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Ford says consumers are often pressured by insurance companies to use cheaper aftermarket parts for insured repairs. The company said it will push for some sort of review and standardization of aftermarket parts, as well as for consumer warnings when the cheaper, non-standard pieces have been used to repair their vehicles.

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Class action suit takes aim at insurance dirty tricks!

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 If you’re told “Your car will never be the same” don’t believe it! It’s entirely possible for your car to be restored to its original condition. BUT it requires a properly trained collision repairman … and the proper auto parts.

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INSUERES MAINTAIN RECORD PROFITS IN 2007 BY OVERPRICING POLICIES AND UNDERPAYING CLAIMS

 Anti-Consumer Practices Also Lead to Bloated Surplus and Reserve Levels State and national consumer organizations joined the Consumer Federation of America (CFA) today to release a new study concluding that the property/ casual Insurance industry continued in 2007 to systematically overcharge consumers and reduce the value of home and automobile insurance policies, leading to profits, reserves and surplus that are at or near record levels. The study estimates that insurer overcharges over the last four years amount to an average of $870 per household.

              The report provide extensive data demonstrating that property/casual insurance companies are paying out lower claims in relationship to the premiums they charge consumers than at any time in decades. The pure loss ratio, the actual amount of each premium dollar insures payback to policyholders in benefits, was the only 54.6 cents in 2007. Over the past 20 years, the amount paid back as benefits has dramatically declined from over 70 cents per premium dollar, indicating a huge loss in the value of insurance to consumers.

“Consumers ultimately pay the price for the unjustified profits, padded reserves, and excessive capitalization that exist right now in the insurance industry, “said J. Robert Hunter, the Directory of Insurance for the Consumer Federation of America (CFA) and author of the study. Hunter is n actually, former state insurance commissioner, and former federal insurance administrator.

“The insurance industry reaped record profits in 2004 and 2005, despite significant hurricane activity,  said  Hunter.  “Profits in 2006 rose to unprecedented heights and 2007 may set a fourth consecutive profit record, “he said. ‘Unfortunately, a major reason why insurers have reported record- high profits and low losses in recent years is that they have been methodically overcharging consumers, cutting back on coverage, underpaying claims, and getting taxpayers to pick up some of the tab for risks the insurers should cover, “said Hunter.

In the last several years, insurers sharply increased premiums for homeowners and commercial insurance and reduced or eliminated coverage for tens of thousands of Americans in coastal areas. Insurers have succeeded in convincing Congress to continue taxpayer subsidies for terrorism losses and are seeking additional subsidies for catastrophe insurance.

Using a number of common measures of financial health, the study finds that balance sheets for proper/casualty insurers are in better condition overall than at any time in history.

Record High Profits/ Losses

            The study estimates the after-tax returns for 2007 are about $65 billion, just under the record level set in 2006. If insurers release even a small part of their swollen reserves as profits, final profits for 2007 will exceed those of 2006. Profits for the record years of 2004, 2005, 2006, and 2007 are estimated to be $253. 1 billion. The loss and loss adjustment expense (LAE) ratio for 2007 is estimated to be 66.7 percent, the second lowest in the 28 years studied. Five of the seven lowest loss and LAE ratios in the last 28 years have occurred since 2003.

Sources:  A.M. Best Aggregates and Averages (2007 data estimated by CFA based on reported industry results for first nine months and Insurance Information Institutes estimates)

Claim Payouts Continue to Drop

Consumers have experienced a startling drop in the amount of premium paid in benefits by the insurers, from 72 percent in the late 1080’s to only 60 percent today when plotted on a straight line trend over the period.

            This drop in the efficiency of the insurance product for consumers is startling and calls for action by the regulators to control industry excesses.

Insurance is a low- Risk Investment

Representatives of the insurance industry often claim that high premiums and profits are necessary to compensate of the excessive risks they must bear. In fact, insurance is a low-risk investment. Using standard measures of stock market performance that assess financial safety and stock price stability, the property/ casual insurance industry represents a below-average risk compared to all stocks in the market, safer than investing in a diversified mutual fund.

In 2007, the study estimates that stock insurers will earn a return on equity (ROE) of more than 19 percent, well in excess of what is required by investors. The lower industry- wide ROE that insurers report underestimates the industry’s actual ROE.

