CIC asked to look into insurance subrogation recovery and how it is increasing out-of-pocket costs

In recent months, nothing significant has changed in the way that Pacific Collision Center repairs vehicles, the shop’s repair manager, Andrew Batenhorst, told a crowd at the Collision Industry Conference (CIC) meeting in Palm Springs late last month. 

The work mix of certified luxury and EV vehicles remains the same. The shop’s repair planning and damage assessment style hasn’t changed. 

“I have not seen a large, sudden increase in my operational costs that resulted in me needing to rapidly adjust my charges,” Batenhorst said at an open mic. “And lastly, vehicle technology has not dramatically changed during this time either.” 

But one thing has changed.

Claims handling. 

“For most of 2025, I had a stable amount of out-of-pocket expenses I was seeing from my customers,” Batenhorst said. “From October of last year through today, I’ve seen roughly a 40% to 50% increase in out-of-pocket expenses for parts, labor, and materials that were not approved by an adjuster.”

During the previous CIC meeting in November, similar comments were made about a large insurer reducing labor rates. The comments reflected similar stories published in Fender Bender and CRASH Network’s subscription newsletter. 

Batenhorst said a recent article from MarketWatch resonated with him. 

“More uninsured drivers, more unfixed damage: Soaring car-insurance prices have pushed Americans into risky trade-offs,” focuses on how the economy is changing as auto insurance premiums rise. 

Aaron Schulenburg, executive director of the Society of Collision Repair Specialists (SCRS), told MarketWatch there are now more incidents in which drivers pay their deductibles plus an out-of-pocket portion that the insurer didn’t cover. He’s also heard of more customers paying the entire amount themselves to avoid filing it with their insurance, for fear of increased premiums.

J.D. Power’s 2025 U.S. Auto Claims Satisfaction Study, released in October, shows that 26% of auto insurance customers now have deductibles of $1,000 or more, and 7% of auto insurance customers say they’ve avoided filing a claim for fear their rates could rise.

“Auto insurance is supposed to be a financial firewall when things go wrong on the road,” the report states. “By bearing more risk, consumers’ trust may be getting tested — at a time when they really want to understand the value they’re getting for their money. The rise of ‘customer pay’ and out-of-pocket payments above a deductible can shake drivers’ confidence, said Schulenburg… They may be caught between repair experts saying one thing and the insurer saying another. That casts doubt about what’s the right thing to do throughout the entire repair process.”

Batenhorst said that the MarketWatch article resonated with him because it is happening in his shop. 

“I’ve noticed an alarming trend amongst the five to seven largest insurers mimicking each other in terms of claim handling, specifically, what they are refusing to pay,” he said. 

Local claims adjusters have told Batenhorst that their leadership tells them they need to pay less. He said claims managers have said this is because they are losing “millions” in subrogation due to other carriers not paying the same amount. 

“I am not here to complain,” Batenhorst said. “I’m just a keen observer of behavior and trends. We are all bound to follow anti-trust regulations in business, just like we do here at CIC. But from what I can see from the shop floor, in my daily observations of claims handling behavior, something isn’t right here.” 

Batenhorst asked CIC if one of its committees could discuss and address subrogation impact on claims handling. 

“As of 2023, more than 15% of drivers had no insurance, according to the latest data from the Insurance Research Council, an organization supported by property and casualty insurance companies and associations,” the report states. “The share of drivers without insurance climbed from 2019 to 2023, the Insurance Research Council data showed.

“During that same period, the average annual cost for comprehensive car insurance went from $1,207 to $1,438, according to the National Association of Insurance Commissioners.”

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