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Ed Attanasio

Ed Attanasio is an automotive journalist based in San Francisco. Ed enjoys sports of all kinds and is a part time stand-up comedian.

 

He can be reached at era39@aol.com.

Tuesday, 05 July 2022 09:37

CAA Says a New Kind of Insurer Steering is Impacting the Industry

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The California Autobody Association (CAA) recently held a one-hour Zoom meeting with the California Department of Insurance (CA-DOI), covering a handful of topics of interest to the entire membership.

One particular subject that has been a pebble in CAA’s shoe for several years was brought up again during the meeting. You might be thinking that pebble was illegal steering, but you’d only be half right.

 

When we talk about steering in this industry, it’s usually about insurers trying to persuade consumers to take their vehicles to DRP shops, because those shops offer the insurer more attractive labor rates, and in many cases, a promise to use the lowest priced parts available.

Instead, this is about “parts steering." Parts steering is where insurance companies search a multitude of different online vendors scattered across the country to find each part at the lowest price, and then cap payment on their estimate based on that price. Sound reasonable?

 

Monte Etherton, chairman of the CAA State Legislation Committee and state board member of CAA's San Diego chapter, has been monitoring this situation for years and doesn’t think it’s reasonable at all.

 

“Here’s an analogy,” he said. “Your 8-year-old car needs some work, so you take it to the dealer and they give you an estimate for $3,500. You tell them you’ll get back to them. Their estimate lists five parts that total $2,000 of the $3,500. Since you want to save some money, you start scouring the internet for those parts.

 

"You find the cheapest parts from five different online stores, and all offer free shipping. Buying those parts instead of the parts from the dealer will save you almost $500. You make a neat list of all the store’s phone numbers and the prices and take it back to the dealer and ask them to buy the parts they need from those places so you can save some money. What do you think they would do?”

 

Etherton cites “parts steering” as a major problem in the industry.

 

“Some insurance companies will only pay us based on the price of the cheapest parts, so they are literally forcing us to buy certain parts from their vendors or lose money," he said.

 

“I did one job on a Volkswagen where the insurance company’s estimate had an aftermarket headlight from an out-of-town vendor, because it was cheaper than my local aftermarket supplier," Etherton said. "I emailed them that they can't require me to buy a part from a specific supplier, and they replied with this fallacy: ‘We can’t tell you where to purchase your parts, but we don’t owe more because you select a different vendor.’”

 

In 2018, CAA received a written legal opinion from the CA-DOI in response to questions regarding several industry problems, including parts steering. Two paragraphs from the opinion explain...


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