AutoMuse®

The National Association of Insurance Commissioners (NAIC) today released a press statement defending its members from insurer criticisms of slow administrative filing processes. Kansas Insurance Commissioner and President of NAIC, Sandy Praeger, refuted the criticism from “high-paid insurance lobbyists” and noted the irony of insurance representatives complaining of slow action on the part of the state insurance regulators.

“It is ironic that as they complain about process delays, consumers tell us that some insurance companies are slow to pay claims. In fact, 60 percent of consumer complaints reported to the NAIC by states are the result of claims handling problems caused by insurance companies. A large majority of them due to slow claims payment processes or outright denials.”

Commissioner Praeger had some other searing comments for the insurance industry, and noted that slow approval often lay with insurers’ failures to comply with state laws or to offer sound products.

“Insurance products are often complicated. They contain separate premium rates for every zip code, application forms with confusing questions, and an abundance of advertising materials promising everything from peace of mind to health and wealth,” said Praeger. “When insurers carefully review their requirements and submit good applications, the approval process is very fast. When companies fail to comply with state laws or offer questionable products, it takes time to review and correct their work to make sure that products deliver the benefits promised to consumers.”

“State regulators invest heavily in tools like SERFF to provide the industry the speed-to-market that companies need to compete,” said Praeger. “It is time for the industry to address speed-of-payment to consumers.”

Consumers will be cheering statements such as these, especially because some insurers take considerable time investigating claims or simply tell consumers, “We don’t pay for that.” Given the fact that state laws have rendered all drivers on the roads a captive market for insurers, consumers have every right to expect strict accountability of insurers by state insurance regulators. NAIC would serve consumers well if it started looking into actual grass-roots-level claims handling practices of insurers. I have little doubt regulators would be troubled by what they might find.

Technorati Tags: insurance, consumer, consumer protection, insurance commissioner, NAIC, lobbyist

Powered by ScribeFire.

“Chicago — Choosing the best body shop to repair
your car is never an easy decision. Now, some customers complain that
some insurance companies are steering them to body shops that might not
be best for their cars. Larry Yellen has this investigation.”

MyFox Chicago | Are Insurance Companies Steering Car Owners to Bad Body Shops?

In many instances the answer to that question is, “Yes”.

Take a look at the story that aired on Chicago’s Fox News Station on February 26, 2008. The insurance industry spokesperson states that a consumer always has the right to choose the body shop and that the insurance companies have essentially “vetted” the body shops for the quality of their work. What she doesn’t say is the insurance company will hound you to death as a consumer to take your vehicle to a “preferred” shop for repair, and will try to achieve that by having the claim representative say things like, “we can’t guarantee the repairs”; “it will take two weeks for an adjuster to even look at your car”; or “that shop charges too much and you will have to pay out-of-pocket for repairs.” What the industry representative doesn’t tell us is that we have the right to choose any body shop we want, AND have the insurer pay for the repairs, AND not be pressured by the insurer about which shop we chose.

What she also doesn’t say is that insurers don’t actually go out and look at the repair work each shop performs, nor ensure they have the proper equipment, training, education, and materials to safely and properly fix each vehicle. Instead, insurers simply rely on the statements in the “direct repair program” document the insurer forces collision shops to sign that says the shops “warrant” to the insurer they have the necessary equipment, personnel, experience, etc. to properly repair vehicles. Many DRP shop owners with whom I’ve discussed the various insurer networks have frankly told me they never read the document before they signed it. They just knew if they didn’t sign the document and join the insurer’s network, they should close the doors to their businesses now. In other words, they don’t even know or care what they agreed to — as long as they have work and can keep their businesses open. As a result, many of these shops owners would have agreed to have Big Foot or pink elephants doing the repairs if that’s what they had to say to get on the insurer’s program.

Technorati Tags: collision repair, car accident, insurance, repair network, consumers

eAutoclaims has created “Collision Repair Centers” of America to try to get a piece of the direct repair program action. But when you dig deep enough, the consumer-friendly-looking site turns out to be just another face of the insurance business.

crcofamerica.com - Would you trust your family’s safety with anything less than a CRC Auto Repair?

Apparently faking consumers into thinking they are joining a “consumer organization”, eAutoclaims has created its own “direct repair program” for consumers to join that tries to cover up the fact that this is a network of repairers put together by an insurance claim processing entity. But if you scratch the surface, you’ll find eAutoclaims lurking behind this face.

Take a look at the “terms and conditions” page which spells out that any agreement is between the user (this is under the “Consumer Agreement”) and eAutoclaims.

Worse still are the terms eAutoclaims makes the repair shops sign to get into the program. It repeatedly states that only eAutoclaims can “authorize” the repair to the consumer’s car — which is a direct violation of some states’ laws.
Consumers need to be aware that there are websites and companies all over the internet and country posing as consumer organizations that are actually business-oriented entities that seem to be designed to pull the wool over unsuspecting eyes.

Don’t be like Little Red Riding Hood and ask Grandma what big teeth she has. If you see anything that looks like big teeth, RUN. After all, if it’s just Granny, you can figure that out while running away, but if it’s the wolf, you’ve already been eaten.

Toothpick, anyone?

Technorati Tags: insurance, AutoMuse, cars, trucks, vehicles, collision repair, auto repair

Powered by ScribeFire.

Yesterday, the U.S. Supreme Court denied Allstate Insurance Company’s last chance to override a Texas law that prohibits insurance companies from owning collision repair shops.  Docket for 07-775

Allstate, and its wholly-owned subsidiary Sterling Collision Centers, Inc. (OK, I’m being lazy — Sterling is actually a wholly-owned subsidiary of Allstate Non-Insurance Holdings, Inc. — which is an indirect affiliate of Allstate) have been fighting with Texas since 2003 over the enactment of Tex. Occ. Code § 2307.002 that states “an insurer may not own or acquire an interest in a repair facility.”  The Texas Legislature enacted the statute because of grave concerns involved with the inherent conflict of interest present when an insurer collects premiums and provides the collision service to the policyholders as well.

Allstate and Sterling have been fighting tooth and nail to have the Texas statute declared unconstitutional — without riveting success — and despite having pulled out Allstate’s moldy wallet to spring for the likes of Kirkland & Ellis (the Washington, D.C. office, no less) and Mr. Pricey himself, Ken Starr.  Yes, Ken Starr of Monica Lew… well, probably the less said, the better.

The district court decision found that Allstate actively referred unsuspecting claimants to its Sterling shops — even when those shops were providing poor service and some were given failing marks by Allstate’s own surveys.   Yet, Allstate had a financial interest in making Sterling profitable, so claims representatives continued to shove insureds and third parties to the Sterling shops, many of whom naively patronized the collision repair facilities on Allstate’s recommendation.  As a result, the court had no trouble appreciating the Texas Legislature’s concerns and desire to protect consumers.

Allstate claimed that the statute violated the Dormant Commerce Clause of The U.S. Constitution.  I know, I know, lawyers everywhere are now dusting off their Con. Law textbooks — except for the 11 of you legal geeks who actually dwell on the DCC and use it daily (I’ll bet you have pocket protectors).  Allstate/Sterling’s argument was that the Texas statute had a negative impact on interstate commerce because it discriminated against large insurers and chains of collision repair facilities in favor of local ones, and was passed to accomplish that discriminatory goal. 

Needless to say, there are many sexier issues being presented to the Justices than the DCC, so it was always likely that our highest court would pass on this one.  But, you just never know with the Big Black Robes.  The bottom line, however, is that the U.S. Supreme Court “just said, NO” to Allstate and Sterling.  Now Texas can go back to doing what it does best:  producing oil so, hopefully, our gas prices will go down.

The Automotive Service Association (ASA) deserves a big round of applause for all of its efforts in supporting the Texas Attorney General and by its action intervening in the case on his side from the beginning.  Most people probably don’t know that the Texas A.G.’s office didn’t even file a Brief in response opposing the the Petition for Certiorari.  (I don’t mean that critically, just stating facts.)  Fortunately, ASA did — and the organization deserves considerable credit for its efforts and all the money spent to help support a law keeping insurers out of the repair business and keeping collision repair businesses focused on serving the interests of its true customer, the consumer.

