The Automotive-Repair Industry and the Practice of Insurance Steering: Is There a Fulfilling Escape Route Available for Auto-Repair Facilities?

Abstract

The automotive-repair industry has fallen victim to the insurance industry’s ability to manipulate a market in which fairness is obsolete. Operating an automotive-repair facility largely depends on engaging in agreements with insurance companies. Repair facilities highly depend on insurance companies for customers, which in turn allows insurance companies more control in the relationship between the two businesses. Through the practices of steering, creating a prevailing rate, and creating direct-repair programs, insurance companies have caused significant injury to the automotive-repair industry. Many repair facilities suffer a loss of business, fail to maintain a profit, and suffer a competitive disadvantage due to these insurance practices. The author contends that a number of Louisiana and federal laws have the potential to remedy the injuries repair facilities endure, yet the issue remains whether these laws are meant to protect the automotive-repair industry from such insurance practices. Because Louisiana courts have yet to establish jurisprudence on this issue, the author examined jurisprudence from other state and federal courts. These cases indicate insurance companies are abusing these practices and causing an unfair restraint on competition in the automotive-repair market. Throughout this article, the author explains how insurance companies discretely steer insureds to the companies’ preferred repair facilities, which, in effect, causes significant injury to repair facilities having customers steered away from them. By detailing every Louisiana law that can potentially provide protection and redress to the automotive-repair industry, this author urges the State of Louisiana to take steps towards ensuring the laws provide justice to injured repair facilities. The anti-steering provisions in states where repair facilities have prevailed are more directly aimed toward protecting the automotive-repair industry. Thus, the author also recommends that the Louisiana legislature amend the state’s anti-steering provision to expressly, in writing, provide a right of action for automotive-repair facilities.