Randy Hassell sounds exasperated before the conversation even begins. The owner of Hassell Bros. Auto Body in Jamaica, Queens, has made these calls hundreds of times; he knows what is coming. A representative from GEICO, one of the largest automobile insurance companies in the nation, answers. She is sweet, her delivery is smooth and soothing. Randy explains that he is calling to report a claim for a customer who has taken his car to his shop for an estimate and repair. The calls all go according to what seems like a pre-set plan.
The representatives ask for information. They ask about the damage. They want a claim number. They ask to speak to the insured party and ask if they had been in an accident. The answer is obviously, “Yes.” They ask if everyone is safe. The sound of a keyboard clicking in the background is barely audible as the person’s account is updated. At some point, triage is performed and certain key aspects of the accident are covered. Now it’s time to get down to business.
The GEICO representative explains repair options. It is a well-rehearsed pitch, not a hard sell at all. There is a fine line the rep is walking. She is trying to convince GEICO’s client to take his car from the body shop he has chosen and bring it to one of the company’s approved Auto Express Facilities or Direct Repair Shops, (DRP), as they are known in the industry. It sure sounds like a good deal coming from the GEICO rep. The first thing is to explain how much easier life would be if the insured would take the car to an Auto Express facility: The car is looked at immediately, and if a rental is necessary, one is available through an on-site auto rental company. All the work is guaranteed by GEICO if it is done at an Auto Express body shop. Choosing otherwise can be a pain in the ass, at least according to the representative.
“It could take up to five business days to get out to look at your vehicle,” says one rep in a series of phone call recordings obtained exclusively by the Long Island Press.
“It can be a lengthy process,” says another.
In Hassell’s case, he gets back on the phone after the car owner speaks with the GEICO rep, and calls them out on their tactics. He asks one representative why he is steering his client to another shop, a practice that is illegal. It is the single biggest challenge facing auto body shops across Long Island and the U.S., according to shop owners, industry experts and organizations like the Long Island Auto Body Repairmen’s Association, Inc. (LIABRA) and New York State Auto Collision Technicians Association (NYSACT) Executive Director Ed Kizenberger.
While insurance companies vehemently deny that “steering” is practiced throughout the industry, the evidence gathered by a Press investigation suggests otherwise: from clandestine, meticulously orchestrated strategies to blatant disregard for legal language meant to protect consumers, some of the largest and most popular auto insurance companies in the nation are involved.
And instead of getting better, it is getting worse. Guys like Greg Smith, owner of Greg and Bill’s Auto Body in Medford have seen the situation evolve into a well-run game that is meant to save insurance companies cash, and cost shops that do not align themselves with them. He says that the companies infringe on the basic rights of their customers when the insurance agents try to force patrons into making a decision.
“It’s [the customer’s] prerogative. It’s a free country,” says Smith, who then rattles off two recent cases in which people brought their cars to his shop and found themselves in the crosshairs of a gentler version of the ShamWow-type sales pitch the reps are schooled in delivering.
Smith is half right. It is the customer’s prerogative. But more importantly, it is also their right. Regulation 64 of the New York State Insurance Law, specifically Section 2610, states that, “An insurance company cannot require that repairs be made to a motor vehicle in a particular place or repair shop. You have a right to have your vehicle repaired in the shop of your choice.”
Although the language is clear, customers continually face a barrage of tactics that will keep them in the convoluted web of the insurance companies. If a customer does choose an approved shop, the control is in the hands of the insurance company. Every aspect of the repair can be monitored, scrutinized and more importantly, expedited.
If a shop does decide to side with the insurance companies, they can expect to be pretty busy. But they won’t make a lot of friends with their fellow collision experts, who see them as treacherous and making a deal with the proverbial devil when they become an accepted auto body shop for an insurance company. It is a difficult business and personal decision that some shop owners, like Medford-based 112 Auto Body owner Joe Amodei, have to make.
“There has been some turmoil over the years,” says Amodei. “A lot [of other body shops] hate me. I get along with some of them, but they have a problem with it.
“It’s not like I am the only one who does it,” says Amodei. “I have to make a tough decision, and I have to take the good with the bad.”
