State Farm claims practices cited as ongoing issue by collision industry

State Farm claims handling practices, including a shift to a centralized claim review process, reduction of labor rates, and other claims practices, were recently a topic of contention with regulators and attendees during April’s industry events week in North Carolina.

Michael Bradshaw, vice president of K&M Collision in Hickory, North Carolina, brought forward examples of claims review challenges that he and others in the industry experience, in which insurance carriers are “tactfully taking the relational aspect out of claims.”

Bradshaw spoke on the subject at the Society of Collision Repair Specialists (SCRS) Board of Directors open meeting on April 21 in a question-and-answer session with North Carolina Insurance Commissioner Mike Causey, and again during an open mic session at the Collision Industry Conference (CIC)’s April 22 meeting. Both meetings were held in Charlotte.

North Carolina Insurance Commissioner Mike Causey

At the CIC open mic, Bradshaw shared his experience with those carrier practice changes at his shop and noted the publication of a P&C Specialist article. He also mentioned he discussed the same carrier conduct and its effect on shops like his several months ago during a CIC open mic.

“We’ve seen a dramatic reduction in labor rates across the country,” he said. “This has been confirmed by article after article. …Over 60% of shops surveyed by Fender Bender said their rates had been reduced by State Farm in the last 12 months.

“Many times, we’re fearful of mentioning names and calling out the individuals that are engaging in the conduct… I can confirm it’s not market-specific, it’s not claim-specific. It is a very tactful approach that is being engaged in nationwide by the largest carrier in the country, State Farm. And I hope they’re still in the room.”

State Farm Property and Casualty Claims Director Ed Mondragon interrupted Bradshaw, accusing him of broaching CIC’s conduct expectations and anti-trust rules, having mentioned their company name.

CIC Chairman Dan Risley said, while the company name had already been mentioned, and requested that company names be left out, “we all have to be mindful of anti-trust, and I don’t think there was anything there specifically that came close to anti-trust.”

Bradshaw responded directly to Mondragon that his intent was not to encourage anyone to take any concerted action, and that he wasn’t talking about specific rates.

“I’ve been very careful in preparing my remarks to do that,” he said. “Aside from the rate process, there is now a centralized review team, and I want to tell everybody how that works in practice and how it’s affecting all the shops across the country that have engaged in discussion about the things that are impacting not really them, but ultimately their consumers.

“We, as a shop, identify repair operations. The carrier in this instance, whose name I won’t repeat again, sends an appraiser that works for them out to our shop. We engage in a discussion on what the vehicle needs. That appraiser identifies those operations. That appraisal is then submitted to a centralized internal review team, and those internal review teams remove countless operations without discussion with the body shop, without engagement with the body shop, without review of the proper documentation, without any explanation, or without a name of the individual within the central review team being attached. In fact, the names of those individuals are specifically excluded from the claim file for this purpose because they don’t want to be identified.”

Bradshaw continued that this results in shops having to send the insurance carrier a supplement, which takes 10-14 days to get back.

“When we get the supplement back, we see that countless operations were identified and then later removed, so we agreed in scope with repairs to the appraiser at the vehicle, who is licensed in our state, only to have those removed,” he said. “And so, what do we do at that point? We submit another supplement, and now that starts another 10-14-day clock. What actually was discussed and agreed upon at the vehicle now takes 45-60 days to get to the same point because those individuals have to come back out and re-add those items.”

Bradshaw added that carriers are pushing pricing agreements onto shops.

“We’re identifying calibrations that, by the way, they have a system that identifies the same operations and safety inspections that they then omit from their estimate, or they provide downward pressure to a third-party vendor to show up and do in our parking lot,” he said. “We’re here for that person [consumer] and that chair [CIC empty chair]. Every day when I get up, and I go to my shop, I go because those people that are going back in those cars are going to be safe.

“I’m going to do everything I can to make sure that that’s the case. But what we’re seeing here is a systematic approach to devalue the repair and to omit required operations and ultimately place that consumer in a car that is far less safe than it was before their accident. And if we can’t engage as a body in here and we can’t call out that kind of conduct, why are we here? What are we doing to move the needle forward?”

Bradshaw then addressed Mondragon.

“I’ve copied you on many emails where I have laid this conduct out, and we’ve not had a conversation,” he said. “I’m welcome to having a conversation with you. I hope to do that without having to get up at the open mic to bring this to everybody’s attention. But I will tell you, shops across the country are dealing with this and are continuing to face downward pressure. If we as an industry can’t come together and discuss that and move the needle forward, then we need to find another body to attend.”