Surplus is Unprecedented: Insurers are overcapitalized

            The study estimates that retained earnings, or surplus, for the entire industry was $687 billion at the end of 2007. An adequate surplus guarantees a safe insurance industry, but this amount is excessive by any legitimate measure. To assess the financial solidity of an insurance company, regulators examine the ratio of net premium written to surplus, which at the lowest level ever, 0.66 to 1 (66 cents of premium written for every dollar of surplus), is less than half of the extremely safe 1.5 to 1 ratio that is recommended by many observers and far less than the famous ‘Kenny” rule of 2 to 1 as an efficient surplus level. The largest loss ever suffered by the insurance industry, Hurricane Katrina, represented an after-tax loss of $26.7 billion, or 4 percent of current surplus when adjusted to 2007 dollars. The $12.2 billion in after-fax losses experienced by insurers after the September 11^th terrorist attacks amounts to2 percent of surplus. Many Insurers are engaged in massive stock buy-back programs and the purchased of other corporations with this excess capital. Insurance chief executive officers now have the highest average cash compensation of any industry in 0merica. Even the Insurance Information Institute(III) admits that the Industry is overcapitalized: “ there is excess capital in the industry today- estimated by some analyst to be as much as $100 billion…” the excess capital approaches $175 to $200 billion if reserve redundancies ( see below ) are eliminated.

Loss and Loss adjustment Expense Reserve are padded with Hidden Profits

When Industry profits are high, as they have been in record amounts since 2003, insurers tend to pad their reserves. This practice contributes to financial solidity. However insurers also pad their reserves because it removes income from their profit statements, thus lowering their tax burden because reserves are not taxed and income is. This practice also allows insurers to point to inflated “losses”, “which rise due to reserve redundancies, as justification for not lowering rates.

            The Insurance Services Office (ISO) estimates that loss and loss adjustment expense reserves at year-end 2006 were 9 percent redundant, a figure that represents over $50 billion in excessive reserves. Adjusting for the time value of money, ISO saw an additional $13 billion in padded reserves at year-end 2006. CFA estimates that the redundancy in reserves increased in 2007 and could be up to more than $80 billion by year-end 2007.

Insurers Have Lowered Risk and Maximized Profits through Legitimate and Illegitimate Means

In recent years, insurers have reduced their financial risk by making wise use of reinsurance and other risk-spreading techniques, such as securitization. However the study cites several tactics that insurers have also used to shift costs risk onto consumers and taxpayers. Some of the questionable methods that insurers have used to shift include:

• Sharp Limits on coverage and availability. Insurers have imposed large hurricane deductibles, capped home replacement and rebuilding costs, added new exclusion such as mold, and placed unjustifiable restrictions on claims. For example, “anti-concurrent-causation” clauses, now in wide use, attempt to strip all coverage for hurricane damage if a non-covered event like a flood occurs, even if the flood hits hour after a home is destroyed by the wind. Some insurers have cancelled policies, refused to renew policies, or refused to write new coverage in coastal areas and entire states from Texas to Maine.
• Harsh Homeowner’s rate increases. Insurers have imposed sharp rate increases on many homeowners’ throughout the nation. A major reason for these recent increases is that insurers are relying on short-term predictions of potential weather disasters, reneging on promises to use more scientific long-term computer predictions.
• Programs designed to systematically underpay claims. Many insurers are now using new computer-directed programs like “Colossus” and ‘Claims Outcome Advisor” that allow insurers to determine the amount of overall claims savings they want to achieve before claims are assessed for legitimacy.
• Taxpayer subsidies.  Insurers and real estate interests were the major proponents of the Terrorism Risk Insurance Act, which Congress recently continued under industry pressure. The study estimates that insurance companies do not have to pay premiums for the reinsurance provided by the federal government. Some insurers have urged Congress to create a similar program to cover natural disasters. Insurers have also received significant taxpayer support at the state level, through the creation of state directed “insurers-of-last-resort.”The existence of these companies allows insurers to “cherry pick,” by insuring lower risk households themselves and sending higher risk households to the state company. Only Florida has taken steps to end this practice.

“Insurers have been so successful in shifting their risk onto consumers and taxpayers that they have produced record profits during a period of increased storm destruction,” said Hunter. ‘this risk shift is reflected by the fact that insurers are paying less and less of the premium dollars they receive in benefits to consumers.”

