond, presumably for fear of retribution from the insurance companies themselves.
With the efforts of more folks like those four bold souls, self-proclaimed rabble-rousers like Eversman, and a growing number of industry leaders who are willing to take a stand—and even to bring legal action against insurers—it is possible to stand up to steering. Here’s how.
#1 Know The Signs
Keith Damrow, owner of Offroad Body Shop in Akron, Colo., says that he has seen just three instances of steering in the 21 years he’s been in business. “I think there is a lot less of it in my rural area,” he says.
Not so with an Orlando, Fla., repairer who’s been in business since 1983. Wishing to remain anonymous, the shop owner says his market is cutthroat due to the large number of tourists and rental car companies. The lack of state regulation of insurers adds to the problem, he believes.
On several occasions, the owner has seen repeat customers and referred customers get their vehicle towed to his shop, sign a repair authorization and report their claim to GEICO, “only to contact us in tears after they were told lies and negative comments about us: about our nonexistent warranty, poor color match, long repair time even after their rental car is gone,” he says.
Sometimes the insurers’ tactics are more subtle. They use carefully crafted “word tracks” to influence a policyholder’s decision. Auto Collision Works in Schertz, Texas, posts examples for its customers’ benefit. For instance:
They are not one of our network shops and they are not on our list, we can’t guarantee the repairs. Claims take longer to settle if you use them.
#2 Know Your Allies
“[Body shop owners] need to get off their butts and start taking some affirmative positions and doing things that are good for them, like joining organizations where they will have lobbying potential,” Eversman proclaims.
Of course, “getting off your butt” doesn’t mean you’ll never suffer steering again, but it’s a start—and an important one: Although many states have antisteering laws in place, a lack of enforcement continues to plague the collision industry.
Steering is a top concern of members of the Automotive Service Association (ASA), which has, through the years, met with commissioners, governors and attorneys general to try and resolve the problem, says Bob Redding, the Washington, D.C., ASA representative.
Insurance company steering was nothing new
to one shop owner—but then came the last straw.
North State Custom in Bedford Hills, N.Y., was plenty accustomed to the aggressive and negative tactics of Progressive to undercut and underpay repair claims, but when the insurer fabricated an insurance fraud case against the shop, owner Greg Coccaro knew he had to fight back.
Last month, Coccaro says, they were close to a trial date on the fraud case, which has cost him more than $100,000 but which “[Progressive] will lose badly because they don’t have any evidence.” The trial date for a steering lawsuit against the company would be set soon, too, he adds. “It’s also going to go badly for them because we have a lot of evidence in that case.”
Because of persistent steering and DRP agreements, Coccaro says, “The cars aren’t getting fixed to preaccident condition as all the policies are written.” Those independent shops not on DRPs are one of the few real advocates the consumer has left, he asserts. “And once they’ve accomplished getting rid of all of us, what is going to be left? It will be impossible to get a quality job. That’s where it’s headed. Every car will be repaired with used, you-name-it parts; half the job won’t be repaired and anything that doesn’t show won’t be fixed.”
Steering happens every day to almost every shop, he says, but DRP shops have become dependent on these agreements and fearful of losing them. “[Insurers] wouldn’t be able to steer cars if it weren’t for the DRPs because they’d have nowhere to steer them to.
“It’s really a disease that’s crippled this industry. Shop owners just have to say no.”
Since filing the steering lawsuit (Progressive declined to comment), Coccaro has heard from dozens of collision repairers across the county who are cheering him on: “I can tell you that they are actively following the same practices here in Michigan,” says one. A shop owner in South Africa wrote that collision work there was also being steered; a Jacksonville, Fla., repairer let Coccaro know he was proud of his willingness to stand for what is right. Said another, “Thank God someone has the guts to do something. I believe that DRP programs and steering have ruined my business, started in 1948 by my father. I regret sitting back for so long, but it just kind of slowly eroded.”
“Where we think the big-picture policy answer lies: number one, we support the repeal of McCarran-Ferguson [which gives the insurance industry a pass on some federal antitrust laws to the extent that the industry is regulated by the state, and declares that the business of insurance is regulated and taxed by the states] and number two, [we support] the federal regulation of the insurance industry. We think that these pieces would create a more level playing field for collision repairers and insurers.”
Another source of support for the fight against steering? Fellow independent body shop owners. The Vermont Auto Body Association has had significant success in not “rolling over on their counterparts.” Instead, members talk openly about how insurance companies are attempting to get their way, such as, “This appraiser came in and acted this way and told me to take it or leave it.” Shop owners can have clear communication with one another and “that’s really worked well for them,” Eversman says.
#3 Know Your Customer
Repairer groups like the Coalition for Collision Repair Excellence, which are viewed by some as agitators within the industry, state firmly that the insurance company is not your customer.