Technorati Tags: insurance, collision repair, Allstate, Texas, law, Supreme Court

Well, it’s about time someone senior at Progressive got told the company’s claims adjuster mantra, “We don’t pay for that.” Buh-by, Brian J. Passell. Guess we’ll keep you’re salary and kickers to help pay for our tanking stock prices. Progressive Announces Management Change - Forbes.com

Passell is the guy who brought us the “Concierge Program” — fanfared with a company press release so full of fiduciary language statements that I could hear the lawyers salivating from one end of the country to another. Here’s the April 8, 2003 press release title:

Progressive To Customers: We’ll Take Care Of Everything
Company is First Auto Insurer To Handle Entire Claims/Repair Process From
Soup to Nuts, Provide One-Stop Convenience and Peace of Mind

‘We have knowledge and access to resources that many of our customers don’t have.
Our intent is to use that experience to provide a superior level of service everywhere
we do business,’ said Passell.

Do you think these guys ever run anything by legal before they blurt out something that just sounds good to their own ears? Didn’t think so.

Progressive reported a 27% drop in third quarter profits in 2007, and in January 2008 reported another 41% decrease. Progressive chalks up the decline to lower prices for auto coverage that reduces premium revenue. Hm. Couldn’t have anything to do with the fact that Progressive is getting sued all over the country for the way it treats customers, handles claims, and treats collision repair shops? Or maybe the fact that the Connecticut Attorney General, Richard Blumenthal, has held press conferences in the last month decrying the unsafe and dangerous repairs Progressive is passing out of its Concierge Program shops? Nah. It must be that pesky competitive auto insurance market.

Technorati Tags: collision repair, insurance, auto, claims handling, motor vehicles, Progressive,

Again this year, Connecticut Attorney General, Richard Blumenthal, is trying to ensure that repaired vehicles returned to his State’s and the nation’s highways are safe.

At yesterday’s press conference Connecticut’s Attorney General demanded that consumers be permitted to exercise their free choice in selecting the shop to repair their vehicles. Standing next to college student, Lyn Moreau, who’s vehicle had been unsafely repaired at a Progressive “concierge” facility, Mr. Blumenthal stressed that legislation is necessary to stop insurers from directing consumers to use “preferred body shops”.

Consumers deserve to choose where a car is repaired. No insurer should straightjacket or corral consumers, forcing them to use a so-called preferred shop. This legislation, which I have advocated for years, would preserve consumer choice and industry competition - deterring anticompetitive relationships between certain insurers and auto repairers.

AG Blumenthal was joined in his call for legislative reform by Republican State Senator Leonard Fasano, demonstrating that this problem is a concern for both political parties. Senator Fasano said,

It is clear we can no longer rely on existing laws to protect consumers following an auto accident. Consumer protection is a bipartisan issue. It’s time to make our laws stronger so people like Lyn Moreau will no longer be at the mercy of the insurance giants.

And that’s just where Lyn Moreau found herself in her dealings with her insurer, at its mercy. Unfortunately, she didn’t get any. After initially recommending she use its “concierge” facility, Progressive allowed the vehicle to be handed back to Ms. Moreau in an unsafe condition. She discovered the safety problems when she took her vehicle to a different body shop, and that shop told her the bad news. When Moreau addressed the issue with Progressive, her insurer told her to take her vehicle back to the “recommended” repair shop that butchered it originally. So much for that “Lifetime Repair Guarantee” Progressive claims it gives you if you patronize one of its direct repair shops.

Most interesting is that under Progressive’s “direct repair program agreement” with repair shops, Progressive retains exclusive authority to write all of the repair estimates and supplements, thereby dictating the manner in which a vehicle is to be repaired. It would certainly be interesting to see if Progressive was responsible for “writing” the unsafe repairs, or whether the shop simply cut corners.

Nonetheless, Progressive woos consumers to use the concierge service and maintains that it inspects the vehicle after it is returned from the repair shop to ensure the quality of repair. Lyn Moreau’s vehicle repair is evidence that the Progressive concierge quality inspectors can’t tell safe repairs from dangerous ones — which should scare all of us.

More on this story at the Hartford Courant.

Powered by ScribeFire.

In yet another shocking display of hubris, Allstate Insurance Co. — you know, “the good hands people” — defied the Florida Insurance Commissioner’s subpoena to produce documents pertaining to the insurer’s relationships with insurance trade associations, risk modeling companies, and others. Mind you, the Florida insurance agency asked to see these documents as part of its determination as to whether Allstate should be permitted to raise its rates. That’s right. Allstate started this by asking for higher premiums, but it wants those higher premiums without anyone looking into its relationships with others. One could say that Allstate just wants the State of Florida to “take its word” for the fact that it really needs more money.

When Allstate failed to comply with the State’s subpoena, the Insurance Commissioner pulled Allstate’s license to write new policies in Florida. Whack! This penalty adds to the list of defiant acts taken recently by the insurer. In the State of Missouri, a court fined Allstate $25,000 a day for refusing to produce a copy of the McKenzie & Company report that is the subject of the book, “From Good Hands to Boxing Gloves”. Allstate was ordered by a Missouri court to produce the report in a pending case. Allstate flatly refused. The court held Allstate in contempt and ordered the $25,000 per day fine until the insurer produces the report. So far, the fine continues to accrue.

It should be plain to everyone that an insurer as arrogant as Allstate, one that has no qualms about defying legitimate orders from government entities and courts, will have no difficulty treating its insureds with contempt as well. If you think you are likely to receive a fair claim settlement from this insurer, think again. We, as consumers, are fleas to such an insurer, incapable of inflicting any real pain to it. If $25,000 per day fines or the inability to write new policies don’t affect the company’s behavior, consumers have no chance at all.

This is just another good example of why this country needs meaningful insurance reform and a repeal of the McCarran-Ferguson Act exempting insurers from the application of the federal antitrust and other laws.

CollisionWeek News - Florida Pulls Allstate’s License to Write New Auto Policies

Progressive announced last Saturday that it will pay 57.6 million over the next 16 years for the right to rename the Cleveland Indians home, currently called Jacobs Field, to Progressive Field. Progressive Field, New Home of the Cleveland Indians

Perhaps this explains the vicious job cuts at Progressive the Thursday before Thanksgiving. The P had to find that $3.6 million a year to get the company’s name up on a sports field, and the money just had to come from somewhere. Who needed those employees anyway? They just suck up the profits, and, besides, cutting them loose right before Thanksgiving and all the other holidays keeps the money in the company coffers so it can be spent on important things; instead of bonuses and tiresome, non-productive things like, hmmm… how about insurance? Now, paying to have your company name on a sports field — that really means something, and we can corporate-speak it as “value added”.

And I was so hoping Progressive would earmark some of that money to train and educate their employees about the true legal requirements insurers owe consumers in their respective states — rather than just letting them make up denials of claims based on misstatements of a state’s law. Let’s hope the company at least springs for some training for Heather Hinkley so this “claims specialist” and Progressive won’t look quite so idiotic by misstating a state’s insurance law.

Although losing twice before in a Texas district court and before a 5th Circuit appellate court, Allstate Insurance and Ken Starr are hoping to convince the U.S. Supreme Court to take review of the Constitutionality of the Texas statute prohibiting insurance companies from owning collision repair shops.

Although Federal District Judge Ed Kinkeade wrote a compelling and well-reasoned decision identifying the inherent conflict of interest involved with insurers owning body shops, which was affirmed by the 5th Circuit, Allstate didn’t like the answer.  Making some of those moth-eaten arguments most of us haven’t seen since law school, Allstate will once again argue that the Texas law violates the Dormant Commerce Clause of The Constitution.

 Well, maybe Mr. Starr will fair better back in Washington, D.C. where his “starr” quality may have more appeal.

Allstate v. Abbott, U.S. Suprme Court Docket

If you are or have been a party claiming diminished value against a Progressive insured in Connecticut, you might have been put off by a misleading statement by a Progressive claims representative. One such claimant’s attorney was told blatantly that the Connecticut Insurance Department refuses to allow insurers to offer diminished value coverage, and, therefore, no diminished value claims can be paid. CT Diminished Value Correspondence

Say, what?