Recommendation for State Policymakers

1. Require insurers to offer an all-risk homeowners insurance policy. This would help once again ensure that homes are protected from catastrophic events. It would also help consumers understand exactly what their policy covers, and encourage insurers to do more to prevent losses before they occur.
2. Better oversee the use of socio-economic factors used to set rates, like credit scoring. Insurers have been able to maintain excessive pricing through the use of such information as consumers’ credit scores, prior insurance limits, occupation, and educational attainment.  This information is opaque to consumers and has not been examined by most regulators to ensure that it results in the setting of fair rates. State regulators should require that pricing practices: promote risk reduction; are logically related to risk ( so consumers know what steps to take to reduce rates); protect low income and minority consumers; and are open and transparent to the public.
3. Increase scrutiny of computer-based claims settlement procedures. The use of computer procedures has shielded insurers from scrutiny of questionable claims practices, while state insurance regulators have largely looked the other way. In 2008, regulators should pierce the mystery of how claims are settled and stop practices that deny the full payment of legitimate claims.
4. Make state-backed reinsurance available. States should join together to offer reinsurance to private insure using the recent Florida Legislation as a model. If all catastrophe-prone states joined together to underwrite reinsurance of actuarially sound rates (or even at a mark-up of 50 percent over actuarially sound rates), they would likely to end or significantly diminish the periodic crises follow big hurricanes or earthquakes.
5. Consider offering state-backed property and automobile insurance.  Policymakers in coastal regions should consider whether the increasing rates, decreasing coverage, and turmoil created by large numbers of periodic non-renewals have reached the point where private insurers should not be offering certain coverage at all. In 2007, Florida allowed its primary insurer, Citizens, Insurance Company, to offer comprehensive homeowners policies at competitive rates. This forced private insurers to lower some rates and allowed Citizens to spread risk more broadly.  States should consider taking this approach further by offering automobile insurance, which would assure that, overtime, the state would make a small profit or at least break even on its insurance offerings.
6. Better regulate the use of catastrophe modeling. States should follow Florida’s example in blocking catastrophe-modeling firms from using short-term projections as the basis for establishing insurance rates and require them to return to the practice of using long-term projections. Coastal states should consider uniting to develop a coastal weather modeling system of their own to test the accuracy of private projections and to evaluate the fairness of insurer rate requests.
7. End unjustified geographic discrimination.  If any insure fails to market a line of insurance that is selling in other parts of a state (or in other states), regulators should consider convening hearings to determine if the insurers license should be revoked for geographic discrimination.
8. Review homeowner’s insurance policy forms for hidden provisions. Insurance regulators should carefully review the policy forms and exclusions they have allowed to become part of homeowner’s policies, and require insurers to offer clear disclosure about exclusions and lower rates to reflect decreased risk that results from these exclusions.

Recommendations for Federal Policymakers

1. Repeat the McCarran-Ferguson Act’s antitrust exemption for insurance. The excessive pricing and unjustified claims practices documented in this report are abetted by collusive and anticompetitive behavior allowed under this law. Congress should impose the same antitrust law relative to insurance with which virtually every other business in America must comply.
2. Authorize interstate cooperation on catastrophe insurance. Congress should authorize states to use interstate compacts to create multi-state risk “pools” to cover wind and other catastrophic losses.  Such legislation should allow states to permit the accumulation of tax-free reserves if the funds collected are kept for the purpose of paying claims after wind disaster strike.
3. Repair the troubled National Flood Insurance Program (NFIP) before vesting it with any additional authority.  Congress should not pass any legislation to subsidize wind insurance or to add wind to coverage to the National Flood Insurance Program. The NFIP is in disarray.  Out of Date flood maps used by the NFIP have underestimated flood risk and resulted in unjustifiably low insurance rates. This has created hidden subsidies for unwise constructions in the nation’s flood prone areas, helping to create a $20 billion shortfall in NFIP funding. The use of private insurers to run the program has resulted in between one-third and two-thirds of flood premiums flowing to insurers, not to the payments of claims. There is also evidence that insurers have shifted the cost of wind claims they should have paid to taxpayers – who support the NFIP.
4. 4. Eliminate any federal policies that might undermine the development of the securitization of insurance risk. The federal should undertake a study of federal laws and rules to ensure that the responsibilities securitization of insurance risk is encouraged, not discouraged, by federal tax policy. Fostering increased securitization of catastrophe risk is a far more favorable option for consumers and taxpayers than insurer efforts to receive more taxpayer’s subsidies.

Advice for Consumers

1. If possible, do not do business with a company that has a history of anti-consumer behavior.  When purchasing or renewing a homeowner’s policy, consumers can contact their state insurance departments to get information on companies in their areas that have sharply raised rates and cut back in coverage in recent years.
2. Carefully review policies at purchase or renewal to determine whether high-out-of-pocket costs will be imposed. Consumers should look for separate deductibles for wind damage, anti-concurrent- causation clauses, mold exclusions, limit on replacement costs, and other restrictions on coverage.
3. Consumers who live away from coastal areas should actively shop for better coverage and rates.  Because insurance companies are overcapitalized, they are looking for new business in lower risk areas.  Rate decrease and better coverage are possible.
4. Demand thorough oversight of insurer actions by state regulators. If consumers have problems with rates or coverage, they should file an immediate compliant in writing with their state insurance agency and follow up for a response. Consumers should also contact insurance regulators to find out what they are doing to require that rates are fair are fair and reasonable and that insurers are not. Unjustifiable withdrawing coverage.

