But that’s all changing.
During the past year, a number of class-action lawsuits have been filed by consumers against some of the nation’s largest insurers, such as Allstate, State Farm and Nationwide. For some insurers, it’s as if the skeletons in their closets have escaped and aren’t satisfied with just coming back to haunt them — they’re also going to have a wicked sense of humor about it. For example, a recent lawsuit was filed against Farmers Group in the Circuit Court in DuPage County, Ill. — the same jurisdiction in which the infamous ’95 Farmers memo originated and stated, "We control the industry. The industry does not control us."
As arrogant as the memo may have been, the sad fact is, it’s true. The collision repair industry doesn’t control the insurance industry. But, the collision repair industry can control information that gets to consumers. And educated consumers — the customers of insurers — can exert some control over insurers. They can hit insurers where it hurts: the wallet.
Currently, educated consumers across the country are flexing their muscles by filing class-action suits. Many in the industry say this sudden surge of lawsuits is, in part, the result of body shop owners and managers taking the time to educate consumers regarding their rights. And, based on responses to our Industry Profile, most shop owners are practicing consumer education.
When asked if they explain/educate customers regarding their rights, a whopping 91.6 percent of respondents said yes, with only 8.4 percent saying no. Why wouldn’t shop owners educate their customers? It seems that fear plays a huge role in this. Here’s what some respondents had to say about why they don’t discuss consumer rights:
• "[If I did], the insurance company would take us off their DRP."
• "It only upsets the insurance company when we do."
• "It only upsets the insurance company when we do." This isn’t a mistake even though it’s the same comment as the one above. Same comment, different shop owner. Interesting, huh?
The majority of respondents, however, aren’t afraid of educating consumers. In fact, it appears they’re more afraid of what will happen if they don’t educate consumers.
The main points respondents discuss with consumers:
1. Consumers have the right to get their vehicles repaired anywhere they want.
2. If they’re forced to use aftermarket parts on their vehicles, they may be eligible to file a diminished value claim.
3. They aren’t required by law to get more than one estimate.
The ways respondents go about educating consumers vary, but some of the most commonly mentioned ways include distributing handouts and brochures (says one respondent, "I give a brochure with my estimate, but I still hear, ‘My agent told me … ’.") and verbally explaining consumer rights.
"Customers don’t have accidents often and aren’t experienced with the changing industry," says one respondent about why he practices consumer education. "They’ll believe their agent/adjuster even when that person isn’t always considerate of them."
Naturally, educating consumers isn’t a totally selfless act on the part of repairers. The idea is, if consumers better understand their rights and begin standing up more for them, insurers may — "may" being the operative word here — be forced to mend some of their ways. This would then put some control regarding repairs back into the hands of repairers, which would benefit consumers because they’d be getting higher quality repairs and benefit shops by allowing them to compete more fairly with one another.
That’s the theory anyway. Whether or not any of this happens remains to be seen. The fact that class-action lawsuits against insurers are popping up all over the place does reflect a changing attitude on the part of consumers but, until we see a verdict for one of these suits, the jury’s still out on how collision repairers will be affected.
Writer Georgina Kajganic is editor of BodyShop Business.