Here is “Claims Specialist” Heather Hinckley’s July 9, 2007 response to a third party claimant’s demand for the inherent diminished value suffered as a result of a Progressive insured’s negligence:

At this time, the State of Connecticut, Department of Insurance does not allow Progressive Insurance or any other company to sell Diminished Value coverage for a vehicle. As the State doesn’t allow sales of the Diminished Value coverage, we are not able to afford Diminished value coverage. For these reasons, but not limited thereto, Progressive Insurance must respectfully deny your claim for damages. I am sorry that I could not advise you more favorably regarding this matter, but trust that you will understand our position.

Counsel for the claimant took the issue up with the Connecticut Insurance Department, which responded on September 26, 2007 stating that:

Heather Hinckley of Progressive Insurance has responded that the Connecticut Insurance Department does not allow diminished value coverage to be sold and therefore claims for diminished value cannot be made in Connecticut. In response to Ms. Hinckley’s assertion this is not correct. The Connecticut Insurance Department does not prevent claims made for diminished value and an insurer can request to include provisions of diminished value in their policy.

The CID also included a letter from a Progressive Claims Manager responding to the complaint that said:

I am writing in reply to your inquiry dated Aug. 21, 2007. I reviewed the complaint as well as the claim file and am able to provide you with the following information.

The letter sent by Heather Hinckley dated July 9, 2007, is incorrect.

Well that’s nice. Glad we got that all cleared up.

Of course, several questions remain. Has the Connecticut Insurance Department taken any action to ensure this misstatement of Connecticut law/regulation does not occur again? Has Progressive taken any action to make certain that its employees do not make this misstatement of Connecticut law/regulation again? But the one that has me really wondering is whether Heather Hinckley is still a “claims specialist” or whether she’s been knocked down to “claims representative”, “file clerk”, or “doughnut person”? After all, inquiring minds want to know.

It also bothers me that someone labeled a “claims specialist” by an insurance company can’t tell the difference between what is owed to an insured (first party) and what is owed to someone making a claim against an insured (third party). Ms. Hinckley’s comment about Progressive not offering “diminished value coverage” has nothing to do with a third party claim. The only portion of the policy any third party cares about is the section that tells the insured, “We’ll pay for anything for which you become liable up to the policy limits” (excepting, of course, intentional torts). How much of a specialist is a claims specialist who can’t tell the difference between a first party and third party claim? That’s covered in Insurance 101.

Probably, the most pertinent question is how many other people accepted the Hinckley line about diminished value not being permitted to be paid and simply went away? Well, Connecticut, your Insurance Department has spoken. Demand your diminished value. It’s really not illegal after all.

Lucky for this customer that she went to an independent collision repair facility rather than one willing to simply follow the dictates of an insurance company bent on saving money.

Williamsburg, Ohio shop owner Jim Krotchen, of All Makes Collision Repair Service, determined that his customer’s 2002 Honda CRV needed to be repaired using a new suspension, rather than one coming from a total loss vehicle from the salvage yard.  In Krotchen’s opinion as a collision repair expert — who is liable if there is a problem with the repair — installing a used suspension on this vehicle was an issue of safety.  There simply was no way of ensuring that the salvaged suspension had not been structurally fatigued.  As a result, Krotchen installed a new Honda suspension on this consumer’s vehicle.

The insurer, whose adjusters often receive no more than two weeks of “training” before being cleared to write estimates for repairing other people’s vehicles, decided that a used suspension would have been just fine for this repair and refused to pay for the new suspension.  As a result, All Makes Collision Repair Service is being forced to sue for the remainder of the repair bill.

It never ceases to astonish me that insurers feel justified in putting people’s safety at risk simply to save money.  This isn’t an issue of waste or extravagance.  This is about ensuring that this consumer’s vehicle is safe to drive and, thereby, protecting her, her passengers, and every other traveller on the road.

The third circuit ruled that allowing a policyholder to pursue a claim against his disability insurer brought under the federal Racketeer Influenced and Corrupt Organization Act does not run afoul of the McCarran-Ferguson Act.  Weiss v. First Unum Life Insurance Co. No. 05-5428 (3rd Cir. 2007)

Apparently, NJ state insurance laws do not provide, nor do they prohibit, a private right of action for a policyholder to bring a claim against the insurer.  As a result, the Third Circuit interpreted the federal RICO act as complementary of the state’s laws.  Here is the panel’s closing thoughts on the issue. 

Welcome to AutoRepairLegal.com

Collision Repairers and Consumers should all know about the launching of AutoRepairLegal.com, a website enabling people to peruse the laws and regulations of a particular state, and to submit information for upload.

Auto Body Association Protest
	03-28-07 | Members of the Auto Body Association of Connecticut protested at the State Capitol in Hartford in support of legislation to tighten the law against auto insurers steering drivers to specific repair shops. Videographer Alan Chaniewski          Video, as requested.  This video only plays with Windows Media Player.  Click below to download.
You’ll need a version of Windows Media Player 7 or higher to view the video. If you need to download it, go to http://www.microsoft.com/windows/mediaplayer/en/default.asptarget=_blank The video player is supported by Microsoft IE 5.0 and above.

Š

 Don’t look now, but there is a convoy of tow trucks in Connecticut’s capitol.

Frustrated with the fact that they have to pay annual licensing fees, comply with regulations of the Department of Motor Vehicles, maintain expensive insurance policies, and pay high rates of workers’ compensation to operate their businesses, while employees of Progressive’s Concierge facility in the Hartford area admittedly disassemble customers’ vehicles without a repair license, members of Connecticut’s repair and towing industries are taking their fight to Progressive’s doorstep.

And their message is clear.  Stop letting Progressive compete without making it comply with the repair licensing laws. 

Attorney General, Richard Blumenthal, is on board with the repairers and tow companies.  Literally.  Blumenthal is scheduled to give a press conference from one of the tow trucks.  After the press conference, the convoy is headed to Progressive’s Concierge facility in Newington, Connecticut — which Progressive’s website identifies as its Hartford Concierge facility. 

Unable to face the rumble, Progressive is reportedly shutting down that facility for the day.

Every new lawyer who has ever worked in a firm knows the terror of potentially writing a memorandum, brief, or making some representation of the status of a statute or case that is relied upon by others that turns out to be — well — wrong.  I’m not talking of distinctions or hair-splitting about the case; I’m talking about cases that have been overturned, vacated, or heavily discredited and statutes that have been repealed or superseded.  That’s a new lawyer’s nightmare and, for the obsessive-compulsive in the rest of us, that concern never quite goes away.

Apparently, that concern didn’t register with insurance representatives lobbying Connecticut’s Insurance and Real Estate Legislative Committee when they argued the Committee should not approve legislation drafted by the State’s Attorney General, Richard Blumenthal, to make the State’s “steering” law stricter.  Three different insurance representatives told the Committee that a New York statute N.Y. Ins. Law § 2610 with similar language had been stricken as an unconstitutional violation of insurers’ right to commercial speech.  What each of them neglected to tell the Committee, however, is that the District Court decision making that statement had been vacated, and, after several appellate court decisions, on remand the District Court had issued a different opinion refusing to enjoin the NY Department of Insurance from enforcing the statute, refusing to rule on the insurers’ First Amendment claims, and dismissing the lawsuit.

Even more troubling, the District Court’s new opinion reiterated the Second Circuit’s finding that insurers could not challenge the NY statute on facial grounds, indicating that the court’s original finding of a constitutional violation regarding the statute itself was in error.

The Second Circuit explicitly rejected a facial challenge to § 2610(b). That court noted, “to the extent that the parties [] present a facial challenge to § 2610(b), it is an ‘overbreadth’ challenge, and such a challenge cannot lie with respect to a regulation of commercial speech.” Allstate II, 261 F.3d at 153

Allstate Ins. Co. v. Serio, 2003 U.S. Dist. LEXIS 13541 (D.N.Y. 2003)

In other words, the insurance representatives’ statements were gross misrepresentations of the status of (existing) New York law. 

