Canadian Underwriter

Mississippi insurers investigated for shady deals with mechanics

October 2, 2015   by Alan Prochoroff

Print this page

The cliché is that you drive into a repair shop, and you suspect the mechanic has ripped you off. It’s a whole ‘nother kind of despicable if you’re sent to a repair shop that’s going to deliberately rip you off. Mississippi is checking it out, investigating whether personal auto carriers have told claimants they must use selected repair shops. State attorney general Jim Hood says certain insurers have misrepresented the value of repairs done by preferred shops, often by warranting repairs made by certain mechanics, which results in “direct and significant harm to consumers.”

In reality, says Hood, there is no insurer warranty—the only warranty is the one offered by the shop doing the actual repairs.

In a March letter to the Justice Department, Hood reported that one insurer required its shops to use a proprietary online system to order repair parts. “Body shops have reported to my office that they are pressured into accepting bids from [that system] for after-market or remanufactured parts that are unsafe and far below the quality of the original equipment manufacturer.”

Hood also indicated his office is concerned about allegations that insurers, in an effort to keep costs down, have told repair shops to make inadequate or incomplete repairs if they wanted to keep the insurer’s business.

“Such practices would hurt unsuspecting consumers who believe full and appropriate repairs have been made.”

The letters outlining the state’s concerns and inviting insurers to meet went to Alfa, Allstate, Direct General, CT Corporation System of Mississippi, Mississippi Farm Bureau, Nationwide, Progressive, Safeco, Shelter, Travelers and USAA.

The insurers have responded to Hood’s letter but the attorney general’s office will only make their replies public once the inquiry is complete.

“These are civil investigative records that are protected,” says a spokeswoman. “We don’t think the insurance companies will be as open if their responses are made public during our investigation.”

This story was originally published by Canadian Insurance Top Broker.