Even though it seems like Amodei has it all figured out, Kizenberger is quick to point out that LIABRA—about 400 members strong—also counts shops that have arrangements with insurance companies as members. Kizenberger says they too are not immune to the tough tactics used to control costs in the industry.
Body shop owners who say these relationships are poisonous to the customers explain that the carriers pay such low labor rates and parts costs that it is impossible to properly fix a vehicle. Amodei gets $47 per hour from Progressive Insurance, for example. Most shops, independent of insurer carrier arrangements, can charge as much as $60 an hour. The insurance-connected shop then has to work faster to make the same amount of money. And when you work fast, mistakes are made.
Amodei admits that his shop is really busy because of his relationships with the insurance companies. He can average 35 cars per week.
Amodei, an active member of LIABRA and NYSACT, is unapologetic about his decision to be certified by many insurance companies. But he does not work with all of them at one time. He was a GEICO shop, but he said they squeezed the customer too hard, trying to save money and push cars out too fast. The result is he routinely loses business once a GEICO customer talks to the company and reports an accident.
“They put it in the consumer’s head that they won’t fix their car if they don’t go to their shop,” says Amodei. That is, until a third party like an experienced auto body shop gets involved.
John Cacciatore, owner of V&J Auto in Lindenhurst, is in the middle, all the time. Cacciatore routinely acts as a referee between the insured and his or her company. “It’s a fight every day,” says Cacciatore.
In a notarized letter obtained by the Press, the story of one V&J customer is told in detail. The writer describes difficult and stressful dealings with his insurance provider, Progressive, and how the company’s representative did everything possible to control the situation. Cacciatore got involved in a three-way conversation with all parties, and the Progressive rep’s song changed fast. In other words, customers are not always aware of their rights. It takes someone with experience—and a vested business interest, of course—to put water on that fire.
As Greg Cocarro of North State Custom, a shop in Bedford Hills, NY, found out, that fire burns pretty hot.
If LIABRA vs. the insurance industry is David vs. Goliath, then Greg Cocarro is the slingshot that cast the stone that took the massive Philistine to the ground.
“Yep, I have become the poster boy for the industry,” says Cocarro. In the past several years, he has spent upward of $500,000 fighting Progressive Insurance. First, defending against a lawsuit brought by the insurance company against North State Custom, and then suing Progressive, claiming they sullied his reputation and name, among other things. They claimed he had fraudulently billed the company for a customer’s repair. That was eventually thrown out of court, and Cocarro has since won several other key court decisions, including one last month that forced Progressive Insurance to produce mountains of documents related to his case that they said could not be released.
Cocarro’s lawyer, Anthony J. Mamo Jr., laughs, “They used the word ‘impossible’ a lot when they were requested to furnish the documents. Less than a month after the decision, there they are.”
Cocarro says his office is filled with the 68 boxes received from Progressive. He is still fighting, however, though it’s almost a little unclear as to why. When Mamo explained to him that the best a legal battle could probably ever do is possibly clear his name, Cocarro wanted to go for it, despite the enormous cost. He is going after the company for tortious interference of business and claiming they are actively steering clients from their shops of choice. He says that consumers and shops have been screwed for billions of dollars.
“There is no way I am going to give in,” says Cocarro.
Progressive’s lips were sealed about the potentially industry-changing suit.
“Regarding the lawsuit, we do not comment on pending litigation, so I’m sorry that I can’t help you with that one,” says Cristy Cote, a spokesperson for Progressive Insurance in an e-mailed statement to the Press.
Kizenberger says Cocarro’s case is rather unusual, and he has become something of a tale of bravery among body shop owners who would love to go to war with a big insurance carrier, but don’t have the wallets to do so.
“He is one of the first [shop] owners who stood up for what he believed in,” says Kizenberger. “Most would fold under that financial mismatch.”
WHAT THEY DO TO WIN
In phone call recordings obtained by the Press, the GEICO representatives are cordial, rehearsed and seemingly sneaky. In one call, after the body shop owner rebuffs the notion that the customer must bring his damaged car to a DRP, the GEICO rep agrees. However, as soon as the rep is on the phone with the insured, her information changes. It is underhanded and blatant.
But they go even further to get cars in their own shops.