I guess I’m shocked because I wouldn’t dream of stating something to a government entity – certainly not something as damning as a violation of The Constitution — without checking, rechecking, and re-rechecking to make absolutely certain it was true.  But, when no one holds you accountable, I guess you feel that sloppy information presentation is perfectly acceptable.  If this is any demonstration of how well state regulated insurance operates, insurers can kiss the McCarran-Ferguson Act goodbye. 

Anyway, after all of these legal decisions, the NY Department of Insurance issued Circular 14 on December 4, 2003 plainly stating that the steering law was in effect and that it would be enforced per the interpretation of the NY Court of Appeals’ decision.  Seven months later in June of 2004, the NY DOI’s General Counsel issued an opinion that insurers would be in violation of the steering statute if they informed claimants their vehicles could only be repaired at a facility certified by the claimants’ auto manufacturers.

Yeah, that’s really a statute that was struck down for its unconsitutional language. 

The Allstate v. Serio cases, NY DOI Circulars, and NY DOI Opinion can be accessed via links below:

Š (more…)

NAMIC, the National Association of Mutual Insurance Companies, issued a “Statement for the record to the Senate Committee on the Judiciary regarding The McCarran-Ferguson Act” protesting any repeal or limitation of the MFA”.  According to NAMIC’s website, the organization identified saving the MFA as its top issue of 2007.

I sometimes hear that insurers actually favor a repeal of the McCarran-Ferguson Act.  Here, for the record is NAMIC’s position on the issue.

NAMIC POSITION…NAMIC opposes any changes to or repeal of the existing antitrust exemptions afforded under the McCarran-Ferguson Act. Congress should be wary of the unintended consequences of changes to the current limited antitrust exemption. Any change that precludes, restricts, or even merely discourages the production and exchange of advisory loss costs and supplementary rating information could place smaller and regional firms at a distinct disadvantage, increase consumer costs, reduce consumer choice, and seriously undermine competition. There is no credible evidence that the cost, availability, or quality of insurance products would be enhanced if the McCarran-Ferguson limited antitrust exemptions were repealed or modified. Any change in the existing antitrust regime and repeal or modification to the current limitations could decrease market stability, reduce affordability and availability of products, stifle innovation and expansion, diminish industry efficiency, and, ultimately, inhibit rather than increase competition in the insurance marketplace.

Apparently, Insurers are surprised that the MFA is under attack, The Washington Post reported at the end of last month.

The insurance industry is one of Washington’s fiercest and best-funded lobbies, so it rarely gets surprised. But last week several industry representatives privately acknowledged amazement that their most important federal benefit — an antitrust exemption — is in danger. 

Well, hello.  Where have they been since November of 2002 when the Antitrust Modernization Commission was formed?  Having attended meetings of the Commission and submitted comments on the need to repeal the MFA, I know first-hand that insurers were oblivious to the threat.  Ironically, when attorneys representing insurers and journalists writing on the industry started looking into the AMC’s interest in the MFA, they called me.  Nonetheless, the fact that an industry that has one of “Washington’s fiercest and best-funded lobbies” completely ignored the AMC shows a certain level of arrogance or stupidity that is difficult to believe.

Yet, now, the insurers are up-in-arms about Senate Bill 618 and the companion house bill submitted last month.  According to The Washington Post:

The National Association of Mutual Insurance Companies has already created a “war room” that is targeting the districts and states of lawmakers who might be sympathetic or persuadable. It is hunting for insurers with employees in those places whom they can train to lobby their elected representatives. A broad coalition of insurance lobbies is also in the offing. 

I wonder if those employees will continue to receive their insurance company salaries while they are lobbying their elected representatives and whether those salaries will be included in and reported as money spent to lobby Congress. 

NAMIC Statement for the record to the Senate Committee on the Judiciary regarding The McCarran-Ferguson Act

Š

Yesterday, Business Insurance reported that Mississippi’s Attorney General, Jim Hood, urged Congress to repeal the insurance industry’s exemption to the application of the federal antitrust laws.  Apparently, AG Hood testified before the House Financial Services Committee’s Oversight and Investigations Subcommittee and accused insurers of trying to intimidate the state’s justice system.

Well, that wouldn’t exactly be news, as California’s former Insurance Commissioner, and now Lieutenant Governor, John Garamendi, issued press releases about how insurers threatened to pour money into a campaign to defeat his bid for the position of Lt. Governor if he insisted on implementing laws and regulations approved by California’s voters that insurers disliked.

Garamendi issued a May 8, 2006 press release from the DOI’s office declaring:

Let me make it clear, I will not be intimidated – not even by the political clout of a $120 billion industry that is willing to go to any length to get its way. This action by the special interest insurance lobby is pure blackmail and extortion, an attempt to stop me from issuing new regulations that will finally implement the will of the voters as expressed in Prop. 103 in 1988.

Garamendi went so far as to take steps to initiate an investigation into the insurance industry’s attempt to blackmail him.  In his letter to the FBI, the U.S. Attorney General’s Office, and the California Attorney General’s Office, Garamendi stated that insurers had previously voiced their displeasure about the implementation of certain auto insurance pricing regulations in a proper manner.

But things changed dramatically on April 24 [2006]. On that day the insurance industry veered dangerously off track in its efforts, and I firmly believe that its leaders have attempted blackmail and extortion against me.

Naming names, Garamendi’s press release of May 9, 2006 said that, “It has now been reported that State Farm, Farmers, Allstate, Safeco, 21st Century Insurance, and others are financing this campaign.”  Ouch.

John Garamendi also issued the following concern and warning to his correspondents about future actions of the insurance industry.

 While this threat was unsuccessful, I believe it is now my responsibility to stand up to this powerful special interest group and set in stone that they cannot engage in, much less succeed with such tactics. This is a serious threat not only to me, but also to the Insurance Commissioners who follow. They, and all other regulators, must be allowed to protect the consumers of California and carry out the laws of the State and people in an atmosphere free of coercion, blackmail and extortion.

Ouch, indeed.

Sometimes I just like to hop around the auto arena to see what my fellow autobloggers are talking about.  And I always find interesting stuff I want to share.

Here’s something fun from cynic Joe Sherlock on how to solve the Chrysler spin-off problem for DCC by offering Chrysler as a time share proposition.  Likewise Buickman, Jim Dollinger, over at General Watch slayed me with the editorial Cannibals and the Secretary.  In a Dilbertian view of relative importance within any organization, the cannibals definitively  know whose flesh will be noticed if it goes missing.  I admit; I sent this to all my friends toiling in the Middle Earth of corporate America.

Carpundit writes a good deal this week on automated law enforcement tactics.  CP wonders whether red light cameras are rigged, and how the Chicago Police Department is now using automated license plate readers. CP also wonders about the Chicago PD publicly asking why thieves are stealing catalytic converters.  What I find interesting is that the Chicago PD has launched an “official” blog Checkerboard Chat.  Maybe this is a widespread trend that I’m not aware of, but it seems to me that a blog is a great way for a police department to allow the public to participate in significant law enforcement issues.  After all, isn’t that part of what makes the Amber Alert so effective — getting the public involved as soon as possible to be on the alert for a missing child and suspect?

The Georgia Collision Industry Association has launched its blog, Collision Solutions. GCIA is welcoming articles and information from industry members, as well as offering the ability to comment on those articles.  The industry association tells us that: ”The purpose of this blog is to educate, inform, and allow like minded individuals in the Collision Industry to post message about issues affecting their businesses.  Please send all articles that you would like posted to gcia at gcia.org.”

Dave Williams at Safe Collision Repairs provides interesting information on customer satisfaction surveys with his post Auto Repair Quality not Usually Reflected in CSI Scores.  Dave’s article talks about the lack of important questions and information being incorporated into the surveys given to customers.  The most important appears to be that no one involved in the customer service indexing process cares about the actual quality of the repair. 