The report was written by the Consumers Federation of America and released with national and state consumer organizations, including Americans for Insurance Reform, Center for Economic Justice, Center for insurance research, center for Justice and Democracy Union, Empire Justice, Florida Consumer Action Network, Foundation for Taxpayers and Consumer Rights, Neighborhood Economic Development Advocacy Project, New Jersey Citizen Action, Texas Watch, and United Policy Holders. A copy of the report can be found at:   www. Consumerfed.org/pdfs/2008Insurance_White_Paper.pdf.

Consumer Federation of America (CFA is a non-profit association of 300 consumer groups, with a combined membership of more than 50 million people. CFA was founded in 1968 to advance the consumer’s interest through advocacy and education.

 V.  NATURE OF TRADE AND COMMERCE
8. An important branch of the insurance industry is automobile property insurance, which provides coverage for property losses arising out of the ownership or use of automobiles.  This coverage is provided by two types of insurance: Automobile property damage liability insurance and automobile physical damage insurance.
9. Total direct premiums earned in the United States by all insurance companies in 1960 for automobile property insurance amounted to approximately $3,327,815,566.  Of the total direct premiums earned in 1960, member companies accounted for approximately 35.5 percent, or approximately $1,183,642,376.  Total direct losses incurred in the United States in 1960 by all insurance companies under automobile 
property insurance amounted to approximately $1,787,276,826.  Of the total direct losses incurred in 1960, member companies accounted for approximately 35.2 percent, or $627,948,160.
10. Automobile property insurance is sold by insurance companies, including member companies, throughout the United States, and in the District of Columbia, by the issuance of an insurance contract, commonly called a policy, in exchange for an amount of money, commonly called premiums.  The automobile property insurance business involves a continuous and indivisible stream of intercourse among states composed of collections of premiums, payment of policy obligations, and documents and communications essential to the negotiation and execution of policy contracts and the adjustment and settlement of claims.
11. A vital phase of the automobile property insurance business is the adjustment and settlement of claims.  A great majority of the claims under automobile property insurance policies are for automobile material damage.  It is the general practice for member companies to employ a claim representative, commonly known as a claim manager, to supervise and be responsible for the adjustment and settlement of claims, including those under automobile property insurance, arising in the territory assigned to him.  An integral part of the process of adjustment and settlement of claims arising under automobile property insurance is determining the cost of repairing the damaged automobiles.  One way of accomplishing this is for the claim manager or adjuster to engage an appraiser to prepare an estimate of the repair cost.
12. An appraiser operates by examining the damaged automobile to determine the damage covered by automobile property insurance, the repairs that must be made, the time it will take to make them and thereafter securing an agreed price from a repair shop.  The agreed price is transmitted by the appraiser to the claim manager or adjuster, and is used as a basis for adjusting and settling the claim.  The process of adjustment and settlement of claims includes a continual transmission to and from and between home offices of insurance companies, claim managers, adjusters, appraisers, and claimants located in different states of the United States and the District of Columbia of claim forms, statements, reports, directives, checks and drafts, documents and communications of various kinds, all of which are essential to the adjustment and settlement of claims.
13. A major part of direct losses incurred under automobile property insurance is attributable to automobile material damage repair cost; and a major part of the automobile material damage repair business is the repair of automobile damage covered by automobile property insurance.  The automobile material damage repair business consists of the repair and replacement of automobile parts and is engaged in by repair shops located in all states of the United States and District of Columbia.  The price charged by repair shops for automobile material damage repairs consists of a labor charge, which is an hourly rate applied to the time taken to repair or replace parts, and a parts charge for any parts which are used to replace damaged parts on the automobile.  Automobile parts are manufactured by automobile manufacturers and others in plants located in various states of the United States and are sold and shipped by them to jobbers, wholesalers and dealers located in the District of Columbia and states other than the states in which they were manufactured for resale to repair shops for sale and use in the repair of damaged automobiles.
 BACKGROUND OF THE CONSPIRACY
14. The ACSC has had for many years a committee known as the Advisory Committee of the Claims Bureau, sometimes referred to as the Claims Bureau Advisory Committee, which is composed of approximately 18 claims executives of member companies.  The NAMCC has had for many years a committee known as the Claims Executive Committee which is composed of approximately 8 claims executives of member companies.  It was and is the function of these committees to consider on behalf of their respective associations policies and programs relating to claims administration.  An additional function of the Advisory Committee of the Claims Bureau of the ACSC is to supervise the operations of and formulate policies for the Claims Bureau, a department of the ACSC.  The Claims Bureau, which has a large administrative staff, maintains its headquarters at 110 William Street, New York, New York, and also has several regional offices located throughout the United States.  The function of the Claims Bureau is to aid in claims administration.