Eversman backs that idea: “There’s nothing wrong with that perspective because it’s absolutely correct. [Body shops] have no obligation whatsoever—there’s no statute, there’s no requirement, there’s no nothing that says, ‘Body shops, thou must deal with insurance companies on behalf of claimant.’”
Eversman asserts that the friction between collision repairers and insurance companies was born when body shops began working directly with insurance representatives—a situation that’s become progressively more damaging to independent shops.
“I believe that any time the body shop is discussing the consumer’s repair with the insurance company and is in any way making alterations to the estimate or any changes, they are effectively engaging in unauthorized practice of law,” Eversman says. “They are compromising the customer’s claim, which, in the vast majority of states—unless you are a lawyer or a public adjuster allowed by law to do that—anyone who is not a lawyer who’s altering a claim on the insured’s behalf is breaking the law.”
#4 Educate Your Customer
Communicating with your customers can help curb steering by making them aware of some of the questionable tactics insurers may use to keep the cost of repairs low.
One known tactic is to delay viewing the damaged vehicle. The shop in Orlando went through that with a GEICO claim. “We had explained to our loyal customer what to expect, and he was OK with that because of our reputation,” the shop owner says. By the end of the third week repairs had begun and four days later were complete, with a supplement called in and invoices faxed. It took another week for the adjuster to consider them and two more days to finalize the supplement. Meanwhile, the insurer took time to call the shop every day for a week in an effort to convince the shop to release_notes the car with a promise that the check was on its way. The shop owner didn’t bite. “Sorry, we’ll wait for the check,” he recalls saying. “Fortunately, our customer was on our side and was kept completely informed every couple days—and has since dropped GEICO.”
Your Web site is another important tool for customer education. Consider the approach taken by Auto Collision Works. In addition to publishing insurers’ commonly used word tracks on its Web site, the shop includes its responses to those coercive statements. For instance, an insurer says, “They are not one of our network shops and they are not on our list, we can’t guarantee the repairs.” Auto Collision Works replies: “We are not on everybody’s list because we do not want to be. We identify the vehicle owner as our primary customer, not the insurance company. As for guaranteeing our work, they do not need to, as we have our own nationwide lifetime guarantee. When have you ever seen an insurance company with a car being repaired in their office?”
#5 Be Ready For Frustration
Although the number of steering-related complaints is lower in states with restrictions than it is in states without them, resolution of complaints is often elusive. “By the time complaints are followed up on, many times the consumer says, ‘Well, my car’s fixed now, and it looks good, so I don’t really want to complain anymore’,” says ASA representative Redding.
In the case of the GEICO badmouth-ing experienced by the Orlando shop, the owner formally complained to the company. His assertions were met with denial, and the insurer insisted its employee was simply explaining the customer’s options and “would never make negative comments regarding the shop.”
In another instance, that shop owner received a visit from a MetLife representative threatening legal action. The reason? When MetLife refused to pay for remove-and-install on parts and trim or for blending adjacent panels, the owner took action. He let customers know what to expect during the claim and after the repair because the insurer denied or disallowed recommended and required procedures. “We have not gotten another MetLife claim since,” he says.
Complaining to the appropriate government authorities can be just as disheartening. Ann TenBrook, owner of Yucca Auto Body in Yucca Valley, Calif., has sent several complaints to the Department of Insurance (DOI) but has never seen a response. “We are concerned, of course, for retribution from insurance companies but are trying to educate the customers,” she says. “It just seems the DOI is not on the consumer or body shop’s side. The insurance companies always win.”
A QUESTION OF INTEREST
Insurance companies will use every law in the book and go to the DOIs to demand enforcement when it is in their interest, Eversman says. “However, they turn around and demand, in essence, that collision repairers engage in what is otherwise unlawful activity when it is in their interest to do so.”
The predicament is akin to situations seen in the much-maligned medical industry. “You have insurance companies acting as physicians, and then physicians making compromises on behalf of their patients,” she says.
“What you have with the insurance industry opting for the lowest common denominator happens in virtually all circumstances in which you separate the person or the entity paying the bill from the person or the entity receiving the services—because they have two diametrically opposite interests.”
That puts even the most upstanding shop operators in a precarious ethical position. “Frankly,” Eversman concludes, “I don’t think anybody involved with safety issues should be permitted to operate with such tremendous pressure economically that’s imposed on them by the insurers, and with virtually no oversight as to whether they’re performing safe repairs.”
Clearly, there’s no quick fix to the industry’s steering problem. Holding steady against insurers who continue to skirt the line between savvy business practices and unfair or even illegal steering requires fortitude and perseverance. Good humor helps, too. One member at AutoBodyOnline.com, got a few e-laughs when he quipped, “I steered [my customers] to a better insurance company!”
