California Department of Insurance (DOI) Deputy Commissioner Tony Cignarale talked about the top insurance complaints his department handles and how repair shops can file complaints during a special session at an open board meeting of the Society of Collision Repair Specialists (SCRS) Tuesday.
The session was held ahead of the Collision Industry Conference (CIC) meeting in Palm Springs, California.
Cignarale, deputy commissioner of the Consumer Services and Market Conduct Branch, said his department received 200,000 phone calls and 50,000 written complaints from consumers in 2024. He said about 42% of the complaints are specific to auto insurance.
“We consider body shop consumers or any small business that has issues,” Cignarale added.
Cignarale oversees the DOI’s consumer call center and assists in market conduct functions. He’s also co-chair of the DOI’s Fair Claims Settlement Practices Task Force, which monitors claims settlement practices and effects regulation changes when necessary.
He told the audience he’s an attorney who grew up in New York with his father’s body shop built on a lot next to his house. He also has a team with previous experience in the auto industry that specially handles auto repair complaints.
About 90% of all the complaints are from consumers directly with 10% from auto repair facilities, he said.
“We do get some tension with regard to some of the outcomes because we’re not a judge or a jury,” Cignarale said. “We don’t say, ‘OK, there’s three hours for this operation. You want five and they said two. We’re going to split it in the middle and say three.’ We don’t have the authority to do that.”
Cignarale said the more documentation that a shop provides in the complaint process, the easier it is for the DOI to help. This includes outlining what procedure the insurer is denying to pay and providing documentation that shows a procedure is required in OEM guidelines. Shops should also provide estimates for the procedure through tools such as CCC/MOTOR or Mitchell.
An issue can arise when the procedure is recommended and not required by the OEM, Cignarale said.
“We do have some issues with regard to recommended guidance,” Cignarale said. “We really can’t say, ‘No, it’s recommended, therefore, it must be done. It must be paid for.’ But it’s not required. It’s a suggestion. And so it’s difficult for us to resolve those kinds of issues.”
There’s a specific form on the DOI’s website for shops to file a complaint, Cignarale said. Later in the meeting members of the audience, including SCRS Chairwoman Amber Alley, expressed they’ve had success with customers filing complaints but shop complaints don’t receive the same amount of attention from the department.
Cignarale suggested anyone having difficulty call the department’s hotline at 1-800-927-4357 to ask any questions that might help with filing a complaint.
The session was the second the SCRS Board has held since last year during which insurance commissioners were invited to speak. The last was in April and included Virginia Commissioner of Insurance Scott White and North Carolina Commissioner of Insurance Mike Causey.
The top 5 auto insurance complaints mentioned by Cignarale were:
- Estimating standard operation times
- Labor rates
- Towing and storage
- Paint estimates
Other issues Cignarale discussed:
- Bill deductions
- Sublet repairs
- Insurance penalties
- Auto policy differences
- Insurance rate increases
- California Bureau of Automotive Repair (BAR)
- How to work with other insurance departments
Estimating Standard Operation Times
A California regulation requires insurance companies to follow estimates given by estimating tools such as CCC/MOTOR or Mitchell, Cignarale said.
“If those programs say eight hours or whatever it might be, then an insurance company can’t come back and say four because they can’t deviate from what’s in the software programs of the estimating companies,” Cignarale said.
Insurance companies could still dispute particular facts of the repair by providing photos or other evidence, he said.
“That maybe creates a factual dispute that we might not be able to resolve,” Cignarale said.
However, about 90% of the time insurance companies have to cover the times provided by estimating tools, he said.
The DOI has difficulty with mediating disputes that involve “subjective” practices, such as the hours input in Procedural Pages (P-pages).
“Then it becomes a negotiation between the insurance company and you as to what’s going to happen here, it’s tough for us to get involved in those kinds of subjective issues,” Cignarale said.
There’s no law in California that DOI can use to regulate the way insurance companies pay labor rates, Cignarale said.
The DOI created a standardized labor rate survey with detailed regulations that insurance can use, he said.
Insurance companies used the survey for about three to four years, he said. However, without a law in place requiring the companies to use it, many switched to a survey they created.
“Those standardized surveys seem to work very well when they’re used,” Cignarale said. “Unfortunately, not every company uses it.”
The standardized survey attempts to calculate for variances in labor rates, he said. He said the size of a shop, location, and type of vehicles serviced at a shop are examples of factors that could change labor rates.
While the DOI doesn’t have control over setting the rates, the department can provide some oversight over insurance practices.
Cignarale said one insurance company was calculating its labor rates by including their Direct Repair Program (DRP) rates.
“We were able to get rid of that,” Cignarale said. “Other issues that we might see is where they either went too far to narrow their geographic area or it looks like a gerrymandered geographic area.”
Towing and Storage
Towing and storage is an issue nationwide, Cignarale said.
California recently had a specific issue regarding towing based on the wording of a recent law, He said. The law said insurers should pay the geographic towing rate or the California Highway Patrol (CHP) towing rate.
The intent of the law was for insurers to pay whichever rate applied to the specific tow, however, insurance companies challenged that it allowed them to pay either rate for any incidence, he said.
The California Bureau of Automotive Repair recently issued guidance to interpret the statute, Cignarale said.
The guidance says that the geographical market rate is what insurance companies should follow, he said. The CHP rate only applies when tows are made for CHP or police departments.
Another towing and storage issue revolves around insurance companies putting limits on what they would pay for one or both services, Cignarale said.
