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Tuesday, 28 September 2010 21:51

Contentious Insurer Survey by Texas DOI is ruled Public by Texas Attorney General

The Texas  Attorney General  has overruled the Texas Department of Insurance (DOI) in that information contained in a survey of insurers conducted by the DOI be made public. The ruling was in response to a petition by Larry Cernosek of the Houston Auto Body Association, and other members, which was filed under the Texas Freedom of Information Act and the Texas Consumer Bill of Rights.

The Texas DOI and the five major insurers surveyed argued that the documents should be exempt from disclosure requirements because they include insurer's proprietary information, but the Attorney General’s office disagreed, exempting only some items that the insurers deemed trade secrets.

The Attorney General reasoned that even if the DOI told the insurers that their responses would remain confidential, that agreement could not circumvent the requirements of the Freedom of Information Act, saying "We note that information is not confidential under the Act simply because the party that submitted the information anticipated or requested that it be kept confidential."


The questions asked of the insurers in the survey were: "Please explain how your company determines the auto repair reimbursement rates," and "Does your company set caps or limits on the reimbursement rates?"

The survey results include responses from State Farm, Allstate, GEICO, Progressive and Farmers. The survey asked insurers to submit copies of their DRP agreements and asked them how often the company re-negotiates agreements with repair facilities and to explain the criteria that must be met by a facility to join the DRP.

One survey question asked how many DRP shops each insurer has in Texas: State Farm (636), Allstate (388), Progressive (277), GEICO (56), Farmers (285), and what percentage of their claims in 2009 went through DRP shops: State Farm (50%), GEICO (35.2%), Farmers (32%), Allstate (23.7% of 1st-party claims and 12% of 3rd-party claims).

Another question asked "Does your company set caps or limits on the reimbursement rates for certain labor, services, parts and/or materials, e.g., paint?"

State Farm and Farmers do not.

Allstate said thresholds and pricing guidelines are negotiated individually with its DRP shops but for non-DRP shops, thresholds may be used and "additional costs are negotiated with the shop to arrive at an agreed repair cost."

Progressive said it has a "local payment authority" for its claims reps on paint materials, but said it is not a "cap" and "does not represent the maximum we'll pay on a per vehicle basis." The amount is sufficient for most estimates, Progressive said, but if the requested amount exceeds it, the claims rep should ask for supporting documentation and also may reference Mitchell's paint and materials calculator "to confirm or negotiate any differing amounts."

GEICO said there are no caps, only an authorization level on materials "to alert the adjuster to reviews any repair facility charges that appear abnormal in order to determine the appropriateness of such charges."

In response to the question, “Please advise how claimants are informed of auto repair facilities that have a contract or agreement with your company,” State Farm said:

State Farm claim representatives utilize the Auto Damage Service Programs – Discussion Information Guide. The following wording is used:

“You have the right to select a repair facility that will repair your vehicle. Only you can authorize repairs to your vehicle.”

“State Farm has agreements with repair facilities in your area that provide enhanced customer services.”

In response to the question, “Please explain how your company determines the auto repair reimbursement rates, including labor, services, parts and materials,” State Farm said:

“The repair facility survey process is used to determine prevailing competitive prices (PCPs) in the market area. PCPs are the repair prices charged by not less than a majority of the repair market. Pricing and repair capacity information is gathered from all known repairers in market areas as they submit online surveys. The repair market is comprised of repairers who have completed the Repair Facility Survey and who meet the Equipment/Capabilities Criteria. This information is used to determine PCPs.”

For a fuller discussion of the survey see Autobody News, Nov 2010 edition.

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