The People’s Billion-Dollar Bully – Part Two How Insurers Took the Little Guy’s Side to Beat Him Down
by Sean Preston, Managing Attorney, Coverall Law
Author’s Note: Catching Up on the Fight
If you missed Part One of this series (grecopublishing.com/near0725legalperspective/), we traced the roots of claim suppression back decades – starting with a 1952 Massachusetts court ruling that severed any promise of profitability from premium regulation, followed by Warren Buffett’s praise of insurance “float” as a financial powerhouse, and culminating in McKinsey & Co.’s reengineering of claims handling into a strategy of delay, denial and diminished payouts. We showed how these forces fused into an industry standard – one that reframed insurers not as fiduciaries, but as cost managers cloaked in consumer-friendly slogans.
Part Two picks up where that foundation leaves off: at the collision shop’s door. We examine how modern advertising has commoditized the insurance product, shifting competitive pressure to the claims side – and how that pressure is weaponized against the very shops and policyholders the system claims to protect. From lowball “visual appraisals” to endless supplement hurdles, we dive into how today’s claim suppression tactics grind down repairers and consumers alike. And we end with a challenge: to stop pretending this system is supposedly broken, and start confronting it for what it is – working exactly as designed.
Commoditized by Advertising: A Race to the Bottom
Insurance companies no longer compete on service, coverage or policy terms. They compete on a single axis: price. The contemporary insurance marketplace has been transformed by an unrelenting arms race in advertising, where slogans promise to save “15 percent or more” and switching takes “only 15 minutes.” In this sea of sameness, where policies are nearly indistinguishable, the only meaningful cost differentiator left is the one insurers have the most control over: how much they pay out in claims.
“When the product is indistinguishable, the only place to compete is cost – and that means paying out less,” insurance analysts have noted. With rates often controlled by state regulation or market equilibrium, insurers can’t raise prices at will. Instead, they turn inward, seeking profitability through reduced loss ratios and cost efficiency – which in practice often translates to claim suppression. This isn’t theoretical. It’s the natural economic progression of commoditization.
Advertising data supports this pivot. GEICO, State Farm, Progressive and Allstate have spent billions each year jockeying for brand awareness. Progressive’s advertising expenditure alone hit a record high of nearly $3.5 billion in 2024, even as others like Allstate slashed their ad budgets by 31 percent in 2023. For GEICO, the nation’s largest auto insurer for a time, advertising was once its greatest asset. But as ad returns diminish and customer acquisition costs rise, the shift toward claims cost containment has become even more pronounced.
This model is inherently extractive. In a commoditized marketplace, price is king – but someone has to pay for those savings. The customer, of course, ends up footing the bill in another way: through undervalued vehicles, denied repairs and inadequate settlements. The rise in repair complexity and costs only exacerbates the problem. As vehicles become more advanced, so do the stakes of cutting corners on claims. Yet, even as the average cost per claim rises due to technological sophistication and labor shortages, many insurers continue to cap or challenge legitimate expenses in an effort to protect profit margins.
It’s a race to the bottom, and the victim isn’t the insurer – it’s the policyholder. The ad-driven illusion of competition conceals a chilling truth: all roads lead to minimized payouts. This industry has commoditized not just the product, but the people it promises to protect. The result? Shops remain under pressure, consumers are left with partial repairs or out-of-pocket losses, and a billion-dollar industry continues to market itself as the underdog – even as it crushes the very individuals it claims to serve.
Populist Branding, Predatory Behavior
Insurers today present themselves as defenders of the little guy – ever-vigilant against fraud, inflated invoices and unscrupulous lawyers. Their commercials, lobbyists and even claims representatives all parrot the same line: “We’re just trying to protect our customers.” But when you look behind the slogans, what you find is an industry that’s less watchdog, more wolf – with policyholders and the repairers who serve them cast as prey.
Collision repair shops know this better than anyone. They’ve long been subject to slow-pay tactics and death-by-a-thousand-cuts negotiations. One of the most egregious insurer practices today is the so-called “visual appraisal” – a drive-by estimate that ignores structural and hidden damage. It’s not a serious effort to understand the repair – it’s a pretext to start low. Shops are then forced to submit supplement after supplement – often as many as six – each time bringing the appraiser back to approve just one or two more line items. The goal is clear: wear down the shop until it gives up on the last five to 10 percent of the bill. Those unreimbursed procedures don’t just disappear – they’re absorbed by the shop or worse – skipped entirely.
The consequences aren’t just economic – they’re structural. I spoke with one repairer who described how a job stretched over five months while waiting for a factory bumper. The program shop had already disassembled the vehicle, replaced the part and was preparing to finalize the repairs when the insurer stepped in and declared the vehicle a total loss. The twist? The same insurer had covered the vehicle since it was new and now used its extended repair timeline as an excuse to deny coverage outright. Five months wasted. Full coverage ignored. The “trusted” insurance partner vanished when it was time to pay.