And the Oscar closer comes from John Shortell of BodyShopSolutions for The Wonderful World of Claim Handling Companies.  As only John can write it, at least one insurance company out there is paying $105 for an hour’s worth of work for an outside estimating company to write an estimate chisling the body shop, when insurers insist on paying body shops a prevailing labor rate that is less than half that amount.  Actually, John puts it quite eloquently, “You can’t get half of that from the same insurance company for skilled labor, repairing the vehicle, but they’ll pay some flunkies $105 per hour for clerical work.” (emphasis added.)

John was being circumspect there.  I happen to know that the insurers’ alleged “prevailing competitive price” in the State of Connecticut, the state at issue — for the entire state (Hartford, Greenwich, Stamford, you name it) – is $45 an hour.  That’s the gross profit for an hour’s worth of work from which the skilled technicians and employees must be paid, rent, workers comp., utilities, supplies, accounting fees, license fees, taxes, etc., and, oh yes, insurance.  I doubt you could hire a teenage babysitter in Greenwich, CT for $45 an hour.  And insurers think a body shop should take the responsibility of peoples’ lives in their hands for substantially less than paper-pushers get for an hour’s worth of work?  Get real.

Perhaps even more offensive is the language at the bottom of the appraisal invoice: “The shop estimated damage at $4318.59. We appraised the damage at $3614.19. A savings of $704.40!”

Anyone can appraise the damage for less.  Doing so honestly, legitimately, and without depriving the claimant of a proper and safe repair is the challenge.  Not that this concept seems to worry too many appraisers working on behalf of an insurer, even ones charged with the ethical obligation to handle every claim in an unbiased manner.  Can you imagine if a claimant hired an appraiser whose invoice included this phrase at the bottom:  The insurance company estimated damage at $3614.19.  We appraised the damage at $4318.59.  An increase of $704.40! 

Insurers would lose their minds.

Life is a highway.   Yes, it certainly is, and because of that, the law and cars seem like such a natural fit.  After all, you have rule framework for driving a car on any given highway – just like you have rule framework for being a citizen, living in a given place, and pursuing happiness.  The actual and metaphoric highways mesh.

Satisfaction Surveys are Just Big Lies:

Stephanie West Allen at the idealawg posts an insightful look at consumers’ responses to satisfaction surveys.  Do clients tell the truth when surveyed about satisfaction? The brain knows and it might be telling.   The study West Allen cites to notes that people often fail to tell the truth when responding to satisfaction surveys.  There is an interesting adjunct to West Allen’s post which is the issue that our bodies and brains often know and react to things long before our conscience knows anything. Anyone who has read Malcolm Gladwell’s “Blink” knows that the adaptive unconscious is usually far out in front of our laggard conscious minds when it comes to making determinations on anything.  Therefore, the question that arises about people’s responses to satisfaction surveys is whether they are intentional or unintentional falsehoods.

Which brings me to a very important issue.  Automotive News($) published a recent J.D. Powers survey involving only 5,752 consumers who had been involved in collisions and addressed their satisfaction about the repair experience.  The survey results suggest that people are happier with the collision repair experience when using insurer “direct repair program” shops or when they have received a referral from an insurer.  Part of the rationale given in the story in Automotive News for why consumers feel better about insurer recommended repair shops is that insurers investigate them and insist that they have the latest model equipment and best-trained technicians.  Holy cats, is that a sell job, because it is absolutely untrue.

While insurers put things in these direct repair program documents that say a repairer has to have the right equipment and training, that’s all for show in the event the AG’s office or some other consumer protection group gets hold of them.  The bottom line is the insurers could absolutely care less if you are using chains behind your repair garage to pull vehicles’ unibodies into alignment.  Insurers only care about getting a repair job done as cheaply as possible, and, often, if they can twist the repairer to perform an unsafe, but cheap, repair, they do it.  I would love to tell lawyers how many times I have seen insurance company representatives write an estimate of repair that calls for the “clipping” of the vehicle.  Clipping is the industry slang for “cutting the car in half horizontally, throwing away the damaged half and welding a salvage yard total-loss half onto the consumer’s vehicle, and handing the customer the keys.”  Ta-da!  And guess, what folks?  In the vast majority of states, that practice is not illegal.  Unsafe?  You bet.  Illegal?  No.  And the insurers’ attitudes about practices like these?  “No one says we can’t do it, and if it’s going to save us a buck, we’re going to do it.”  and my personal favorite, “We don’t repair cars, we just pay to have cars repaired.” – even though insurers dictate how vehicles are to be repaired to collision repair shops every day of the week.  If you are a collision repair shop that stands up for the consumer, insurers make your life a living hell.  And, they make the lives of consumers who try to patronize the responsible collision repair facilities hell as well.

You can see, therefore, the complete lack of value of the J.D. Powers survey.  The only reason those customers are satisfied with the insurer’s recommendation is because the insurers tend to leave shops in their “networks” alone and don’t play games with them by browbeating their customers, refusing to pay for necessary repairs, deliberately delaying sending an adjuster to review the damage for two or more weeks, and other lovely games.  And why do they leave the network shops alone?  Because those collision repair shops have signed documents that trade away many rights of the customers (unbeknownst to the customers), agree to use inferior parts, use salvage parts (including salvage airbags), and agree to fully indemnify the auto liability carrier for anything (negligence, intentional acts, diminished value, attorney fees, titling problems — oh yes, some of those clips are “front end” clips.  That means the VIN on your dashboard is a salvage vehicle VIN and no longer matches the registration or title of your car.)  Anyone who takes the insurer’s recommendation for a collision repair shop is asking for trouble.

Along those lines, Eric Turkewitz of the New York Personal Injury Law Blog posts about Anderson Cooper’sstory on Allstate Insurance and its aversion to actually paying claims   No, really?

John Shortell of the BodyShop Solutions blog has an enlightening post called More From Inside Nationwide.  A Manifesto That Threatens Termination for Appraisers Who Fail to Get With The Program about the realities of how insurers treat consumers, collision repair facilities, and their own employees.  Shortell even posts an email from a person identified as Paul J. Connell, Materials Damage Claims Associate Director ratcheting up the pressure on claims personnel and body shops.  Anyone who practices in the personal injury area will find Shortell’s post eye-opening.  As a final thought, PI lawyers, are you aware that many insurers use the cost to repair the vehicle as the basis upon which they offer soft tissue bodily injury claims settlements? So, you can see the additional incentive insurers have to keep repair costs as low as possible. 

Accidents:

In my day, babysitters earned about a dollar an hour.  No one paid social security, worker’s comp., or insurance – but that’s probably changed.  And if it hasn’t, maybe it should.  The Orange County Personal Injury Lawyer blawg recounts a sad tale of a babysitter who hit another car killing someone while picking up his employers’ youngest child from school.  Needless to say, the decedent’s family sued the babysitter but also sued the parents/employers.  Vicarious liability isn’t anything new, but how many times do even lawyer parents, desperate for a night out, stop to think, “what are the potential ramifications of this employment activity?”

David Giacalone has some meaningful information for people involved in accidents who want to handle the matter without the assistance (and cost) of an attorney.    DG must have a great sense of humor as the blawg is titled:  “shlep - the Self-Help Law ExPress”.  He also has an excellent post on how consumers can protect themselves in a used car purchase.  Although, Giacalone’s post contains much useful information for buying vehicles, the gigantic problem with the whole used car world is that there are NO standards dictating how vehicles are permitted to be repaired and NO used motor vehicle standards dictating “lifecycle motor vehicle safety” throughout a vehicle’s lifetime.

 J. Craig Williams from May it Please The Court reminds us that if you ski and get hurt, nurse your wounds and go home.  Assumption of risk is still the word of the day on the slopes, and suing the ski resort just makes you look stupid as well as clumsy.

Just Pull over and Keep Your Mouth Shut:

Carpundit says it like it is, and I just love that.  CP reminds sassy Harvard Law students that, in fact, Big Daddy Brother does have jurisdiction over any punk on the road and it really doesn’t matter if it’s a state road or a local one.  CP’s tip of the day for drivers: “when you see the blue lights flashing, pull safely to the right shoulder and come to a complete stop.  In the words of Chris Rock, If the police have to come and get you, they’re bringing an ass kicking with them.”   Jamie Spencer does a neat job of digging through the law to find out if a client committed a traffic violation by performing a U-turn at a location posted only “No Left Turn”.  I have to admit, trying to piece together state law and local ordinance is often a nightmare, and it makes for some wacky results.  This is an interesting read over at the Austin DWI Lawyer blawg.

