They are unaware that a competent repairer fights for the consumer every day by demanding that the insurer cover the cost of certain processes or parts used in returning a damaged vehicle to pre-loss condition. They don’t recognize that the contract is between the vehicle owner and the licensed automotive repair dealer, not the insurer. Fortunately, Senator Migden and her staff saw the beauty in SB 1059 immediately by asking: Why would an insurer force you to put parts on a car that might be detrimental to the warranty?
While insurers wouldn’t intentionally want to void a warranty, they sometimes lose sight of their customer in the rush to save dimes. Hey, CRA members say insurers lose sight every day when it comes to installation of radiators, AC condensers, and suspensions.
But restoring contract power to repairers will only be effective if steering is stopped. Frankly, top officials from the Department of Insurance admit it’s difficult to prove steering occurs although do acknowledge it is a significant problem. Not comforting! Here is what CRA is doing about steering:
Each week I hand-deliver steering complaints from CRA members to Bill Gausewitz, counsel to the Insurance Commissioner. It’s a statewide problem and it is illegal. Bill gets it!
Gausewitz has convened a working group of lobbyists from the insurance and the collision industries with the stated purpose of finding a way to effectively reduce the incidence of steering. I’ve been at all four meetings and witnessed the bureaucracy attempting to move faster than a glacier. He states emphatically that the Insurance Commissioner wants a “response” this year and this means we might see proposed rules that Gausewitz hopes will make it easier to enforce steering laws. I believe the law is clear. When the consumer says he or she has selected a repair shop, all discussions must end, including any blather about DRPs. The insurers want to be able to extol on the benefits of DRPs even if the consumer has picked a shop.
The one positive note that has come from these gatherings is that Gausewitz sent an email to lobbyists stating that it was unreasonable for an insurer to pay DRP rates for non-DRP work. He understands the nuances of reduced labor rates and referrals.
CRA’s other efforts this year are directed at compelling regulators to crack down on any insurer that consistently underpays claims. Underpayments, unlike steering, are easy to prove because there is written proof. When underpayments are coupled with small claims court filings against insurers by policyholders, insurers have some explaining to do. In other words, it is an unfair claims practice to force policyholders to go to court to receive their entitled insurance benefits. Again, I hand-deliver cases of underpayments to Gausewitz.
I don’t want to create the impression that insurers are across-the-board bad. CRA members enjoy solid working relationships with insurers — but it’s not a 100 percent throw your hands up we’re having a fun party. The CRA will be quick to identify unfair insurer practices when they occur and we invite insurers to point out any perceived shortcomings on our part. We are committed to solving problems. For example, we are somewhat pleased with the decrease in the incidence of insurer capping of paint and materials. Our members report that insurers are paying itemized invoices. Please correct me if I’m wrong.
Finally, CRA members will march to the State Capitol on Wednesday, April 2, to meet with key legislators. Among other things, we will be issuing report cards on the commissioner’s efforts to stop steering, capping, and underpayment of labor rates. We will make certain that the policymakers understand the issues.
Frankly, there is no sense in being quiet about the challenges confronting repairers. I refer to a CRA board meeting in July 2007 where the association’s spirit took on new life. After 90 minutes of business talk, a brief silence took over the room when one board member announced: “If we don’t act, most of us won’t be around in five years.” A few minutes later the board voted to adopt an association acronym: Courage, Responsibility and Action. A few months later, the CRA showcased its acronym at its booth at NACE 2007 where it enrolled more members, including one shop owner from Illinois who said he joined simply because he liked the CRA’s attitude.
The CRA’s attitude is that shop owners should be paid for the reasonable cost of repairing a damaged vehicle. Reasonable payments cannot be based on an average rate that takes into account shops that don’t have the equipment or trained workers to do all the work necessary to return a damaged vehicle to pre-accident condition.
The CRA is unhappy over how regulators have allowed unfair business practices to fester. We aren’t revolutionaries but we aren’t just going to wait and hope for better days.
If you aren’t a member of the CRA, please visit our website: www. cra-ca.com.
There you’ll read about how we get things done. We don’t make promises, only assurances that we won’t sit on our hands. Well, I’m about to make another delivery to the Department of Insurance. Please send your comments to me at firstname.lastname@example.org.