Georgia Shops Accusing Insurers of Steering After Raising Labor Rate - BodyShop Business
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Georgia Shops Accusing Insurers of Steering After Raising Labor Rate

Shops in Brunswick, Ga., claiming insurers towing cars up to 70 miles away to avoid paying increased rates.


Jason Stahl has 28 years of experience as an editor, and has been editor of BodyShop Business for the past 16 years. He currently is a gold pin member of the Collision Industry Conference. Jason, who hails from Cleveland, Ohio, earned a bachelor of arts degree in English from John Carroll University and started his career in journalism at a weekly newspaper, doing everything from delivering newspapers to selling advertising space to writing articles.

Some Georgia body shops are charging insurers with steering after raising their labor rates.

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Mike Purnell of The Body Shop in Brunswick says that he raised his rates from $42 per hour to $48 – the first time he has raised rates in 10 years – and now insurers are taking cars to shops up to 70 miles away in Waycross. Other shops in his area that haven’t raised their rates are being flooded with work, he says.

“The average rate in this town is $48,” says Purnell. “There has to be some law against what the insurers are doing. They’re price fixing and starving the lower class.”


Purnell went on to explain why he has had to raise his rate. “I’ve been hit with inflation for the past 10 years and I’ve just sucked it up. People are losing money hand over fist on paint and materials. All the good guys in this town are hanging on by their fingernails. I would like to upgrade my equipment and give my people a raise who haven’t had one in 10 years. I would like to have them have health insurance, where last year I had to drop it because I couldn’t afford it.”


Ryan Dykstra, manager of Advanced Collision Center, also in Brunswick, is in the process of raising his rates and says that some insurers are paying them while others aren’t. He says he has had six cars either towed from his shop or picked up by customers who didn’t want to pay out-of-pocket costs.

“I only know of three or four vehicles that ended up getting repaired at a different rate,” he says.

In one case, Dykstra says, he told a vehicle owner that she would owe an additional $133 if they did the repair. He says she contacted her insurer, and the insurer subsequently had the car towed to another shop.


“The insurance adjusters aren’t stupid,” says Dykstra. “They know how to word what they’re saying so legally it can’t be called steering.”

Dykstra consulted with a local attorney, who told him that third-party claimants are in a more negotiable position than first-party claimants when it comes to how much the insurer is obliged to pay for repairs.

“It’s not realistic or reasonable for a prevailing rate to be a specific number. It’s the way the free enterprise system works,” he says. “There is a spectrum of numbers, and as long as the amount being charged isn’t well outside of any reasonable spectrum, then the insurer owes that rate.”


Glenn Allen of the Georgia Insurance Office says he is encouraging the shops affected to contact his office, but they need hard evidence.

“It will be difficult to respond to allegations," says Allen. “If a body shop owner has evidence of wrongdoing, then that’s definitely something we would take a look at.”

Dykstra said coming up with hard evidence is easier said than done.

“You need a claimant, and they have to be willing to have their car sit for a month or however long it is not getting repaired. And they will also likely incur attorney’s fees because even if the insurers end up paying the rates, there is no extra money to pay for attorney’s fees. It’s not in my program to hassle customers to get signatures, but maybe if this escalates far enough, I will do that.”


As to the price fixing allegations, Allen said he didn’t believe that was the insurance department’s “area.”

“We want to know if business is being steered or if the consumer wasn’t given the opportunity to choose a shop of their choice. If consumers are being told they have to go to a particular body shop or their vehicle will not be repaired, then that is a concern to us.”

Howard Batchelor, executive director of the Georgia Collision Industry Association, said he was unaware of the situation in Brunswick but has heard of the tactic before.


“I haven’t heard of this happening elsewhere in Georgia, but I have heard of this sort of thing going on,” says Batchelor. “My advice to him would be to contact the insurance commissioner or attorney general. It’s obviously an uphill battle trying to fight with the insurer.”

Aaron Schulenburg, executive director of the Society of Collision Repair Specialists, also said this is not the first time he has heard about insurers hauling cars to faraway shops to avoid paying increased rates.    

“I’m familiar with the tactics of insurers doing that. It’s unfortunate that insurers are unwilling to recognize market rates and the fluctuation that occurs in them and feel they need to resort to things such as steering or manipulation of where the consumer goes – if that in fact is what’s happening here.”

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