Shop and association allege North Carolina Department of Insurance ‘one-sided,’ unresponsive to shops

A North Carolina collision repair shop and the Carolinas Collision Association (CCA) have taken issue with recent correspondence from the North Carolina Department of Insurance (NCDOI), which advises shops “to take a more proactive role in setting clear and transparent expectations with vehicle owners at the outset of the repair process.”

Michael Bradshaw, former K&M vice president and current Collision Partners executive vice president of operations, told Repairer Driven News he and the Carolinas Collision Association (CCA) have questioned the DOI about a July 22 letter sent to K&M as an email attachment in response to the shop speaking on behalf of one of its customers regarding a claim.

A P&C consumer complaint analyst, Andrew, whose last name isn’t provided, writes in response to a specific claim at K&M. He states that the department would respond directly to the claimant “upon conclusion of our findings” and attached a letter that lacks a signature from an NCDOI official.

The letter states its intent is for the department “to address recurring concerns and complaints arising from differences in expectations between auto repair facilities and insurance companies during the claims and repair process.”

Bradshaw alleges the letter is written as if it’s from an insurance carrier. The letter isn’t on NCDOI letterhead, and it isn’t signed.

“It’s not clear where the communication came from, but it is written almost as if it was drafted by an insurance carrier to justify their position,” he said. “The most important thing, above and beyond the fact that they’re [NCDOI] constantly interfacing with the insurance carriers and their counsel and their leadership, but they’re not interfacing with the counterpoints.”

The letter encourages shops to discuss “potential coverage limitations, particularly when it comes to after-market parts, possible out-of-pocket costs, and areas where it is clear that disputes with the insurance company may arise.”

“Aligning expectations early can significantly reduce misunderstandings and mitigate customer dissatisfaction,” the letter states.

Bradshaw says he has continually reached out to the department for clarification on the correspondence.

“We have been dealing with numerous issues that we have brought to their [NCDOI] attention and conduct that clearly goes against regulations and established positions that the Department of Insurance has taken in the past,” he said. “And this has been going on since, I want to say, at least November of last year. We can’t get any response out of them. I mean, can’t even get them to take a position — any position, that ‘this is OK,’ ‘this is not OK,’ ‘this is not something that is in our regulatory authority.’ They’re just non-responsive.”

In a letter to Commissioner Mike Causey, dated July 31, Bradshaw details his concerns and includes several questions. Bradshaw writes that the letter tells shops “insurance companies ‘may exercise contractual rights to limit reimbursement based on their internal guidelines, prevailing market rates, or policy provisions.'”

“[I]t makes substantive statements about what insurers may do, and it does so in language that treats practices created by carriers as though they carry the same weight as the policy and the General Statutes,” Bradshaw writes. “It then hands the consequences of those practices to repair facilities and policyholders. We respectfully request that the department’s legal counsel provide, in writing, the specific statutory authority, regulatory authority, applicable policy language, and controlling case law supporting each of these assertions.”

Bradshaw told RDN that NCDOI leadership previously told K&M, other body shops, and independent appraisers who were members of an NCDOI task force to make them aware of certain insurance company practices because they can do something about it.

“We have made them aware of the same types of conduct that were discussed in the task force meeting, and the responses we get from the complaint analyst don’t align with what leadership communicated,” he said. “It’s just a complete breakdown.”

He added that he knows of numerous times NCDOI complaint analysts have said insurance company conduct is acceptable when it was against policy language or regulations.

“We’ve had to get managers involved at the DOI to correct the complaint analyst,” Bradshaw said. “It’s essentially a… pervasive attitude throughout the department that carriers are taken at their word and body shops are just out there trying to give one over on somebody. And it’s extremely frustrating to me and everyone else involved in the association and other shops. For instance, we see what’s happening in Oklahoma and all the conduct that’s being uncovered there as to the lengths that State Farm has went to outright deny things that should be owed under property damage coverage.

“It’s the same conduct that we all see and can demonstrate is going on with auto claims. And we have constantly went to the DOI about this conduct, about State Farm rolling back rates, about State Farm denying total loss charges, about State Farm denying people’s right to appraisal clause. There’s just so much that has went on and the DOI might as well not exist right now if you want my honest opinion.”

RDN was copied on some of the emails Bradshaw sent to the DOI, including one to Causey and several other officials, including Angela Hatchell, NCDOI’s senior deputy commissioner of agent services, consumer services, and regional directors, on July 31. Bradshaw attached his letter to Causey to the email.