15. Beginning in or about 1940, the Advisory Committee of the Claims Bureau of the ACSC and the Claims Executive Committee of the NAMCC began to hold joint meetings.  These meetings were soon formalized into regular joint sessions and the group became known as the Joint Claims Committee and later the Combined Claims Committee (hereinafter referred to as “CCC”).  These two committees were designated by their respective defendant associations to represent the interest of member companies on the CCC.  The purpose and function of the CCC was and is to provide a common forum to consider policies and programs relating to claims administration.  In 1962, by resolution of the governing boards of the defendants, the Claims Executive Committee of the NAMCC was designated to represent AMIA on the CCC.
16. On March 12, 1942 the CCC passed a resolution which provided for the organization of Casualty Insurance Claim Managers’ Councils (hereinafter referred to as “Councils”) in various areas of the United States to act as sub-committees of and under the direction and control of the CCC, then known as the Joint Claims Committee.  These Councils are each chartered by the CCC.  Each Council’s membership is composed of those member companies which have a full time, salaried claim representative in the area under the Council’s jurisdiction.  The primary purpose and function of the Councils are to permit field claim managers of member companies to consider local problems of claims administration, including those arising under automobile property insurance.  At the present time there are approximately 80 Councils located throughout the United States, including the District of Columbia.
17. In the Fall of 1946, the Pittsburgh, Pennsylvania Council met to consider what collective action might be taken by its members to depress and control automobile material damage repair costs in the Pittsburgh area.  In March 1947, the Pittsburgh Council adopted a program subsequently known as the Independent Appraisal Plan (hereinafter referred to as the “Plan”), intended to depress and control automobile material damage repair cost.
The CCC in December 1948 and again in July 1949 formally adopted the Plan and since that time has sponsored it and actively promoted its expansion and use.  Since its inception the Plan, under the supervision and direction of the CCC, and administered by the Claims Bureau of the ACSC and the Councils, has become a nationwide operation.  By the end of 1961, it was in effect in 177 localities throughout the United States, including the District of Columbia.  The CCC requires uniformity in the operation of the Plan throughout the United States.
18. Under the Plan, a Council in collaboration with the CCC, selects and sponsors an individual or partnership to act as appraiser to make determinations of automobile material damage costs for use in the adjustment and settlement of claims.  Prior to the selection of a sponsored appraiser, Council members are instructed to submit to the Council the volume of business they anticipate giving the appraiser in the area for which he is to be sponsored.  The sponsored appraiser is required to employ sufficient personnel to handle any volume of appraisal business in his territory.  Most such appraisers have several employees.  The sponsored appraiser is required to confine his operations to the territory for which he is sponsored by the council or CCC.  The fees which the sponsoring appraiser charges are subject to the approval of the sponsoring Council or CCC.  The sponsored appraiser is required to conform his operations to the principles of the Plan and to assure his compliance, his operations are supervised and controlled by the sponsoring Council and the Claims Bureau on behalf of the CCC.  The Plan calls for exclusive use of the sponsored appraisers by member companies and the sponsored appraiser is urged to solicit business from others in order to increase the effectiveness of the Plan.
19. Included among the means used under the Plan to control and depress automobile material damage repair costs are the following: (1) to repair rather than replace damaged parts; (2) to replaced damaged parts by used rather than new parts; (3) to obtain discounts on new replacement parts; (4) to establish strict labor time allowances by the sponsored appraisers; and (5) to obtain the lowest possible hourly labor rate.
20. The Plan calls for the sponsored appraiser to arrange for a number of repair shops to agree to make automobile material damage repairs based upon his estimate without the repair shop first examining the damaged automobile.  In those situations in which the damaged automobile is not already in the possession of a repair shop, the sponsored appraiser will recommend any of these repair shops to the adjuster or claim manager.  In those instances where a particular repair shop in which the damaged automobile is located will not agree to make repairs based upon the sponsored appraiser’s estimate, the Plan provides that the sponsored appraiser shall inform the adjuster or claim manager of the names of those repair shops which will accept his estimate and that the adjuster or claim manager will then, when possible, have the damaged automobile repaired by one of the repair shops which have agreed to accept the sponsored appraiser’s estimate. It is seldom that a claim is settled at a higher figure than the sponsored appraiser’s estimate.
21. The nationwide application of the Plan involves a continuous intercourse among the states composed of memoranda, correspondence, directives and other communications to and from and between the CCC, defendants, Claims Bureau, member companies, Councils and sponsored appraisers. 
VI OFFENSES CHARGED
22. Beginning in or about 1947, and continuing up to and including the date of the filing of this complaint, the defendants and co-conspirators have engaged in a combination and conspiracy in unreasonable restraint of the aforesaid trade and commerce in the adjustment and settlement of automobile property insurance claims, the automobile material damage appraisal business and the automobile damage repair business, in violation of Sections 1 and 3 of the Sherman Act.  Defendants are continuing and will continue said offenses unless the relief herein prayed for is granted.
