In an Aug. 21 advisory memorandum, Montana Insurance Commissioner Troy Downing said his office has been informed of possible steering to specific auto repair shops by at least one insurance company.

The advisory was issued as a reminder to insurance companies that, by law, they cannot steer consumers toward specific shops. It was also meant to remind consumers that, under state law, they have the right to take their damaged vehicles to any collision repair facility of their choice.

Downing advises that insurers, including their producers and adjusters, “may not engage in any act or practice that intimidates, coerces, or threatens a claimant or that provides an incentive or inducement for a claimant to use a particular auto repair shop or location.”

According to the memorandum, at least one insurer with an established DRP may have discouraged a claimant from using a non-DRP shop by “misrepresenting information about the shop, claiming that the shop was difficult to work with, and made the claims process difficult.” Downing didn’t name the insurance company he referenced.

“These types of statements are intimidating and can easily discourage a consumer from selecting an auto repair shop of the consumer’s choosing,” Downing wrote. “An insurer may not make false claims or provide misleading information about body repair shops to steer consumers, directly or indirectly, toward the insurer’s preferred auto repair shops.”

Following a review of recent auto repair complaints, the Commissioner of Securities and Insurance (CSI) Office found that some insurance companies are paying for pre- and post-sublet scans at direct repair program shops but not at non-DRP shops “under the same or similar coverage circumstances,” according to the memorandum.

Some insurance companies are also paying more for the scans if they’re completed at DRP shops.

“In both instances above, these practices constitute illegal incentives or inducements to use DRP auto repair shops (also known as steering) and violate §33-18-224(1)(a)(ii),” Downing wrote. “It would also be illegal if an insurer used similar tactics regarding other services, such as calibration.

“An insurer may not require a customer to use a specific auto repair shop, directly or indirectly, to receive coverage for a repair (a scan in this case) or a higher reimbursement rate.”

Downing advises insurers and their producers and adjusters to review their notices, practices, policies, and procedures to ensure compliance with Montana state law and the guidance given in his memorandum.

“The CSI will enforce the rights of claimants to receive the benefits to which they are contractually entitled and the protections they are afforded under the law.”

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More information

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