ISSUE ANALYSIS
In recent years, several states have passed laws designed to stifle insurer efforts to steer consumers to certain collision repair facilities. Despite the laws, it's apparent to many that the laws aren't working and the practice isn't going away anytime soon.
"One could make the reasonable assumption that introducing a bill and seeing it become law is the greatest challenge one could face. Unfortunately, the reality is that it is far more difficult to enforce steering legislation than to see it become a law," says Dan Risley, executive director of the Society of Collision Repair Specialists (SCRS).
"I believe steering exists," says Darrell Amberson, the president of the Minneapolis-area Lehman's Garage, Inc. "Some insurance companies are very good about choosing the wording they use to recommend without steering, but others are not. They use a really forceful set of words. I've seen too many examples of people saying I was told to go to this type of shop not to believe they just misunderstood."
Amberson's repair shops are in Minnesota, which he and others say has pretty good steering laws. So why hasn't steering gone away in Minnesota? "The laws don't make a lot of difference because they are difficult to enforce," Amberson says.
Enforcement is the largest problem because the only people who really complain about the effects of steering are collision repair shops.
"Most consumers don't know they've been steered. They think they've been provided a consumer service," says Stephen Regan, spokesman for the Massachusetts Autobody Association.
The nature of the "scripts" that Regan says are often used puts customers at a disadvantage, says Ed Kizenberger, executive director of the New York State Auto Collision Technicians Association. "I don't think it's fair that some insurance companies provide less than the full story about the questionable practice of using a word track that anticipates a consumer's answers and then continues to try to steer them back into a shop of the insurer's choice. That obviously circumvents the law-at least the intent of the law."
Proof of how little consumers know or care about anti-steering laws can be found in the low numbers of complaints that are filed with insurance commissioners throughout the country. An informal survey by ABRN of state agencies that enforce anti-steering laws found that the numbers of complaints were low-usually fewer than 10 per year. In states that did not keep complaint figures, officials couldn't recall the last complaint or said there were "a few."
"We don't keep specific records on steering, but anecdotally, our consumer protection folks say it hasn't been a problem. Most of our complaints are about payments," says Jim Hurley, spokesman for the Texas Department of Insurance.
"We definitely receive more complaints from shops themselves than from consumers," says Kate Kiernan-Pagani, spokeswoman for the Connecticut Department of Insurance. "When these issues have arisen a few autobody shops complain all at once."
And even if a customer who may have been steered mentions that to a shop owner, pursuing the complaint is difficult. Customers must be able to specifically identify the word tracking and that means recording or being able to recite it to know what caused them to believe they were being steered.
Even customers who are aware they have been steered may not file a complaint. "The funny thing about it is that in this fast-paced society it's very difficult to get someone to complain," says Kizenberger. "It's not very often that we get a real solid complaint that we can work with-one with all the facts and figures-because without that it's just a basic he said/she said."
Efforts to educate consumers about the laws can help, but are generally focused the wrong way. "Shops are doing some education, but by the time someone is in the shop it's usually too late," says David McClune, executive director of the California Autobody Association. "If they've been steered away they don't learn, and if they're in the shop with the sign about steering laws they are already there."
With regard to the problem of substantiating steering charges, Regan believes the government should be responsible for investigating these actions. "We don't have strong insurance commissioners who are willing to do so. And that's unfortunate," he says. "The only type of reform that will work is something similar to the insurance fraud bureaus in certain states where they put someone undercover-somebody calling insurance companies and seeing what kind of questions they are asked."
Regan says his state (Massachusetts) already has some of the strongest anti-steering protections for consumers and body shops, but without any specific penalties, insurers won't restrain their actions. "How would we curtail speeding if there wasn't a $200 ticket attached-just say,'Don't do it again, see you later'?" he asks.
"We were successful in getting legislation through the insurance committee [of the Massachusetts House] this year, which would have put $500 per incident fines on each steering occurrence and given the insurance commission a very broad authority to fine, which would really help reduce it," says Regan.
Kiernan-Pagani says the Connecticut Department of Insurance has looked at the scripts insurers have used to make sure they aren't improperly steering. However, she admits she is not sure what the punishment for a violation is in her state. In fact, Connecticut, like most states, doesn't have any penalty provisions in its anti-steering law.
The lack of penalty provisions is an obvious reason why anti-steering laws have little impact. While insurance company executives work to ensure the company is complying with the law they can't oversee every second of every claim phone call. Without penalties, even the most scrupulous insurer is unlikely to be able to root out every instance of steering.
While fines, education and increased investigation may reduce the amount of steering that collision repair shops see, current laws do little in those areas and remain ineffective. The most effective element in achieving the full enforcement effect of current anti-steering laws is proving that the law has been violated.
"It's not really important what the enforcement provisions are," says Risley of SCRS. "It's proving the fact it was actually done so they can enforce it. You can have the best provision in the world, but if you can't validate that it was done, there's nothing to enforce."
[Sidebar]
Many find anti-steering laws lack effectiveness
[Author Affiliation]
By Mark Johnson
Senior Editor
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