When an insurance company and a body shop cannot come to an “AP,” or Agreed Price, on the repair, it serves as the out for the company. For example, they are not going to pay for the $8,000 estimate from a chosen body shop. They will only pay $6,000 at a DRP. So, if you want the car fixed and don’t want any headaches, the insurance company will get you to go to one of their shops.
This is such an attractive situation for the insurance company that it is celebrated internally. In a document obtained by the Press, it is apparent that a representative securing a “non-AP” is a good thing for the company. And a bad thing for the client. In fact, on the very top of the document sent to the rep, it says “Congratulations, you got a non-AP!!” Instructions follow on how to spit out a letter confirming this to the insured. A phone number on the document obtained by the Press goes to the cell phone of a Progressive employee. Then a letter goes to the insured, rubbing it in that the company will not agree to terms with the client’s chosen body shop.
Another company document secured by the Press clearly shows a concerted effort to keep a vehicle within an insurance company network of shops. In one section of an employee evaluation form, the employee’s “Network Acquisition Results” are tallied up. This is an accounting of how many vehicles the rep was able to get into a shop that is a strand of the company’s web.
To establish industry-wide guidelines, New York’s State’s Regulation 64 covers every base, including providing insurance companies a template of a non-AP letter to their clients if resolution cannot be reached between a body shop and the carrier when it comes to repair price. It is literally a copy-and-paste situation, should the carrier need to send such a letter. The Press has discovered an example of the second-largest auto insurance carrier in the nation, Allstate, completely omitting the language explaining that consumers have their choice of shop from the template letter, in a letter to its insured—clearly a violation of law.
Missing from the letter, in mid-sentence, is the all-important statement that: “…but under the Insurance Law we may not recommend a repair unless you expressly request such information. Unless you have already asked us to recommend a repair shop, you must sign the attached Section 2610 of the Insurance Law Disclosure Statement in order to enable us to make such a recommendation.”
Sources tell the Press that some insurance companies even reward employees who divert business toward their network shops with prizes, like iPods or gift certificates, and other incentives.
Allstate did not respond to the Press’ requests for comment. But GEICO sent an e-mail: “GEICO believes that efficient and customer friendly service enhances the claims experience. GEICO understands that delivering excellent customer service requires meticulous compliance with the statutes, regulations and rules promulgated by a state. All our associates recognize the benefits of our direct repair shops for our customers, but that being said, all customers are absolutely, positively free to have their vehicle repaired at the shop of their choice. In the event any associate is found to be giving customers information that is contrary to this position, disciplinary action, up to and including termination of employment is taken. The right of an individual to select the repair shop of their choice is paramount,”
Progressive’s spokeswoman Cote also responded by e-mail: “Following up on our conversation, Progressive does not have a direct repair program as it’s typically thought of in the industry. Our customers always have a choice about where to get their cars fixed. They can choose their own shop, or if they’d like, they can use a shop in our network. For more on our network repair program, click on this link and scroll down to the headline
‘You’re in the driver’s seat.”
From the looks of it, that is up for real debate.
“You have to know your rights as a consumer,” says Kizenberger. “When you do, then you are in control.”
That’s a better way to drive.
YOUR RIGHTS AS A CONSUMER
The best thing to be is prepared. If you have an accident and have to bring your car to a body shop, here are the three most important aspects of New York’s Insurance Laws, Regulation 64. Before you speak to your insurance company, heed these regulations.
Section 2610 of the insurance law says an insurance company cannot require that repairs be made to a motor vehicle in a particular place or repair shop. You have a right to have your vehicle repaired in the shop of your choice.
You do not have to get your vehicle repaired to receive your payment for damage from your insurance company.
If body parts were used in the repair, the invoice must indicate if each such part is a new original equipment manufacturer part, a new after market equipment manufacturer part or a used part. This is required by part 82.5 of the commissioner’s regulations. This also applies to inflatable restraints (air bags).
1. Section 2610 of the insurance law says an insurance company cannot require that repairs be made to a motor vehicle in a particular place or repair shop. You have a right to have your vehicle repaired in the shop of your choice.
2. You do not have to get your vehicle repaired to receive your payment for damage from your insurance company.
3. If body parts were used in the repair, the invoice must indicate if each such part is a new original equipment manufacturer part, a new after market equipment manufacturer part or a used part. This is required by part 82.5 of the commissioner’s regulations. This also applies to inflatable restraints (air bags).