His comments were met with standing applause from the audience.

Beyond the initial challenge to the comments, State Farm representatives provided no other response to the conversation.

The articles Bradshaw referenced include a recent P&C Specialist article, which explores changes State Farm has made to its auto claim practices, including moving to centralized auto claim audit teams and cutting labor rates.

“The Bloomington, Illinois-based insurer has lowered labor rates by as much 20% in the past eight months, depending on the location of the repair shop,” the article states. “It is also increasingly leveraging its audit team to review estimates written by its own staff adjusters and has modified policy language related to reimbursements for labor, sources said.”

The industry publication, published by Financial Times, says it interviewed more than a dozen repair shops and reviewed internal recordings and documents “showing how State Farm’s approach often turns fixing damaged autos into an opaque, adversarial process, creating friction between repair shops and the insurer.”

The article notes that while the insurer is working to lower repair costs, it is also facing regulatory scrutiny and profitability concerns as complex repairs push up claim costs higher.

Bradshaw additionally pointed to stories by Jay Sicht, with Fender Bender/ABRN editor-in-chief, and John Yoswick, editor of the CRASH Network subscription newsletter.

In July, Sicht reported that 57% of the 230 respondents to a survey said State Farm had reduced its labor rates offered to their shop without explanation.

During the SCRS open meeting, the day prior to CIC, Bradshaw told Causey, who held a panel Q&A session at the meeting, that he recently sent him and his office about 40 examples of State Farm taking $2,000-$3,000 off appraiser estimates or identified appraisals.

“One of the things that we’re seeing is centralized claim review, and that is a process that is set up in a punitive measure to kind of disenfranchise the independence of appraisers in the field,” he said at the open meeting.

“Used to be, when an appraiser came out to my shop, we could discuss what the vehicle needed, and they made that decision; they identified what the vehicle needed based on our conversation and agreement. The claim process went forward; the customer was made whole, and the vehicle was repaired correctly.”

Bradshaw said that has changed. Now, his shop has conversations with insurance appraisers at the damaged vehicles, the appraisers’ estimates are written, and then fed to a central review team in Arizona, “where somebody that’s never identified, their name is never on the estimate, removes things.”

“Everybody in this room, regardless of what state they are in, is dealing with that,” he said. “If there’s an operation that a licensed appraiser identifies as needing to be done for that vehicle, and then somebody thousands of miles away arbitrarily removes it without discussion, explanation, or review, what do we do? How do we challenge that process?

“State Farm is reviewing performance based on the metrics in this claim review process, so if you’re an appraiser that works for State Farm and they identify operations on a consistent basis that they’re removing from your appraisals, your pay is effective. What they’ve essentially designed is a centralized mechanism to punish appraisers for doing the right thing and really beat them into submission.”

Causey has previously advocated for and encouraged shops at the April open board meeting to have their customers file complaints with the DOI rather than doing it themselves.

Bradshaw compared the process to seeing a robbery and reporting it to the police department, only to be told he can’t report it because he isn’t the victim.

“Meanwhile, I’ve got the video of the robbery happening,” he said. “As the Carolinas Collision Association, we could reach out to our membership, ‘Hey, do you have examples where State Farm claim review has removed operations?’ And we could probably have thousands within a very short order. It’s frustrating because we’re kind of in this limbo where we’re not the customer… I get it, but we also are the ones that have all the access to the data and the conduct on a daily basis.

“By us doing our job and escalating things, and fighting for the customer, we sometimes resolve those differences, but it makes the customer wait weeks and months on end for their vehicle.”

Causey said Bradshaw’s analogy was good; however, the comparison to reporting a robbery to the police and filing DOI complaints about insurance companies is different. He asked if anyone could counter what Bradshaw said.

“The counter is either charge the customer, or you continue to send supplements, but the problem with continuing to send supplements is what was agreed on on day one now takes to day 45 to get coverage for the customer,” Bradshaw said. “It just places the customer without their vehicle in that time.”

Another audience member, who didn’t share their name, said their shop in New York experiences the same thing as Bradshaw’s daily.

“To Michael’s point, we are put in a position constantly to either charge the customer directly or have a repeated supplement process, which many times, ends up in double-digit supplements that need to be done and constantly renegotiated,” he said. “What we’re doing is we’re renegotiating the claim on a continual basis because of this situation that the largest insurers have put us in.”

