Vehicle insurance claims complaints through the roof as problems mount

Despite the image projected by one leading insurer in a popular advertising campaign, the vehicle damage claim process is not working.

Repair experts are frustrated, customers are angry and insurance adjusters are often missing altogether. The Washington Office of the Insurance Commissioner reports a historic volume of complaints since 2021. In April 2023, for example, the office received 467 complaints, up from a historic average of 287, a 63% increase.

The OIC held a public meeting Monday over Zoom to hear feedback on what isn't working. According to the parade of speakers, not much is working well.

"I know supply chain supply chain issues have caused some repair delays," Washington Insurance Commissioner Mike Kreidler said. "But I'm especially concerned with the increase in consumer consumer consumer complaints about the claims experience that do not involve supply chain problem."

'Just inappropriate'

Start with the accident appraisal process. The COVID-19 pandemic accelerated the use of photo estimating to prepare damage estimates. It doesn't work very well or accurately, said Justin Lewis, president of the Washington Independent Collision Repairer’s Association.

The association surveyed car repair shops in Washington and of 1,291 photo estimates, just 2% were judged to be "accurate and will economically restore the vehicle to its prior condition," said Jeff Butler, past president of the association.

The survey revealed that just 6.6% of insurers still sent inspectors to their repair shops to look at the vehicle and discuss the repairs, he added.

"Overall, that means that 93.4% of automobile property damage claims are settled solely based on reviews of photos," Butler said.

Some of those results are way off and painful to the customers. Lewis showed a series of photos in which the extent of internal damages could not be seen, leading to costs many thousands of dollars over the original estimate.

"Photos don't tell the whole story and photo estimates for photo claims handling is just inappropriate," Lewis said.

Delays upon delays

Delays are a consistent theme in the vehicle repair claim process, speakers said. The association's survey found that just 6.9% of shops reported receiving full payment from insurers in response to one submission for reimbursement.

"We've found that 70.6% of repair facilities reporting they had to submit essentially the same information over and over again to the insurer," Butler said.

The appraisal clause is a tool for conflict resolution that too few participants in a damage claim take advantage of, speakers agreed. The clause simply allows the policyholder to select an independent appraiser to get a second opinion.

"The appraisal clause is really very important for me, because it's an appropriate alternative dispute resolution mechanism that helps to avoid litigation," explained Erica Eversman, lawyer and founder of the Automotive Education & Policy Institute. "Insurers across the country over the last few years have been systematically attempting to restrict the use of appraisal clauses to total losses only and exclude partial losses, or they have been attempting to rid themselves of the appraisal clause in its entirety."

Repairing vehicles is a much harder job in 2023, other speakers noted. Many vehicles have difficult-to-purchase computer chips and other technologies not found under the hood in the past.

"Not only is it an art to be able to repair these vehicles and do it properly, but you have to be a computer expert, and a mathematician," said Mike Harber, a former longtime body shop owner who now offers appraisal services. "I mean the people that are repairing these vehicles nowadays, they're amazing."

Unfair characterization

Several representatives from industry trade groups led off the public session, defending insurers and disputing much of the data.

Historically, complaint rates in Washington are less than 1% year after year, reported Kenton Brine, president of the Northwest Insurance Council. And that rate is from hundreds of thousands of claims, he added.

"That said, here's the problem: Insurers strive to provide their best service to claimants, often at times we are suffering the worst moments of their lives," Brine said. "The people who work in claims her insurance companies are caring, dedicated individuals and ... the data bears out, nearly all of the time, the claim process works as intended."

Insurers have an overall claim satisfaction score of 871 out of 1000 from auto insurance consumers as measured by JD Power in 2022, he added.

"Insurers are keenly aware that those numbers mean nothing to an insurance claimant whose auto repair is taking longer than they expected, or who has not had a timely response," Brine said.

Christian Rataj is regional vice president for the National Association of Mutual Insurance Companies. He disputed the complaint data collected by the OIC. Many factors could account for the increased complaints, Rataj explained, starting with the increased number of claims. More claims is bound to produce more complaints, he said, and the OIC's ban on the use of credit scoring in underwriting surely led to complaints to the insurer.

Otherwise, there are several studies on happiness, or lack thereof, as consumers deal with inflation, political turmoil, the pandemic disruptions and other factors. The Mayo Clinic reported that people are simply "angry," Rataj said.

According to a March story in The Wall Street Journal, out of 1000 consumers surveyed, 74% reported experiencing an issue with a product or service. The vehicle claims experience is almost certain to leave consumers with negative feelings, Rataj said.

"Just being involved in an auto accident and needing to have one's car repaired or replaced is a major life stressor," he noted. "Even if every aspect of the claims experience and every aspect of the auto repair goes well, it is still a terrible life experience."

Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.