A year-plus investigation by the New York State Department of Insurance (DOI) revealed that some insurance company representatives have violated state insurance law when handling claims. However, the department concluded that most insurers have not systematically steered customers to preferred body shops.
“This very thorough investigation is reassuring in that it shows auto insurers are largely complying with the laws that preserve consumer choice,” Insurance Superintendent Eric Dinallo said. “But it does raise some issues which the department is addressing directly with certain individual insurance companies.”
The New York State Auto Collision Technician’s Association (NYSACTA) requested the investigation into possible steering – a violation of Section 2610 of New York insurance law – in May 2007 and presented the DOI with hundred of pages of documentation supporting its claim. Section 2610 states that insurance companies cannot require customers to repair their vehicles at specific shops and prohibits insurers from suggesting a repair shop unless an insured specifically asks for a recommendation.
The DOI did not name the violating companies but said that in isolated incidents, some companies:
• Required that some customers’ damaged vehicles be inspected at that company’s drive-through facility, in apparent violation of a regulation requiring this inspection to take place at a time and place “reasonably convenient to the insured.”
• Set a goal of having 45 to 60 percent of repairable vehicles repaired at network shops.
• Told an insured to bring his car to a network shop for inspection and stated that the repairs could be done there. Another claim representative told an insured that repairs could be done at the network shop in half the time an out-of-network body shop would take.
NYSACTA President Mike Orso said the group felt a responsibility to bring the steering allegations to light.
“We felt the sheer numbers and frequency of complaints and calls we were receiving from consumers and shops, especially with certain companies, caused us to act,” Orso said. “Let’s say our alert level was raised to red.”
The investigation included a review of all complaints filed with the DOI related to possible steering, a review of insurers’ tapes and file notes, and a review of controls put in place by insurers to ensure compliance with state laws.
NYSACTA Executive Director Ed Kizenberger said consumers play an important role in revealing steering and other problems with insurers.
“This report reflects the fine line of how a consumer complaint factors into a statistic the department might look at,” Kizenberger said. “Some attempts at steering go unrecognized because savvy consumers are informed enough to make their own choice or may just not file a complaint.”
Dinallo said consumers must be vigilant when dealing with insurers. “Consumers need to know their rights, and know that the Insurance Department stands ready to protect them.”
Over the last couple years, several New York repairers have made the news by taking hard-line stances toward steering. Greg Coccaro, owner of North State Collision in Bedford Hills, is suing Progressive for $40 million for alleged steering, and was accused of fraud by the insurer in a case that was dismissed last summer (read the story HERE). Editor Jason Stahl wrote a column about Mike Trinagel, a Bronx repairer who said his business has been cut roughly 80 percent in recent years due to steering (read the column HERE). Coccaro and Trinagel were both featured in an investigative report about steering last year (watch the video HERE).
For more information on NYSACTA, visit www.nysact.org. For more information on the New York State DOI, visit www.ins.state.ny.us.
