August 22, 2003 by Canadian Underwriter
In a presentation to Ontario’s Auto Insurance Review Committee on possible ways to reduce claims costs, the Collision Industry Action Group (CIAG) is pushing for new rules to prevent “tow truck chasing”.
The CIAG says chasing when a tow truck rushes to the scene of a collision to try and convince victims to use a specific bodyshop from which the tow truck driver gets a kickback should be considered “an unfair and deceptive act”.
One collision industry representative noted that the practice means shops are unable to use standard marketing practices as they are compelled to feed into the aggressive tactics of two trucks drivers who take advantage of accident victims.
The CIAG went on to show the committee some of the reasons repair costs are on the rise. “It is not labor costs,” says John Norris, executive director of CIAG. “Costs are up because new cars need higher-priced OEM (original equipment manufacturer) parts, models and types of new cars are changing quickly with only a few thousand sold of each, making replacement aftermarket part makers with not enough coverage to supply.” New devices in cars are costing more and more to replace, such as navigation systems and entertainment equipment.
Norris also says that the average repair cost is rising because more often now consumers are paying for the low-cost claims rather than filing claims and see their premiums go up or their insurance cancelled.