23. The aforesaid combination and conspiracy has consisted of a continuing agreement and concert of action among the defendants and co-conspirators to eliminate competition among member companies in the adjustment and settlement of automobile property insurance claims, among appraisers and among repair shops, in order to control and depress automobile material damage repair costs through boycott, coercion and intimidation of repair shops.
24. Pursuant to and in effectuation of the aforesaid combination and conspiracy the defendants and co-conspirators did those things which, as hereinbefore alleged, they agreed to do and, among others, did the following things: (a) Refused to recognize or sponsor more than one appraiser in a territory designated by a Council or the CCC; (b) Coerced sponsored appraisers to operate only in the territories in which they are sponsored; (c Induced member companies to channel their automobile material damage appraisal business to the sponsored appraiser and boycott other business to the sponsored appraiser and boycott other automobile material damage appraisal businesses; (d) Encouraged the use of sponsored appraisers by others to increase the effectiveness of the Plan; (e) Required sponsored appraisers to conform their operations to the Plan and withdrew or threatened to withdraw the sponsorship of appraisers who failed to do so; (f) Required fees charged by sponsored appraisers to be approved by Councils or the CCC; (g) Induced member companies to refuse to settle a claim for an amount greater than a sponsored appraiser’s estimate of the automobile material damage repair costs; and (h) Induced member companies to channel automobile material damage repair business to those repair shops which will, and boycott those repair shops which will not: (1) Accept the sponsored appraiser’s estimate as to the cost of repairs; (2) Give a price discount on replacement parts; (3) Maintain hourly labor rates at a figure which is considered the lowest possible rate in the area; and (4) Accede to the sponsored appraiser’s determination of time allowances.
 VII EFFECTS
25. The aforesaid offenses have had, among others, the following effects: (a) Elimination of competition in the adjustment and settlement of automobile property insurance claims, in the automobile material damage appraisal business and in the automobile material damage repair business; (b) Non-sponsored appraisers engaged in or desiring to engage in the automobile material damage appraisal business have been foreclosed from a substantial segment of the business; (c Repair shops which refuse to accept the sponsored appraisers’ estimate have been foreclosed from a substantial segment of the automobile material damage repair business; and (d) Prices charged by repair shops have been subjected to collective control and supervision by defendants and co-conspirators. PRAYER WHEREFORE, the plaintiff prays: 1.  That the aforesaid combination and conspiracy be adjudged and decreed to be in violation of Sections 1 and 3 of the Sherman Act.  2. That each of the defendants, their officers, directors, agents, and employees, and all committees or persons acting or claiming to act on behalf of the defendants or any of them, be perpetually enjoined from continuing to carry out, directly or indirectly, the aforesaid combination and conspiracy to restrain interstate trade and commerce in the adjustment and settlement of automobile property insurance claims, the automobile material damage appraisal business and the automobile material damage repair business; and that they be perpetually enjoined from engaging in or participating in practices, contracts, agreements, or understandings, or claiming any rights thereunder, having the purpose or effect of continuing, reviving, or renewing the aforesaid offense or any offenses similar thereto. 3. That each of the defendants be enjoined from, either individually or in concert with others: (1) sponsoring or preferentially dealing with any appraiser; (2) boycotting any appraiser; (3) exercising any control over or influence upon the activities of any appraiser; (4) channeling or attempting to channel automobile material damage repair business to any repair shop or type of repair shop; (5) boycotting any repair shop or type of repair shop; or (6) coercing any repair shop to conform to its prices for repair work or parts to the estimates of any appraiser or otherwise influencing the prices for repair work or parts. 4. That each of the defendants be ordered to amend its by-laws to require each of its member companies to refrain from acting in concert with any other companies in: (1) sponsoring or preferentially dealing with any appraiser; (2) boycotting any appraiser; (3) exercising any control over or influence upon the activities of any appraiser; (4) channeling or attempting to channel automobile material damage repair business to any repair shop or type of repair shop; (5) boycotting any repair shop or type of repair shop; (6) coercing any repair shop to conform its prices for repair work or parts to the estimates of any appraiser or otherwise influencing the prices for repair work on parts; and to make compliance with such requirements a condition of membership. 5. That pursuant to Section 5 of the Sherman Act on order be made and entered herein requiring defendants AMIA and NAMCC to be brought before the Court in this proceeding and directing the Marshal of the Northern District of Illinois to serve summons upon AMIA and NAMCC.  6. That the plaintiff have such other and further relief as the nature of the case may require and the Court may deem just and proper.  7. That the Plaintiff recover the costs of this suit.  Dated: New York, New York October 22nd 1963 signed by: Robert F. Kennedy Attorney General William H. Orrick, Jr. Assistant Attorney General Baddia J. Rashid Attorney, Department of Justice John H. Waters Attorney, Department of Justice William H. Rowan Attorney, Department of Justice       —————- —————- —————-