Go Green!   The Green Business News brings us news about recent enactment of laws in the U.K. that require vehicle manufacturers to pay for the safe and environmentally appropriate disposal of motor vehicles. Autoblog reports that the President has finally drafted some fuel economy legislation which would allow regulators to demand higher mileage standards from automakers.

Government Officials We Think Have Drive or Have Job Openings

 The AutoProhpet lauds Michigan AG, Mike Cox, for doing what every state should do — ban those stupid (and inaccurate) red-light camaras.  Boy, talk about a total walk around the hearsay rule.

The Antitrust Review points out a bunch of job openings in that easy-to-parse-through land of antitrust law.  In addition to which, the AR tells us that the European Court has upheld a Beer Cartel Fine.  Look, if the U.S. can finally “free the grapes” and let wineries ship directly to consumers, then I think the European consumers should be entitled to “free the hops.”

Revelations (Oh, my goodness, it’s just what I wanted):

GAL of the Greatest American Lawyer has toyed with revealing his (and I do believe it is a “his”, although GAL may be more of a hint than one might imagine!) anonymous self.    There was even a contest, closed yesterday, winners to be announced early this week.  GAL begged not to be outted by those in the know until post-revelation.  OK, I’ll give you all a real heads-up.  It’s me!  Why do you think I’m hosting this blawg review?

Also, anyone interested in what interests gay people in the world of automobiles must visit Gaywheels.com which bills itself as the “gay-friendly automotive resource”.  The Truth About Cars has a fun dish on some woes at ToMoCo (you know, Toyota Motor Co.) involving “memogate“.

Vorsicht bei der Abfahrt  (Danger, Will Robinson, Danger!)

Overlawyered keeps us up-to-date with warning labels the whole family can enjoy, while Jonathan B. Wilson comments on a Georgia Social Networking Bill designed to keep minors safe.

Joe Sherlock of The View From Behind The Windshield warns about property loss damage that can occur to your car just by going through an automated car wash.

Nicole Black of Sui Generis–a New York law blog warns of issues involving ethical issues involving NY’s lawyer advertising rules and their application to a home office. Diane Levin of Death and Taxes Blog talks about her thoughts on Associate Salaries.

Heresy (I prefer to take the bus, thank you very much):

“Blessed are the few of words, for they will be welcome anywhere.”  Lawyers talk too much (just look at this Blawg Review!)  If you don’t think so, marry one.  Imagine if other professions bored spouses and friends with the minutiae of earning their daily bread, e.g. “Then I typed the letter “q”, then a “u” . . .” or “I put the strands of DNA, that I had previously teased from the extracting solution, into a test tube . . .”  Honestly, how does the rest of the world stand us?  But now I have a hero.  His name is Donald A. Van Sullehem.  And courtesy of the (new) legal writer,  Here is his elegant response to a brief, and one which, if I weren’t so much of a coward, I would have written in some of my own cases.

Brief in Opposition to Plaintiff’s Motion for Reinstatement
Plaintiff has got to be kidding.
Respectfully submitted, Simpson & Moran, By Donald A. Van Sullehem, Attorneys for Defendant, Birmingham, Mich.

Basquette talks about why blogging isn’t for everyone in put down the blog and step away from the computer, ma’am… and Charles H. Green emphasizes the power and beauty of silence at the Trust Matters blawg.

By a whisker (as in, “I just missed that guy by a”):

Julian Ku discussed the hang-up concerning the words “annihilation” versus “genocide” in the debate over the mass killings of Armenians during the Ottoman regime in Turkey.  Ken Adams of AdamsDrafting really splits hairs over the use of the words “termination” or “expiration” in contract drafting. 

Warm and out of the wind (if it’s a convertible, the top is up):

The Wired GC takes aim at the Government Accountability Office for being miffed that the DHS counsel wants to review documents before production and be present at employee depositions. Stephen M. Nipper of The Invent Blog gives us the happy news that PayPal is trying to compete with Google’s new “Checkout” program by offering a $15 rebate on goods purchased from participating retailers.  Luckily for us, some of those retailers include purveyors of law books and legal aids.  Where the heck were these companies when I was in law school paying full bore for every book I had to use?   Sox First continues to report that Citigroup has its hands full trying to defend itself against the allegations of the Australian Securities and Investment Commission that it engaged in insider trading and failed to manage conflicts of interest.

Grievances (Why the hell didn’t you fill up before we left?):

J. Daniel Hull of What About Clients?™ flares about whether lawyers are delivering real services to clients in an economy that now seems exclusively about selling services on a global level.  Hull’s comments immediately reminded me of a fascinating discussion my friend Leon Polott of 5iTech and I had when we were the Chair and Vice Chair respectively of the Cleveland Bar Association’s International Law Section.  At the time, Leon and I discussed the client zealous representation and potential ethical issues arising from the ever-present (and in use) bottle of Vodka on the meeting table in a Russian negotiation.  At what point should there be a different code of conduct and professional responsibility for lawyers representing clients internationally?   

S. Alan Childress points out the grandstanding, childish, and jerry-springerish activities that some judges have begun to exhibit in their occupation of the bench. While paid participants in the legal world continue to pay lip-service to concepts of professionalism and collegiality, the migration of the practice of law to the business of law rewards those who can draw the most dollars by their outlandish behavior.

My own grievance, of course, is that issues I care about are once again being upstaged by that minx, Anna Nicole Smith (aka Vicky Lynn Marshall).  It’s bad enough that the U.S. Supreme Court deemed her dispute over her ancient deceased billionaire husband’s estate to be more review-worthy than a genuine issue over the denial of due process and question of the propriety of a state supreme court justice casting the deciding vote overturning a billion dollar consumer judgment against one of his supporters, State Farm.  Now, the week I am hosting blawg review, she dies, leaving questions about the cause of death, the paternity of her new baby, and the quagmire of her former husband’s estate and her own.  As a former probate, trust, and estate trial lawyer the latter is undeniably appealing to me.  Nonetheless, couldn’t ANS/VLM have done this on someone else’s watch?  I think I will have to take this personally.

Tune in Next Week

Blawg Review has information about next week’s host, and instructions how to get your blawg posts reviewed in upcoming issues.
 

Don’t we all think it’s important to know who actually benefits from side deals before we give any company our business?  You bet we do.  I don’t think anyone liked hearing that commercial customers were paying substantially too much for insurance because of insurance broker/insurer arrangements that paid enormous commissions for fraudulently placing insurance with certain companies.  It makes us all wonder if we are really getting a good deal on our individual insurance, too.

So, it’s about time some regulatory entity looked at the relationship created between insurers and collision repairers by “direct repair programs” that consumers are vigorously encouraged to patronize.  The Illinois Attorney General’s Office, Department of Consumer Protection is looking at the agreements insurers get repair facilities to sign to become members of the insurers “network” of “preferred” shops.  Insurers push consumers to these network shops for reasons that are good for the insurer, but not necessarily good for the consumer.  To get into these networks, repair shops have to agree to give the insurer discounts, look for “betterment” (i.e. the flip side of diminished value), agree to use aftermarket (non-original equipment manufacture), salvage, or rebuilt parts, and/or agree to indemnify the insurer.  The scary part of the indemnification provisions in many of these agreements is they require shops to indemnify the auto insurer for anything relating to the claim.  That could mean intentional acts, attorney fees, inherent diminished value payments — all things not associated with whether the repair properly fixed the car.  Most importantly, the way insurers market these networks is to tell customers how beneficial it will be to the customer — which may or may not be the case.

