Progressive's Claims Service Centers: Caviar Or Canned Soup?
By E. L. Eversman, Esq.
On April 8, 2003, Progressive Insurance announced that it was initiating a comprehensive claims and repair service, in which the insurer will handle the entire claim and vehicle repair process. In its press announcement, Progressive states that it is the "First Auto Insurer To [sic] Handle Entire Claims/Repair Process From Soup to Nuts, Provide One-Stop Convenience and Peace of Mind". The company opened its first full-service center in Columbus, Ohio, with nineteen more centers to open across the United States this year.
This program is designed to streamline the entire process from the moment a vehicle is damaged, to its completed repair, and return to the customer. According to Progressive, the service follows these steps:
- The customer calls 1-800-PROGRESSIVE to report the claim, any time of the day or night, and brings the vehicle to the new center. The centers will be conveniently located for most of the Company's area customers.
- At the claims center, the customer drops off the car, picks up a rental vehicle and leaves.
- A Progressive claims representative prepares a repair estimate and selects a repair shop that has met strict quality requirements.
- The vehicle is transported to the shop and the repairs start. The customer is kept informed about the status of the repair throughout the process.
- When the work is finished, the vehicle is transported back to the Progressive claims center.
- A Progressive claims representative and a shop representative inspect the quality of the repairs and the customer is notified.
- The customer and claims representative inspect the vehicle together and the customer drives off knowing the repairs are guaranteed by the shop and Progressive for as long as the customer owns the vehicle.
Progressive News Release, (quoted as of April 23, 2003).
The concept is terrific, and for anyone who has been faced with the claim and repair process, and knows first-hand what a nightmare the experience can be, the service sounds like a dream come true. So, what is the downside, if any?
Conflicting Requirements
There are a wide variety of laws and regulations governing both the insurance and the repair industry. In the U.S., insurance is currently regulated at the state level, as the McCarran-Ferguson Act, 15 U.S.C. § 1011, et seq., prohibits the federal government from exercising jurisdiction over areas states have chosen to regulate as "insurance".¹ Each state has an insurance department, through which the business of insurance is controlled. National Association of Insurance Commissioners, Links to State Insurance Department Web Sites. On the other hand, entirely different state and federal laws govern repairers. In Ohio, where Progressive launched its first comprehensive facility under the program, repairers must answer to the Ohio Collision Repair Board.
Strict Quality Requirements?
One of the features the program boasts is that the repair facilities Progressive uses have "met strict quality requirements." Progressive, however, does not define those quality requirements, and the company has not set standards for determining how repairers are measured against those requirements for inclusion in the program. According to Leslie Kolleda, Progressive's spokesperson for the claims service center initiative, those quality requirements vary from state to state, but the only specific criterion she offered was "quality of workmanship". Otherwise, there is no indication that Progressive insists its repairers have any type of technical training, certification, experience, or education. Ms. Kolleda said that the repairers Progressive intends to use in this new program are the same ones in the company's current direct repair program (DRP) network.² And therein lies a problem.
In 2002, Jack Lundberg, the Executive Director of Ohio's Board of Motor Vehicle Collision Repair Registration, notified Progressive's CEO, Glenn Renwick, that some of the repairers in the insurer's DRP network were unregistered, in violation of Ohio law, and that Progressive's continued use of these facilities could render the company in violation as well. Progressive's spokesperson, however, was unaware that a state enforcement agency had put Progressive on notice about those prior violations. This lack of oversight is alarming in an insurance company publicly declaring that its network auto repairers have met "strict quality requirements".
Responsibility Equals What Exactly?
Additionally, Progressive advertises that it is taking "responsibility for the entire vehicle repair claims process"; that it has "'knowledge and access to resources that many of our customers don't have"; and when it declares, "we'll take care of everything", isn't the company encouraging customers and claimants to rely on Progressive -- and even implying the company will protect their interests? Sure it is. But do consumers understand that the company's interests and their own may be very different? Perhaps not. The operative question, however, is whether Progressive realizes that encouraging consumers to rely on its superior knowledge and access to resources may alter the company's relationship with claimants and expose it to liability if it promotes Progressive's interests over those of claimants.
Consumers would be best served if they remember that while this program is designed to streamline the claim/repair process, it is not designed to protect their legal, financial, or even personal interests beyond making the process swifter and more convenient. While Progressive correctly says in its announcement that we don't expect to cook our own food at restaurants or read our own X-rays, we at least anticipate that the doctor is licensed and the restaurant isn't violating any health codes. If the automobile claim and repair process is to be compared to these activities, I would certainly prefer caviar to canned soup.
E. L. Eversman
¹ The McCarran-Ferguson Act, however, does not excuse insurers from complying with federal labor and wage laws, nor from federal antitrust provisions.
² Auto insurers have developed their own repair networks to which they "steer" insureds and claimants, often in exchange for price concessions.
The information provided in this column is for information purposes only and should not be construed as legal advice. You should always consult an attorney licensed to practice in your Country, State, and/or Territory as laws vary from Country to Country, State to State, and Territory to Territory. The author is delighted to share information but cannot be responsible for damage or adversity encountered by reliance upon that information and urges you to consult with local counsel.
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