 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
 CIVIL ACTION No. 63 Civ. 3106 ENTERED: November 27,1963 UNITED STATES OF AMERICA, Plaintiff v. ASSOCIATION OF CASUALTY AND SURETY COMPANIES, AMERICAN MUTUAL INSURANCE ALLIANCE and the NATIONAL ASSOCIATION OF MUTUAL CASUALTY COMPANIES, Defendants
 FINAL JUDGMENT
Plaintiff, United States of America, having filed its complaint herein on October 23, 1963, and the plaintiff and the defendants, by their respective attorneys, having consented to the entry of this Final Judgment without admission by any party with respect to any issue herein; NOW, THEREFORE, before the taking of any testimony herein, without trial or adjudication of any issue, and upon such consent, as aforesaid, it is hereby ORDERED, ADJUDGED AND DECREED as follows:
I.  This Court has jurisdiction of the subject matter hereof and the parties hereto and the complaint states a claim upon which relief can be granted under Sections 1 and 3 of the Act of Congress of July 2, 1890, commonly known as the Sherman Act, as amended.
II.  The provisions of this Final Judgment shall be binding upon each defendant and upon its officers, directors, agents, servants, employees, committees, successors and assigns, and upon all other persons in active concert or participation with any defendant who shall have received actual notice of this Final Judgment by personal service or otherwise.
 III.  (A) Each defendant is ordered and directed within ninety (90) days from the entry of this Final Judgment to terminate, cancel and abandon the Independent Appraisal Plan, sometimes known as the Automotive Damage Appraisal Plan, which the defendants have established and are now administering, and each defendant is enjoined from reviving, renewing or again placing into effect that plan.
 (B) Defendants are ordered and directed within ninety (90) days from the entry of this Final Judgment to send written notice, in the form attached hereto as an exhibit, stating that all defendants have terminated, cancelled and abandoned the Independent Appraisal Plan (1) to each appraiser sponsored under the Plan, (2) to each member company, and (3) to each Local Casualty Insurance Claims Managers’ Council.
 IV.  (A) Each defendant is enjoined from placing into effect any plan, program or practice which has the purpose or effect of: (1) sponsoring, endorsing or otherwise recommending any appraiser of damage to automobile vehicles: (2) directing, advising or otherwise suggesting that any person or firm do business or refuse to do business with (a) any appraiser of damage to automobile vehicles with respect to the appraisal of such damage, or (b) any independent or dealer franchised automotive repair shop with respect to the repair of damage to automobile vehicles; (3) exercising any control over the activities of any appraiser of damage to automotive vehicles; (4) allocating or dividing customers, territories, markets or business among any appraisers of damage to automotive vehicles; or (5) fixing, establishing, maintaining or otherwise controlling the prices to be paid for the appraisal of damage to automotive vehicles, or to be charged by independent or dealer franchised automotive repair shops for the repair of damage to automotive vehicles or for replacement parts or labor in connection therewith, whether by coercion, boycott or intimidation or by the use of flat rate or parts manuals or otherwise.
 (B) Nothing in Subsection (A) above shall be deemed to prohibit the furnishing to any person or firm of any information indicating corrupt, fraudulent or unlawful practices on the part of any appraiser of damage to automotive vehicles or any independent or dealer franchised automotive repair shop, so long as the furnishing of such information is not part of a plan, program or practice enjoined in paragraphs (1) through (5) of Subsection (A) above.  Each defendant shall include in any report of such information an affirmative statement that such report is not a recommendation and that the person or firm to whom such report is furnished should independently determine whether to do business with any appraiser or automotive repair shop to which the report relates.
 V.  Defendants are ordered and directed within ninety (90) days from the entry of this Final Judgment to cause the character of each Local Casualty Insurance Claims Managers’ Council to be amended so as to incorporate therein a declaration of policy that the Council shall not engage in any activity prohibited by Section IV of this Final Judgment.
 VI.  Nothing in Section IV of this Final Judgment shall be deemed to determine or constitute a waiver of any rights or immunities that defendants may have under the Act of Congress of March 9, 1945, commonly known as the McCarran-Ferguson Act.