This is the daily reality for body shops and policyholders alike. During our development of the Forever Forms, I asked one shop owner what it was like negotiating with insurers before Coverall Law. His response was painfully honest: “What negotiation?” Insurers weren’t engaging – they were dictating. Recently, I visited several Cape Cod shops who admitted they didn’t know if they’d be profitable this month. The uncertainty isn’t just financial – it’s existential.
Insurers claim they’re fending off fraud and waste. But too often, it’s the legitimate claims – the honest shops, the policyholders with full coverage – that get bled out. “Insurers say they’re defending the customer,” I often say, “but they fight tooth and nail against making that customer whole.” This isn’t oversight – it’s exploitation disguised as stewardship.
Collision Shops: Profitless in the Shadows
While insurers regularly tout record revenues and billion-dollar portfolios – thanks in part to disciplined underwriting and buoyant investment returns – the outlook for collision repair shops tells a much darker story. These shops, often family-run and locally rooted, are navigating a gauntlet of rising costs, shrinking margins and adversarial insurer relationships. Many of my member shops can’t say with confidence whether they’ll finish the month in the black. Some go week to week, project to project, unsure if the next vehicle through the bay door will pay fairly – or push them further into the red.
This is not coincidence; it’s by design. In the insurer’s claims ecosystem, collision shops are the weakest link in the chain – the final vendor, the easiest to squeeze, the last defense between a cost-saving claims department and a repaired vehicle. “Squeeze-the-vendor” strategies target shops precisely because they lack the financial insulation and legal firepower of national carriers. By underpaying labor rates, dragging out supplement approvals and demanding exhaustive documentation for standard procedures, insurers apply slow pressure until many shops simply give in – or give up.
Operational costs alone are enough to sink the unprepared. Inflation has driven up the cost of everything from aluminum panels to adhesive compounds. Shops are forced to invest in increasingly expensive equipment to keep pace with ADAS, electric vehicle technologies and complex vehicle construction. OEM certification, once a badge of quality, is now a financial burden – requiring dedicated training, tools and exclusive parts procurement that many small operators can barely afford.
Labor challenges compound the problem. With a nationwide shortage of skilled technicians, shops must offer more competitive wages and benefits to attract or retain talent. Yet, many insurers still push reimbursement rates that don’t even reflect current market compensation, let alone recognize the specialized knowledge required to handle today’s cars. Add in delays in payment, unreasonable part substitutions and a constant need to resubmit and rejustify work that’s already been performed, and it’s clear: this is not a marketplace. It’s a gauntlet.
Some insurers are even leveraging the digital transformation of claims to widen the imbalance. Virtual estimating tools and AI-based image capture may improve efficiency for carriers, but they do little to ensure repair accuracy – and often become a new pretext for denying or delaying payments. Meanwhile, the cycle times for repairs are ballooning due to supply chain issues and parts delays, straining cash flow and client relationships at independent shops across the country.
The situation is untenable. While insurers maintain profit through diversification, investment portfolios, and financial engineering, body shops have only one business model: fix the car right, get paid fairly, and do it again tomorrow. But in today’s system, that simple goal is increasingly out of reach. For too many shops, especially independents, profitability is no longer the baseline – it’s the battleground.
Conclusion: This System Is Working as Designed
The greatest misconception about the insurance industry is that it’s broken. It’s not. It’s functioning exactly as designed. From the moment Massachusetts’ highest court told insurers they were responsible for their own profits, through the era of McKinsey’s cost-cutting gospel, to today’s marketplace of interchangeable ads and interchangeable policies, the system has evolved with one central goal: maximize shareholder return by minimizing what’s paid to the people who file claims. What’s sold as protection is, in reality, a cost-control enterprise wrapped in customer-friendly branding.
Insurers have mastered the optics of advocacy. They paint themselves as defenders of the policyholder, even as they lowball, delay and deny those same individuals behind closed doors. They celebrate innovation when it accelerates appraisals but balk at paying for OEM procedures or safe, proper repairs. They pour billions into marketing while collision shops are asked to work for yesterday’s rates and make tomorrow’s technology work on a shoestring.
We cannot keep pretending this is just a misunderstanding or a glitch. It is a system structured to serve capital, not customers. Legal professionals, repairers and consumers must stop expecting fairness from a machine built for margins. We must meet force with strategy – through legal advocacy, regulatory engagement and, most importantly, refusing to play the game on their terms.
At Coverall Law, we’ve built tools like the Forever Forms to help shops document, fight back and reclaim the ground they’ve been told they don’t deserve. But forms alone aren’t enough. This industry needs collision professionals who know their worth, consumers who demand to be made whole and lawmakers willing to see past the slogans and into the spreadsheets.
The boxing gloves are already on. It’s time to stop taking hits and start landing some of our own blows.
Want more? Check out the August 2025 issue of New England Automotive Report!