It's all over the industry press, and it's a hot-button issue being raised in State legislatures all over the U.S. - steering.
What is steering? The American Heritage Dictionary defines it this way: "to maneuver a person to a place or course of action". But it has taken on different nuances to apply the term to business practices in many different industries. For example, the real estate industry uses it to describe the deliberate maneuvering of a client from a minority racial group away from considering a home in a primarily white neighborhood.
In our industry, we have come to define steering as the practice of insurance companies directing their insureds to specific collision repair facilities and away from others, as well as controlling the rates charged and the repairs performed by the collision repair facilities. And several legal and political actions have resulted in recent years over this definition of steering.
Collision Week ran an article on May 29 detailing the Artie's Auto Body, Inc. v. Hartford Fire Ins. Co. lawsuit in Connecticut, and its approval by the Connecticut Supreme Court to allow this case - which alleges that The Hartford, "pressured consumers to select the insurer's network shops over independent, non-preferred shops," has been granted class-action status by the courts, and now has over 750 shops as plaintiffs in the suit against The Hartford.
So, where does "steering" cross the line from offering a consumer, who may have the need for collision repair once every five to seven years, advice on where to get those repairs performed, and pressuring the consumer to select a shop with a contractual agreement in place with the insurer?
The State of Massachusetts has answered this question through legislation. MA State Regulation 211 CMR 123.06 details how insurers in that state must provide a list of state registered repair shops that are "geographically convenient" to the vehicle owner, and that list may not be a list solely of shops in the insurer's DRP program. Other states are debating proposed legislation to curb the ability for insurers to encourage their insureds to use specific repair shops as well.
An article by the American Insurance Association, AIA, in The Advocate Newsletter, calls this trend in legislation "a wolf in sheep's clothing," that will lead to less informed consumers and the converse of what the shops want - a restriction in competition in the marketplace. They argue that insurer referral actually aids the consumer in choice. Personally, I'm not sure this is a sound argument - that consumers will be less informed and have less choice if they have every collision shop in their area to choose from.
I agree that an informed consumer is a happier consumer, but how happy is that consumer, really, when they find out that they only got part of the choices available to them? JD Power did a study, and found a direct link between consumer choice and higher consumer satisfaction with both the repair and claims process. I'd have to agree.
--Chrisa
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