“My broader concern is the department’s continued failure to communicate with me directly,” Bradshaw wrote in the email. “At this point, it is difficult not to view the continued silence as a concerted effort to avoid engaging with me. For nearly 20 years, I have advocated for consumers and challenged department positions that were not supported by applicable rules, regulations, or policy language. In multiple instances, after sufficient evidence was presented, the department ultimately changed its position to align with the applicable authority. I have also challenged many of these same claim-handling practices in civil proceedings where insurers were found liable for unfair and deceptive trade practices, breach of contract, and bad faith.

“Yet the department has now put in writing that insurers may possess ‘contractual rights’ to limit reimbursement based on unpublished internal guidelines and undefined ‘prevailing market rates,’ without citing the policy language, statute, regulation, or controlling authority that creates those rights. We have repeatedly been told that the department cannot interpret policy language.”

Hatchell responded that an internal meeting was scheduled for the next week to review and discuss Bradshaw’s concerns.

Bradshaw and RDN followed up with the department to discuss what came from the meeting. Bradshaw said he has not gotten a response.

The department didn’t respond regarding the internal meeting. Instead, NCDOI responded by sending RDN a 2024 memorandum from Causey to auto insurance companies that outlines required claimant disclosures.

When asked more pointed questions regarding the letter from Bradshaw and a letter from CCA, NCDOI Deputy Director of Communications Barry Smith emailed the following to RDN: “The Department of Insurance Consumer Services Division has received a consumer complaint related to the subject of Mr. Bradshaw’s letter. Our consumer analysts have worked and continue to work to resolve issues. DOI is responsible for ensuring that insurance companies comply with their policy contracts, applicable statutes, and applicable administrative codes. We recognize that significant differences can arise between insurers and auto repair shops regarding repair costs and methods, particularly when it comes to the use of materials of Like Kind and Quality vs. Original Equipment Manufacturer parts and applicable warranties.

“We take all complaints seriously, especially when disputes between insurers and repair shops negatively impact consumers. However, we review these concerns presented and share the findings with only the consumer and the insurance company. We encourage consumers who have complaints regarding a claim to call us weekdays from 8 a.m. to 5 p.m. at 855-408-1212, or contact us online at www.ncdoi.gov.”

CCA also wrote the department on Aug. 5, citing concerns similar to Bradshaw’s. CCA’s attorney, William E. Morgan, wrote the letter on behalf of all of the association’s member body shops. He wrote that the letter attached to the email from an NCDOI consumer complaint analyst to K&M “raised many concerns for the association.”

“First of all, the attachment was not relevant to the issue with Mr. Cardos,” Morgan wrote. “The issue with Mr. Cardos stems from the failure of Allstate to properly follow through on the appraisal clause process in Mr. Cardos’ claim. The attachment appears to be a general letter of admonishment and caution to body shops in general as to how they should work around the limitations that insurance companies place on what they will pay on claims.

“I am not even certain to whom our concerns should be addressed because the attachment was not signed, labeled, or titled, nor did it include any additional information as to its origins or purpose. I do not wish to overreact, but I believe I am safe in saying that the attachment is full of inaccuracies, misstatements of the law, and misinterpretations of insurance policy language. It arguably crosses the line into improper rulemaking by the DOI. The overall tone of the document is also one-sided in favor of the insurance companies, patronizing, and borders on an attempt to dictate how private companies should operate their businesses, even in areas that are not regulated by the DOI. Essentially, the message to body shops appears to be: ‘You should know that insurance companies are not going to pay for all of your repairs, so do what you can to make it easier for them to do so.'”

According to Bradshaw, Mike Labrose, an NCDOI area director, said the department could help.

“He came by the shop… and we went over some things with him, and he kind of seemed to acknowledge that, ‘Yeah, these are things that they could do something about.’ But they won’t do anything,” Bradshaw recently told RDN.

In April, Labrose and Causey participated in an NCDOI panel discussion and Q&A session at an open meeting of the Society of Collision Repair Specialists (SCRS) Board in Charlotte, North Carolina. Bradshaw brought up issues shops have had with State Farm claims handling practices, speaking to Causey and his team in front of industry attendees. He also brought up the claims handling practices at an open mic during a meeting of the Collision Industry Conference (CIC) held the same week in Charlotte.

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

In April, 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.

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.”

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.

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