Bradshaw noted that North Carolina law outlines appraisal option requirements in insurance policies, which he said serve as the backstop.

“But unfortunately… State Farm has intentionally written the appraisal clause language out of policies in states where it’s not a regulatory requirement,” he said. “They are very good at getting that by and taking away any right to dispute it.”

Michael Giarrizzo Jr., DCR Systems CEO and SCRS director-at-large, said shops in Ohio experience the same thing.

“We are one of those states where they’ve written it out of the policy, which really leaves that policyholder, that customer, with really no resolution,” he said. “It gets really, really challenging.”

SCRS Executive Director Aaron Schulenburg addressed Causey, indicating that rather than continue to share individual experiences, “every repairer in the room is going to tell you the same story.”

Causey said, “From what I’m hearing you all say, and I’m not an attorney, but to me the solution would be, if you could get the state legislature, the statutes, changed to require this is what has to be done. That’s the only way to hold those insurance companies accountable to that.

“Every time we run into this thing, it always comes back to, from a legal standpoint, ‘Well, wait a minute, the contract’s between the policyholder and the insurance company; the contract’s not between the body shop and the insurance company.’”

He added that making the public aware of the issue before they take their vehicle to a shop for repairs is key.

“If they just say they want to take it to your shop, the insurance company says, ‘Well, if you take it to that shop, it’ll be two months before we get somebody out there to look at that car. If you take it to our shop, we’ll get on it this afternoon,'” he said. “They know how to work all of that, and that’s a tough thing to fight.

“The only thing you’ve got is ammunition from that car owner, that policy owner to say, ‘I’m going to have my car repaired at this shop. They’re going to use OEM parts, and that’s what I want.’ …I’ve got a shop near my house, it’s been there over 50 years, and they’re certified repairers for a number of automobile manufacturers. The owner told me, ‘It doesn’t matter that we repair to factory standards; the insurance company said, ‘We don’t care how you repair. We’re not paying for that kind of repair.’”

Causey concluded that the only leverage is to get that customer to say they want their vehicles repaired to OEM standards.

“We’re not going to solve it here today, but we’ve got some good ideas, and this is what needs to continue: to have these types of conversations to figure out a solution,” he said. “The companies [reimbursement], the labor rate… according to everything in the world, with the prices going up, it’s way too low. But then they say you can’t talk about labor rates. Yet, the insurance companies said, ‘We’re going to lower our labor rates.’ That’s another issue.”

Bradshaw clarified that he appreciates the DOI’s work and he wasn’t trying to discredit the job they’ve done.

“I know you understand our issues as much as anybody, but the scary part for us is if the largest carrier starts to push the envelope, and they very much are in a way that I have never seen, everyone else follows suit,” he said. “I think that’s why it’s so important that we have these conversations now with urgency because it’s only going to get worse.”

When asked how to handle claims in which carriers refuse to pay for proper repairs unless it’s filed with their own policy, Causey said shops should let the DOI know.

“We need to know about it,” he said. “If we’re hearing from every body shop in the state that this is the thing that’s happening, we can take that to the North Carolina Rate Bureau, to the legislators, to the insurance companies, and say, ‘Look, we got a problem that needs to be fixed,’ it gives us more leverage.”

Causey thanked everyone involved with any trade association because they’re important.

“I will make one analogy. If you’re a medical doctor, you have to belong to the American Medical Association,” he said. “We have an insurance company here in North Carolina for general contractors, it’s called Builders Mutual. If you buy a policy from Builders Mutual, you can’t buy it unless you’re a member of the association. …whoever came up with that plan got a 100% surefire way to get members. I don’t know how you can do that with independent business owners. It is real important that no matter how small a body shop is, or auto glass shop, [to be] involved with an association. There is strength in numbers, and it gives you a louder voice in every state legislature. It helps all over the country.”

Images

Featured image: SCRS Chairman Michael Bradshaw, who is vice president of K&M Collision in Hickory, North Carolina, speaks during the board’s April 21, 2026, open meeting in Charlotte. 

Secondary photos: The SCRS Board of Directors at the April, 21, 2026, meeting, followed by a photo of SCRS Chairman Michael Bradshaw (left) and SCRS Executive Director Aaron Schulenburg at the meeting.

All photos taken by Lurah Lowery/Repairer Driven News