An insurance policy provision requiring certain insureds to have their collision repairs done exclusively through The Hartford’s direct repair program (DRP) has brought calls to buck this trend by rallying the industry to intensify its educational and lobbying efforts directed toward elected officials, state regulators and consumers.

“This is the time to take action,” says Erica Eversman, chief counsel for Vehicle Information Services in Akron, Ohio. “You need to decide where you want the industry to go. Do you want to hand over control of the industry to the insurer?”

In exchange for a discount on their premiums, certain Hartford Essential Auto Policy customers receive an endorsement stating: “For comprehensive and collision losses, any damaged vehicle must be repaired by a Direct Repair Provider selected by The Hartford or you will pay any difference for the cost of repair.”

The potential implications of such a provision are chilling, according to Eversman, whose company specializes in litigating diminished value issues. “If this is successful, all the major insurance companies will do this and there will be no independent collision repair industry.”

Unless this is nipped in the bud, Eversman fearfully foresees a future system where all collision repairs are conducted only by facilities screened and approved by insurance providers and vehicle manufacturers.

“I see that very much coming to fruition,” she warns. “I think it is incredibly naïve of repairers to think this would never happen.”

In order to forestall such dire consequences, collision industry associations should be stepping-up with an ongoing series of intensified lobbying efforts directed at state regulators, elected officials and the insurance-buying public, Eversman says.

“Given the state of regulatory oversight, this is something I always perceived would happen.”

DRP shops are frequently forced to submit to inequitable agreements “out of a sheer attempt to survive in the industry. There are no true partnerships at all,” she contends, “the benefits all flow to the insurance company.”

Hartford officials did not respond to requests for comment.

“If you’re in one of these networks, these issues are out in the open and these issues need to be resolved in the industry,” Eversman says, suggesting a four-point approach entailing: consumer education; adopting a collision industry Code of Ethics; educating state insurance department personnel, attorneys general and various elected officials; and holding regular meetings with regulators, consumer protection enforcement agency leadership and other public officials

There is a compelling need for individual repairers to better explain the longstanding coverage disputes and payment reimbursement problems to their customers and enlisting their support and influence in the process, Eversman added.

“The consumer has been happy to leave it in the hands of the repairer and the insurance company,” remaining blissfully “ignorant” of the difficulties shops face when confronted with insurer payment discrepancies, she says.

The Ohio-based Choice Auto Body Repair Association (CARA) has explanatory materials aimed at customer education, Eversman noted. “They have some wonderful pamphlets that they provide people with before they buy a policy,” delving into choosing one’s preferred shop, weighing the aftermarket/salvage parts issue and other points of concern.

“We’re all for the consumers,” says Rick Finney CARA’s president. “We try to keep them in the loop as much as possible. That’s who we work for — the consumers.”

Crash victims are frequently unaware of the options available to them, such as playing a part in deciding the origin of components used in a repair. Finney, president of Finney Automotive Inc. in Cadiz, Ohio, reported that the preponderance of DRPs in the industry is a particular source of angst. “Some of these contracts are more to save the insurance company money rather than doing what’s right for the consumer,” he asserts.
Detailed information from CARA is available at http://www.c-a-r-a.org/

Along with customers content to let the body shop and insurance carrier handle the details of a claim, state regulatory departments — along with elected representatives and senators — often don’t know the severity of the various insurer vs. repairer brouhahas erupting throughout the industry, according to Eversman.

“Some of the regulators are horrified when they find out that tactics are going on that they are not aware of,” she says.

Under the statehouse dome, citizen-legislators may be owners of hardware stores and the like rather than professional politicians — especially in jurisdictions with term limits. Thus they are frequently unfamiliar with body shop and insurance industry issues.

Eversman sees this as a prime opportunity for collision repairers to provide these officials with the necessary education, particularly when it is presented with a pro-consumer protection point of view.

“The insurance regulators must be receptive to what the industry has to say because it impacts consumers,” Eversman says, citing the state of the economy and its effect on family finances. “This is a time when insurance departments will be far more willing to listen to repairers.”

Also, under policies now mandating “thou shalt use a DRP shop because you’re getting a discount off your premium,” there are questions arising over bearing responsibility for guaranteeing the quality of work being done, according to Eversman. “There is a pretty big body of case law. If insurance companies control selection of the shop, the insurer has equal liability with the repair.”