“We were able to put a regulation and said any reasonable charges must be paid,” Cignarale said. “We forced companies to remove those caps from those policies.”
One audience member said they’ve recently seen insurers pay for the towing bill at the start and then take it out of the policyholder’s settlement at the end.
Cignarale said that’s an issue his department would look into if a complaint was filed. He said towing is not something insurance companies are allowed to deduct. However, he added there could be nuanced details in any deduction that would make it difficult for the department to be involved.
Steering, when an insurance provider directs policyholders to or away from specific shops, is the most difficult issue for the DOI to tackle, Cignarale said.
“It’s very subtle,” Cignarale said. “There is usually not a lot of paper trail for us to look at and say, ‘Hey, this vehicle was steered.'”
The state passed anti-steering laws in recent years to attempt to tackle the issue, he said. The laws did reduce complaints to the DOI.
“But again, I’m sure it didn’t solve the problems,” Cignarale said. “I’m sure it is still an issue.”
Cignarale said this has become more of an issue in recent years with inflation and the cost of the finished products.
A California regulation and statute limits the ability for insurance companies to deviate from shop estimates, he said.
“If I’m using an hourly rate for paint in my estimate, the insurance company cannot come back and say, ‘Well, we used a paint calculator and it’s less,'” Cignarale said. “It has to be apples to apples.”
California law requires insurers are required to complete inspections within six business days, Cignarale said.
“That has been really helpful because before that we were receiving complaints that, ‘It’s been four weeks, no one showed up, and the car’s sitting here,'” Cignarale said. “That has reduced those complaints dramatically.”
Bill Deductions Overall
If an insurer refuses to pay the estimate from a shop, it has three options, Cignarale said:
- Pay the higher amount
- Refer the policyholder to a DRP shop that will do it for that amount but only at the request of the consumer
- Reasonably adjust the estimate of the shop
To adjust the estimate, the insurance company has to identify what portion of the estimate they won’t pay and provide evidence on why it doesn’t need to be paid, he said.
An audience member told Cignarale insurers are often making adjustments to their bills with the statement that the price “is not customary for the market area.”
Cignarale said that is not enough of a reason to adjust the bill.
“What does that mean? Does that mean they have an agreement with their DRP shops? That wouldn’t be sufficient for us to accept,” Cignarale said.
Cignarale said it is difficult for his department to enforce markups on sublet repairs.
“It is difficult when there’s that kind of gray area about markups,” Cignarale said. “Can you make profit on a markup? This is a real difficult issue.”
If an insurer violates law, for example, not getting a vehicle inspected within six days, the department’s first step is to cite the insurance company with a violation letter, Cignarale said.
The DOI will look at how often the company has violated the law in the past year. If the company violates the law often, the DOI will do a deeper search to collect evidence.
Depending on the evidence collected, the DOI then could take enforcement actions, he said.
Penalty per violation is up to $5,000 and up to $10,000 if there’s proof the company willfully violated the law.
An administrative court would hear the case, he said. The company could appeal from there to a traditional court.
Insurance Rate Increases
An audience member noted that insurance companies are increasing their out-of-pocket and short payments but also increasing consumer rates.
Cignarale said he doesn’t review insurance rates in his area but it is handled by his department.
“So insurance companies know it’s going to take time to get a rate increase through because they have to justify it with all kinds of real data,” Cignarale said.
During the time it takes to get the rate increase, you’ll see the company reducing claim costs, staff, and direct costs to shops, he said.
“That’s where you get more disputes that might occur with insurance companies and shops,” Cignarale said. “Once those rate increases go through, you might see a little bit of a breather on that.”
Yet, if an insurance company sees that a certain practice is working, they could keep doing it, even after the rate increase, he said.
Auto Policy Differences
California auto insurers have fewer restrictions than homeowner insurers when it comes to what is required to be in a policy, Cignarale said.
“There’s no limits on what an insurance company will agree to cover or not covered in an auto insurance policy,” Cignarale said. “And not only that, our department doesn’t have the authority to approve those policies, even though they’re submitted to us.”
Policies are submitted to the department for ratings versus approval, he said.
“If we see something glaring or it’s a clear violation of stated law, or whatever it might be, we’re able to get that change,” Cignarale said.
The department can’t require policy clauses such as an appraisal clause. Legislation that requires appraisal clauses in policies is something several states have attempted within the past year.
California Bureau of Automotive Repair (BAR)
BAR is a state agency that regulates the repair industry, while DOI investigates insurance complaints.
“Sometimes those goals don’t always agree with each other,” Cignarale said.
The departments do try to meet and address issues from time to time, he said.
“It’s a totally different agency from ours,” Cignarale said. “There’s been some good communication over the years and some not-so-good communication over the years. There’s no fault to anyone, just turnover or whatever it might be.”
The recent towing and storage guidance from BAR is an example of the two departments working together, he said.
How to work with other insurance departments
Cignarale noted that most states don’t have the same size staff he does to handle insurance complaints. He said many don’t have a dedicated staff to specifically handle auto insurance complaints.
However, any association wanting to have a conversation with their DOI should reach out and ask for a possible meeting, similar to the Zoom meeting held by the California Autobody Association last year.
He suggested that the associations might have to do all the legwork to make a similar meeting happen in states that have smaller departments.
Featured image: California Department of Insurance (DOI) Deputy Commissioner Tony Cignarale speaks at Society of Collision Repair Specialist open meeting Jan. 16 (Jordan Hendler/SCRS).