Collision repair shop owners and automotive insurance company lawyers clashed at a recent public meeting, a year after Vermont lawmakers asked regulators to examine pricing policies.
State officials hope to hear from consumers about the price of automotive insurance. But the regulatory scrutiny highlighted an ever-expanding chasm between local shops and automotive insurance brands.
In June 2023, Vermont lawmakers asked the state’s Department of Financial Regulations (DFR) to analyze the auto insurance prices for Vermont drivers. The law sought to ensure that insurance brands' pricing policies were “fair and reasonable.”
“The department is required to assess a number of specific issues, and to solicit and receive feedback from stakeholders,” Emily Brown, Vermont’s deputy commissioner for insurance, told Autobody News. “Auto body shops are a key group of stakeholders, and we want to hear their perspectives.”
The department met publicly Sept. 10 to hear from consumers. The meeting was held in the Montpelier City Center and livestreamed for digital participants on Teams.
Instead, the only participants who spoke were two collision repair shop owners and representatives from the automotive insurance brands.
“We’re seeing increases in the average total cost of auto repair,” James Feehan, a lawyer representing the American Property and Casualty Insurance Association, said at the meeting. “Take, for example, in calendar year 2018, the average total cost of repair was just over $3,000. Compare that to calendar year 2023 at just over $4,500.”
Vermont’s vehicle repair bills are part of a national trend of exploding insurance costs. Automotive insurance pricing has skyrocketed across the nation, according to the latest national Consumer Price Index. Price spikes across the industry are rising faster than in any other category in the American economy. Overall inflation rose by 2.5% year over year, but motor vehicle insurance rose 16.5% across the U.S. since 2023.
According to Feehan, increasingly digitized cars, record vehicle crashes and overall inflation in the new and used vehicle markets have cost insurance companies dearly. Insurance companies struggled to maintain profits with the pricing headwinds in 2023, per SP Global.
Locally, Vermont’s car insurance rates are lower than those of most other states, according to Money Geek. The site lists the state’s average annual premium at $317, compared to the national average of $615.
However, local shop owners claimed insurance companies were raking in record profits while providing weaker services to drivers, their contracted clients.
“If you’re not careful, all you’ll do is cause more chaos,” Mike Parker, the owner of Rutland-based Parker’s Classic Auto Works, warned the DFR during the public comment, advocating that regulators don’t side with the profit motives of the insurance agencies. “I’ve now stood in the shoes of 2,000 Vermont consumers and taken insurance companies to court.”
Parker pointed out body shops are subjected to pricing shocks without stringent guardrails. Insurance companies are liable for the price of the vehicle’s repair, which collision shops can’t negotiate. He claimed the pricing responsibility motivated insurance providers to use fewer safety-focused parts.
“In our business, we have to contend with individuals who have never worked on a vehicle,” David Ayer, the owner of Ayer Auto Sales in Barre, added in comments during the meeting. “The way that they see and understand how a vehicle should be repaired is inadequate.”
The disagreement highlights the DFR’s delicate task of simultaneously balancing three interests: those of the consumers, the automotive insurance brands and the local collision shop owners.
Regulators said they are still seeking more guidance from auto body shops and drivers.
“We developed a survey that will be released soon and is designed to solicit certain information from auto body shops in Vermont,” Brown told Autobody News. “We are also open to receiving additional comment or documentation beyond the survey.”
The September meeting’s main point person, Vermont’s Director of Insurance Regulation Mary Block, said the regulators would file for an extension as it unveils the survey.
“The report was initially due in November of this year,” Block said during the public meeting. “Given the volume and complexity of information involved, the department intends to seek an extension, probably until February of 2025.”
Vermont residents who hope to add more information to the state-wide study are asked to submit questions or comments to mary.block@vermont.gov.
