The Colorado Division of Insurance has fined Ameriprise Auto and Home Insurance Company also known as IDS Property Casualty Insurance Company. A $71,100 penalty has been levied against the insurer for illegally steering repair customers to preferred shops.
Between September 2006 and January 2010 there were 711 instances when consumers were steered to Ameriprise’s shops of choice. Each infraction will cost the insurer $100 payable to the state’s general fund.
The idea of favored shops has been around for a long time and has been difficult for state agencies to police since insurance companies have used the right to screen repair shops by setting up minimum standards. Smaller shops have contended that these standards are unfair and that they are put at a competitive disadvantage by such policies.
Marcy Morrison, Colorado’s Division of Insurance Commissioner, told the Northern Colorado Business Report that: “Consumers need to be able to compare repair rates, quality and service. While the repair shops contracted with Ameriprise may have done good work, the anti-steering law ensures that consumers, not insurance carriers, are in the driver's seat to decide where they want repairs done."
Colorado’s action comes after Texas sent out a bulletin warning insurers that it is illegal to “directly or indirectly engage in practices that constitute steering." Reports that insurance companies were suggesting certain shops based on a list prompted the warning according to a news update posted at the commission’s website.
In related news the State of New York passed legislation that prohibits insurance companies from steering collision claimants to preferred car rental agencies.
As Ms. Morrison’s quote indicates there is more at stake than just the choice of the repairer. The real issue is control over the repair process and how that impacts the parts used to repair the car as well as what is deemed in need of replacement as opposed to reusable. One would assume that the companies on the insurance companies’ lists would share a common repair philosophy whatever that is.
For a look at how this issue plays out in real life check out the AllCarAdvice post, Prevailing In A Real Life Car Repair Dispute. Although, in this case the owner chose the body shop, the incident does deal with the use of aftermarket parts in place of OEM parts in the repair of their 2009 Toyota Corolla.
Collision repair is traumatic for the insured and can be bungled regardless of who is in control. At least when the car owner chooses the repair shop, the decisions are his to make regardless of how they turn out.