Certainly, an insurer will tell you that an adjuster will address the claim right away and you can get the repairs underway immediately.  OK, that’s probably good for both of you.  It saves the insurer money on the rental car expense and helps the customer obtain a prompt repair.  Yet, sometimes the insurer uses this languange and deliberately withholds sending an adjuster to a non-network shop to impress upon customers how difficult it will be if they choose to have their vehicles repaired at these non-”preferred” facilitites.   Nonetheless, insurers also typically say that you get a guaranteed pick-up date and that they will guarantee the repair.  Well, that may sound good, but is it?

A guaranteed pick-up date is good for the insurer because it allows them to minimize rental car expenses and have certainty in the reservation of the claim.  However, the insurer often determines how long it thinks the repair should take, not necessarily how long a proper repair must take.  Customers assume that when they pick up the vehicle it has been repaired correctly and safely — which simply may not be true.  Because the repair shop has to absorb any additional rental car expenses or other fees if they go over the projected ready date, they have every incentive to push the customer’s car out of the door by the pick-up date, ready or not, safely repaired or not.  What if a part is on back order and it will take two weeks to obtain the necessary part?  Again, the incentive for the shop is to find something, anything, that will substitute for that partt rather than be penalized by the insurer for failing to meet the deadline.  Overall, the danger to customers likely outweighs the benefit of an artificial pick-up date.

Then there is the warranty/guarantee the insurer promises.  Virtually all body shops guarantee their work.  After all, just how long would a repair shop stay in business in a free market economy if they didn’t satisfy customers?   (Of course, this has changed completely with insurers selecting repair shops because they don’t necessarily reward for the same things consumers do.)  So, this alleged guarantee is nothing new, other than the fact that the insurer now says that it guarantees the repair.  Well, the insurer typically sends the customer back to the same body shop if there is a problem — which is what the customer would have done if they had selected the repair facility.  So, insurers are piggy-backing on existing repair shop guarantees. The hard part is to get an insurer to truly honor one of these “repair guarantees”, rather than just dumping the problem back in the lap of the customer and the body shop.  Of course, the obvious question is, how well do you think the repair shop that butchered your car in the first place will fix it the second time around?  Or the third? Or fourth?

Illinois AG examining insurer/repairer relationships - Consumer protection statutes are center of the debate - ABRN (Automotive Body Repair News)

Sure seems like it.  While you are away on the crusade, make sure your car doesn’t go out with anyone else.

Biometric Solutions is offering a new technology for keeping your vehicle safe.  It’s a fingerprint identification device that will only allow the vehicle to start if there is a match between the entered fingerprint and one registered for the vehicle. Finally, a way to keep your teenager from nipping out in the Porsche while you are on vacation.

Car Theft Prevention | Immobilizer | Fingerprint Car Security

Good news for the wretched homeless in Mississippi!  Their “good neighbor” State Farm is opening its wallet and will be paying homeowners’ claims pursuant to a settlement agreement entered into after the first trial made it full policy limits of $223,000 and $2.5 Million in punitive damages poorer.  Yes, from State Farm’s perspective, the homeless in MS are picking the pockets of the insurance giant.  How did the homeless accomplish this task?  By daring to publicize how shamefully State Farm treated them.  I guess they should have gone on living under cardboard boxes rather than rebuilding their homes.

You might ask why SF caved?  Publicity, dear, publicity.  According to the New York Times, “the insurers became tired of being called insensitive and uncaring about the victims of Hurricane Katrina.”  Well, wasn’t that just what insurers were doing?  People who paid premiums to have insurance, and whose mortgage holders certainly insisted they pay those premiums, were being niggled to death about whether (no pun intended) the root cause of the loss was the hurricane, flood, rain, or some other cause.  Newsflash.  These people lost their homes.  They weren’t trying to get completely new carpet for the house because their three-year-old spilled cherry Koolaid in the living room.  They suffered the devastating loss of their homes and belongings and insurers were trying to claim they were only responsible for the last foot of damage.

What makes the State Farm issue particularly compelling is that SF is a mutual insurance company, which means that the policyholders actually own the company like shareholders.  (If I go wrong here, the RiskProf will set me straight.)  This, of course, raises all kinds of questions about whether policyholder/owners could initiate a vote as to whether catastrophic claims should be paid.  It also makes me wonder if there isn’t a really good argument to be made that SF has a fiduciary responsibility to its policyholders as companies do to their shareholders.

The bottom line is that Mississippi homeowners will be getting claims paid by State Farm, which includes, of course, Senator Trent Lott.  I certainly hope State Farm doesn’t think this belated show of good neighborliness will convince Senator L to back down on his introduction of any legislation mandating public disclosure of total loss VINs (to stop title washing) or federal regulation of insurers.  The one good thing about the fact that SF denied Senator Lott’s claim along with all of the other homeowners is that at least we can sleep well knowing that all affected homeowners were sleeping on cots out in the open — the high and the low.

Consumers living in Connecticut are truly getting their money’s worth in Attorney General, Richard Blumenthal.  Not only does he do his job as Attorney General, which he clearly performs with genuine passion for protecting the public, but now he is doing the Insurance Department’s as well.

 Today, the AG’s office issued this press release Attorney General Drafts Stronger Law Prohibiting Insurers From Steering Consumers To Select Auto Repair Shops and the AG held a press conference to announce changes he wants to see to the toothless and unenforced current version of the anti-steering law.  The current law simply prohibits insurers from “requiring” car owners to take their vehicles to particular repair facilities.  AG Blumenthal’s version would prevent insurers from even requesting that claimants patronize select shops and prevent them from using some not-so-subtle word-track to shove claimants toward shops that have signed agreements with insurers.  (Those agreements deserve some scrutiny by the AG themselves given that they are designed to benefit the insurer and often include terms that work against the repair customer — all unbeknownst to that customer; but right now, I think the AG has earned a well-deserved respite.) 

What word-tracks am I talking about?  Well, if you recently had a motor vehicle accident (it doesn’t really matter which state), you probably heard something like these well-rehearsed, telemarketing-type, word-tracks: 

 ”Well, you can take your vehicle to any shop you want, but X insurance company can only guarantee the repairs if you take it to one of our preferred facilitites.” or maybe you got:

“You can take your car to that shop, if you really want to, but we won’t be able to send an adjuster out to do a damage estimate for at least two weeks.  But if you take it to shops X, Y, or Z, they will be able to start on your repairs tomorrow.” (One of my typical responses to this is, “I guess you need to take some of those record profits insurers are always declaring and invest some of it into customer service areas by hiring additional adjusters.”)  or perhaps:

“Shop A is very difficult to work with.  We can’t ever get an agreed price from them, so you’ll have to pay a lot of money for the repair out of your own pocket.”

When the existing version of the anti-steering statute was being considered by the Legislature, it was voted positively out of the Transportation Committee with the inclusion of this language that insurers “also cannot intimidate, coerce, threaten, or provide an incentive or inducement to influence the use of a specific service or product.”  (OLR Bill Analysis, sHB 5793, October 1, 1992, Transportation Committee).  All of the intimidation, coercion, incentive, or threat language got excised from the bill during its trip through th Insurance and Real Estate Committee, and Connecticut ended up with an anti-steering bill, the spirit of which insurers routinely violate.

Of course, the Connecticut Insurance Department doesn’t see a problem with the coercive tactics insurers use to promote their direct repair programs — which include terms and conditions that actually harm consumers.  It has to make one wonder what the CID does to earn its keep.  After all, if the AG is doing both his job and the Insurance Department’s, who needs the CID?  Perhaps the citizens of Connecticut deserve a little rate decrease of their own.  If the CID gets cancelled now, CT citizens might get some premium back.  If nothing else, they at least won’t have the CID obstructing every attempt made by citizens, groups, and, yes, even the Attorney General to get information about insurer practices and enforcement action for alleged insurer violations of the State’s laws and regulations.

 Have you any recommendations as to my situation?

Last year while driving my new 2005 Toyota X runner truck I had a 30 mph fender bender on the 405 frwy that damaged the left front head light, fog light, bumper, hood left corner, the left tower attached to the frame to secure the also damaged fender & skirting. No damage to the right side at all. Although the airbag deployed the impact caused no damage to the radiator or engine and the vehicles driving ability otherwise was not affected. The vehicle was taken to the dealer for repair. The estimate to repair the damage was twenty three thousand dollars! My insurance company informed me that the vehicle damage was severe. Although I disagreed, they declared it a total loss. I retained the vehicle by paying the amount the insurance expected to get from the sale of the damaged vehicle. I subsequently had the vehicle repaired at another body shop for one third of the cost estimate accepted by my insurance provider.                  