 VII.  (A) For the purpose of determining and securing compliance with this Final Judgment and subject to any legally recognized privilege, duly authorized representatives of the Department of Justice shall, upon written request of the Attorney General, or the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to any defendant made to its principal office, be permitted (1) access during the office hours of such defendant to all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of such defendant relating to any of the matters contained in this Final Judgment during which time council for such defendant may be present; and (2) subject to the reasonable convenience of such defendant and without restraint or interference from it to interview officers or employees of such defendant, who may have council present, regarding any such matters. (B) Any defendant, on written request of the Attorney General or the Assistant Attorney General in charge of the Antitrust Division, shall submit within a reasonable time such reports in writing, under oath if requested, with respect to any matters contained in this Final Judgment as may be reasonably necessary for the purpose of the enforcement of this Final Judgment.  (C) No information obtained by the means provided in this Section VII shall be divulged by any representative of the Department of Justice to any person other than a duly authorized representative of the Executive Branch, except in the course of legal proceedings to which the United States of America is a party for the purpose of securing compliance with this Final Judgment or as otherwise required by law.
 VIII Jurisdiction is retained for the purpose of enabling any of the parties to this Final Judgment to apply to this Court at any time for such further orders and directions as may be necessary or appropriate for the construction or carrying out of this Final Judgment or for the modification or termination of any of the provisions thereof, and for the enforcement of compliance therewith and punishment of violations thereof.  Dated: November 27, 1963 /s/ Edward C. McLean United States District Judge —————- —————-
 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
 CIVIL ACTION No. 63 Civ. 3106
Filed October 23,1963 UNITED STATES OF AMERICA, Plaintiff v. ASSOCIATION OF CASUALTY AND SURETY COMPANIES, AMERICAN MUTUAL INSURANCE
ALLIANCE and the NATIONAL ASSOCIATION OF MUTUAL CASUALTY COMPANIES, Defendants.  STIPULATION.  It is stipulated by and between the undersigned parties, by their respective attorneys, that: (1) The parties consent that a Final Judgment in the form hereto attached may be filed and entered by the Court at any time after the expiration of thirty (30) days following the date of filing of this Stipulation without further notice to any party or other proceedings, either upon the motion of any party or upon the Court’s own motion, provided that plaintiff has not withdrawn its consent as provided herein; (2) The plaintiff may withdraw its consent hereto at any time within said period of thirty (30) days by serving notice thereof upon the other parties hereto and filing said notice with the Court; (3) In the event plaintiff withdraws its consent hereto, this Stipulation shall be of no effect whatever in this or any other proceeding and the making of this Stipulation shall not in any manner prejudice any consenting party in any subsequent proceedings. Dated: October 23, 1963.  For the Plaintiff: WILLIAM H. ORRICK, JR. Assistant Attorney General JOHN H. WATERS WILLIAM D. KILGORE, JR. WILLIAM H. ROWAN BADDIA J. RASHID CHARLES F. B. McALEER Attorneys, Department of Justice For the Defendant Association of Casualty and Surety Companies: ROBERT MacCRATE For the Defendants American Mutual Insurance Alliance and the National Association of Mutual Casualty Companies: HUGH B. COX       —————- —————-

The customer’s apprehension and irritation grew worse as the overly friendly insurance company employee who was telling her – “we’re gonna give you this” and “we’re gonna take care of that” with all the slick and polish of the typical snake oil saleman and then – the icing on the cake – this insurance company employee had our customer sit and “relax” in a massage chair (and yes, her turned the chair on) while he went to his little space to input his “estimate” into his computer.  She said that she felt like the massage chair kind of grabbed and pawed her as it vibrated, squeezed her neck and rolled her back. 

She said she left the “drive in claims center” feeling disgusting and wanted to just go home and shower.  Interesting isn’t it?  What’s next at the insurance company’s “drive in claims center” – pedicures?

J. Phillip Mosley     
Valley Paint and Body Inc.