A New Auto Insurance Industry Trend Arises

Yara Zakharia, Esq.

A number of car insurance companies are transforming their centers into one-stop auto insurance service stations offering body work and handling every aspect of their clients' vehicle-damage claims. By providing the body shop, obtaining an estimate and arranging for a car rental, insurance companies like Geico, Progressive, and several others are sparing customers the hassle and complications arising from an auto accident, such as repair and claim resolution.

Auto insurance companies are seeking the competitive edge by setting up such one-stop centers. Consumer advocates are hailing this new service for the convenience it offers customers. However, they point out the presence of a potential risk for a conflict of interest. “The downside is that you’re turning over your car to somebody who has a vested interest in maybe chiseling you out of a couple of bucks,” stated J. Robert Hunter, the Consumer Federation of America's insurance director. For a little financial peace of mind, Hunter recommended that the insured seek out a second, independent opinion for purposes of assessing the repairs and damage.

Insurance companies maintain that, while they do bargain with body shops for the lowest possible costs, both the insured and the insurers stand to gain from the new one-stop centers. This is because the faster the insurers return the repaired vehicles back to the policyholders, the lower the companies' car rental cost.

Additionally, insurers hold that it would run counter to their business interest to short-change clients since this would thwart and compromise their objective of maintaining a loyal customer base with the prospective of coverage renewal and of drawing new customers. Brian Passell, chief of claims for Progressive Insurance, the third-largest insurance company in the U.S., stated “We want a fair price to repair cars at the highest standard, and we want to keep our customers".

Raking in approximately $160 billion in yearly revenue, the automobile insurance industry has become considerably lucrative due to increasing prices and falling costs attributed to a lessened frequency and severity of accidents.

For a long time, strained relations existed between body shops and insurance companies, the latter referring more than 90 percent of their clients to the former. Partly because of the friction with the repair shops, insurance companies resolved to establish service centers in a number of cities. The public's receptiveness and positive reaction to this concept has encouraged insurance companies to expand and to launch an advertising campaign to promote this all-inclusive service.

One customer summed-up her experience at Progressive's service center in Tamarac (South Florida) as follows: “The convenience of having everything right there and not having to go running around town,” she said, “was really good.”

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