Forced to accept a salvage title to renew license.  Although the actual damage was far less than was accepted my insurance provider, they are insistent on a salvage title. Even though it does not warrant the change. This adversely affects me. I am unable to drive the vehicle unless I accept the title change and if I agree I am loosing by having a vehicle with a diminished vehicle value associated with a salvage title. 

 I have not been able to renew the registration because the DMV has a pending salvage title change notice on file from my insurance company. DMV has told me all I need is a letter from the insurance company withdrawing the change, however my insurance company is unwilling to change their decision even after I have proved that the damage estimate was wrong. I have spoken with the state insurance commissioner’s office who suggested I write directly to the insurance company main office headquarters. This resulted with them sending me back to another adjuster who has said they will again look at it however he informed me that there obligation as the insurer is only to the actual amount of the damages and although he didn’t actually ’say it’ he eluded to the potential that I may be responsible to repay them if a inaccurate estimate was paid. I feel like they are punishing me for their decision to pay an exaggerated estimate (I objected to their decision in the first place) and possibly, may use this as a condition (if they are willing) to release the salvage title determination. Can you offer any suggestions that may help get my title released from the ”salvage” determination and help the insurer accept responsibility for their decision. Not try to recover from me for their decision. This is a very time sensitive mater that I am dealing with, any thought regarding this is much appreciated.

The U.S. Supreme Court tanked any hope of Due Process for the Avery plaintiffs when it denied their Petition for Certiorari today.

Despite the filing of a brief Amici Curiae from 12 Organizations Concerned about the Influence of Money on Judicial Integrity, the high court would rather spend its time discussing the merits of whether Anna Nicole Smith a.k.a Vickie Lynn Marshall should get her millions. These were the issues presented in Anna Nicole’s, er, I mean Vickie Lynn’s case that the Supremes deemed supreme-worthy. The issues are about the application of state probate law. Well, I guess the good news is that, if the U.S. Supreme Court won’t pay attention to you while you are alive, you just might get a crack when you’re dead.

T Tags: Law, Blawgs, Supreme Court

How low can you go? Well, here in Ohio, apparently the lowest in the nation. NAMIC reports that, once again, Ohio enjoys some of the lowest homeowner’s and auto insurance rates across the country.

Report: Ohio Property/Casualty Insurance Rates Still Among Lowest in Nation

Color me simple, but it seems as if those of us who live in states that don’t have major disasters get to enjoy lower insurance rates. Could there be a connection?

John W. Mayo writes a fascinating essay on the increasingly sophisticated approaches taken by industry monopoly-holders to manipulate public policy and regulation to prevent competition. Professor Mayo uses the current cable TV industry as his example of how an industry seeks to limit competition.

AEI-Brookings Joint Center

There is an interesting flip-side to that discussion, however. That is the approach taken by the insurance industry and involves obtaining an exemption to the antitrust laws in the first place. Exempt from the application of the federal antitrust laws, the insurance industry has developed a virtual stranglehold on other entities that provide services to insureds.

While we typically think of antitrust in terms of control to keep prices artificially high, it can also be used to keep prices artificially low.

Take, for example, how insurers use “usual and customary rates” or “prevailing competitive prices” to set a ceiling for payments to providers. In the collision repair arena, I am unaware of any insurer, other than State Farm, that solicits information on labor rates from shops. Without knowing what the repairers’ posted labor rates are, how can an insurer come up with a “usual and customary rate”?

There is also the issue of the use of aftermarket parts in repairs. There is now a mechanism by which the insurers can source and purchase aftermarket parts directly from a company that has them drop-shipped to the repairers. This removes the decision about which parts are appropriate for the repair from the professional, and it also automatically excludes the original equipment manufacturers (OEM) from competing in the repair parts marketplace.

The point of competition is to benefit consumers, but consumers do not benefit when the best providers of service are not able to command a higher rate for their superior performance. They also do not benefit when product price is virtually the sole component to decision-making, without deference to quality, uniformity, and other factors.

The Pennsylvania Collision Trade Guild has launched a new website to give consumers and repairers an avenue to address problems with the manner in which damage appraisers do their jobs. Tired of appraisers ignoring regulations and state law and interfering with how vehicles are to be repaired, the PCTG is naming names, posting formal complaints on the site, and sending copies of those complaints to state legislators.

After reading many of filings, the actions complained of begin to sound eerily similar, with the customer trapped as the hapless pawn between the people who know how to fix cars, actually fix cars, and accept the liability for doing so and the people who think they know how to fix cars, do not fix cars, and accept no liability for the repair. It’s quite clear to me who should have the final say on how to fix the car in that mismatch.

PCTG - Pennsylvania Collision Trade Guild

Justice Karmeier may be getting a surprise — and it’s not more money for his campaign coffers. Instead, it may be a summons to account for his actions before the Illinois Judicial Inquiry Board.

Common Cause filed a complaint Tuesday (February 7, 2006) asking the Illinois Judicial Inquiry Board to investigate Justice Lloyd Karmeier’s participation in the decisions overturning the two biggest class action verdicts in Illinois history, Avery v. State Farm Mutual Insurance Co., 216 Ill.2d 100, 835 N.E.2d 801 (2005) and Price v. Philip Morris, Inc., No. 96236, 2005 Ill. LEXIS 2071 (Ill. S.Ct. Dec. 15, 2005).

I was gratified to discover that I am not the only person outraged by what I see as the inappropriate participation of Justice Karmeier in these decisions. Independent film director Wayne Ewing has released his documentary “Benched: The Corporate Takeover of the Judiciary” about the contentious election and the corporate interests that buoyed Lloyd Karmeier to the Illinois Supreme Court bench. Common Cause, likewise, was pointed in its assertion that his participation in these decisions violated Illinois’ judicial cannons.

Common Cause spotlights a glaring issue with Karmeier in that he participated in Avery when it seemed he knew his vote was imperative to overturn the case, yet he recused himself from participating in the Gridley v. State Farm Mutual Insurance Co. decision bacause the necessary majority already existed to make the case disappear without his vote.

The Common Cause complaint is supported by legal ethicist Geoffrey Hazard, Jr., which means that, with Monroe Freedman’s agreement, the gurus of legal and judicial ethics are stacked up against Justice Karmeier. More damning for him, however, is the assertion on page 4, footnote 1 in the CC complaint that:

In response to a 2001 request by the then President of the Illinois State Bar Association to the Chair of its Bench and Bar Section Council, a subcommittee was appointed to develop standards defining an “excellent” judge. Justice Karmeier became Co-Chair of that subcommittee and co-authored the standards, which included the statement that,
“A judge must always avoid even the appearance of bias or injustice because confidence in the entire system of justice is diminished when any single judge engages in conduct that lowers public trust in the fair and impartial administration of justice.”

I guess that means Karmeier is not an excellent judge, by his own standards. Or maybe it’s easy to espouse ideals until someone comes along with enough money to put them to the test.

HT to Jerry Brown

As always, George Wallace of Declarations and Exclusions presents a fine analysis of the resurgence of California’s Proposition 103 and other issues pertaining to insurance regulation. The regulation centers on auto insurance and how rates can be set. Mandatory rate cuts required by Prop. 103 were stricken by the California Supreme Court as unconstitutional. As George explains:

The California Supreme Court promptly declared that portion of the initiative to be unconstitutional, on the ground that it violated due process requirements by depriving insurers of the opportunity, permitted to every other business enterprise, to at least attempt to obtain a reasonable return on investment.

I know that collision repair facilities would heartily agree that businesses have a right to make a reasonable profit and could make the same argument about insurers setting their labor rates, dictating permissible parts markups, and setting price caps on paints and materials — irrespective of how much was necessary in the repair.

Anyone interested in the California auto insurance market should read George’s commentary.