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Where do insurer middlemen like collision Service Centers fall regarding auto body shop choice laws?

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Business Practices | Insurance | Market Trends | Repair Operations

A recent Progressive email to a policyholder hyping Service Centers raises the question of if traditional shop choice laws have any relevance to how an insurer markets a middleman compared to an actual body shop.

“When you choose a Service Center to manage your claim, you just drop off your damaged car, pick up your rental and go!” states the email to a Virginian who’d renewed his policy.

Not only did the email tell him the closest Service Center, it provided a map from his home to the facility. (We redacted these and other identifying elements.) It’s accompanied by a promotional video giving customers a tour of a sample center.

As the email indicates, Service Centers aren’t actually body shops. They receive damaged vehicles, send them to shops — presumably direct repair program facilities if the customer has no shop preference — and dispense rentals. Progressive says this makes the claims process easier and cuts two days off of cycle time.

That’s a fair consideration. But does pushing one of these middleman facilities let insurers get around laws which mandate customers given shop recommendations be reminded they can patron anywhere?

In Virginia, state Code states that no one can “Require an insured or claimant to utilize designated replacement or repair facilities or services, or the products of designated manufacturers, as a prerequisite to settling or paying any claim arising under a policy or policies of insurance.”

Nor can someone:

“Fail to disclose to the insured or claimant, at such time as the insurer or its third party representative recommends the use of a designated motor vehicle replacement or repair facility or service, or products of a designated manufacturer, in connection with settling or paying any claim arising under a policy or policies of insurance, that the insured or claimant is under no obligation to use the replacement or repair facility or service or products of the manufacturer recommended by the insurer or by a representative of the insurer;

“… Fail to disclose to the insured or claimant, at such time as it or its third party representative recommends the use of a designated motor vehicle replacement or repair facility in connection with settling or paying any claim arising under a policy or policies of insurance, that the insurer or its third party representative has a financial interest in such replacement or repair facility, if the insurer or its third party representative has such an interest.”

Marketing

Nowhere in the Progressive email or video accompanying it is there any mention that the service center has an interest in the shops it would presumably recommend or that a customer has no obligation to use Progressive’s recommendation.

That seems to for practical purposes offer a loophole: Customer is told of Service Center through email. Customer takes car to Service Center after suffering damage. Service Center offers the appropriate disclaimers about shop choice and offers suggestions. But at that point, the customer’s probably not likely to pack up and drive home to research non-DRP shops.

Asked if such emails violated the spirit of the law, Progressive described the Virginia communication as marketing.

“The email you referenced is an email sent to Progressive policyholders only, intended to make customers aware of our Service Centers before they have an accident,” spokesman Jeff Sibel wrote in an email last week. “The emails are part of our overall marketing efforts describing the benefits of our Service Centers and are not generated or sent as a result of a claim.”

It’s rare that such a scenario would happen, according to Progressive. Few customers report claims at Service Centers.

“Service Centers are not part of the typical claim reporting process,” Sibel wrote. “The vast majority of customers call to report a claim.  After that initial call, options about the customers’ claim are discussed.”

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This redacted copy of a Progressive email to a Virginia policyholder is one example of marketing repair networks to specific customers long before a crash happens. (Progressive email provided to Repairer Driven News)