It was in February of this year, that I wrote a blog about an auto insurance fraud ring that involved more than 40 people in the Las Vegas area. At the center of the ring was a family collision and repair business that was profiting from making false repair claims and making hefty profits from what was reported versus what the repairs actually cost to make. At the time, I warned 
that such an ethical crime was hardly victimless. Though no one was “assaulted,” the net effect of artificially-charged insurance rates, ultimately affect everyone who owns an automobile or commercial vehicle, and they ultimately must pay higher insurance rates. Those responsible for the fraud were sentenced, the business license was pulled and fines and/or jail time was the ultimate result.
Surprised? Not really
Not long ago, a friend had massive hail damage on his automobile and the claims adjuster determined the damage was extensive, but repairable. He gave my friend a quote. The repair shop then told my friend “with a wink” that the damage was much more than was quoted, and that they were very backed up with other hail damage claims.
“I’ll tell you what,” said the repair shop manager, “let me put in a claim for $2,000 more and if the auto insurance company accepts it, I’ll give your car a priority.” As my friend was not born yesterday, he realized the shop was playing games with him. He told the manager he’d get back to him, and drove off with the hail-damaged vehicle.
Am I surprised? No, not really. Fraud of this kind goes on constantly with underhanded repair shops, customers and auto insurance companies playing a nasty game of ethical roulette. Sooner or later, the shops get caught, the papers and electronic media report it, and people are dragged into courts to pay hefty fines.
The shops capitalize on an opportunity. Does the lay person really know the difference between the repair on a crumpled panel or a door panel? No, not really. Do many customers care if their insurance companies are charged an extra $1,000 or more? Unfortunately, no not really either. It becomes a “spite game.” The game follows a scenario of:
“Well, you don’t care how much you raise my premiums, so I’m going to stick it to you when I have a chance to do so!”
What customers don’t realize, it that it comes full circle to harm them. There are no winners here and despite some slick maneuvering, sooner or later the shops will get caught. Auto Insurance companies are hardly stupid; they see patterns and they act on them.
Consequences to every action
The choice to defraud a company, in this case, auto insurance companies, does result in long-term consequences. As ethical training is obviously impossible for all of the customers, it should be up to the insurance companies to have ethical expectations of repair facilities. I would propose this training be a mandatory function of licensing, renewable on an annual basis.
More than that, ethical training should have some type of identifier. When a customer enters a shop, there should ideally be some kind of certification stating that the shop has annually passed – and maintains a good status in the ethical training of its personnel.
Is this overkill? Not really. As I explored earlier, most customers walking through the doors have no idea what they are going to be charged through their insurance – or why. There is always a certain amount of apprehension not just with the quality of the work, but the honesty of the provider. While I would hope that most every repair facility adheres to an ethical standard, we know from experience that some don’t.
For the customer to understand that ethical training and certification has been established, is at least astrong start to customer assurance. My ultimate hope is this strategy will at least stabilize and possibly lower auto collision costs and the effect on insurance rates. There is no harm in trying!
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