The Collision Repair Industry: How Decades of Insurer Influence Shaped Our Reality
by Andrew Plischke
Few pieces of legislation have had as profound an impact on the collision repair industry as the McCarran-Ferguson Act of 1945.
This nearly 80-year-old law, combined with subsequent strategies like the “The Plan” of 1947 and the 1963 Consent Decree, established a framework that has allowed insurers to dominate the auto repair landscape. For those in the independent collision repair industry, understanding this history is essential to confronting the challenges of today.
The McCarran-Ferguson Act: A Pivotal Turning Point
Passed in response to the 1944 Supreme Court decision in United States v. South-Eastern Underwriters Association, the McCarran-Ferguson Act returned regulatory authority over insurance to the states and granted insurers immunity from federal antitrust laws, provided state regulations were in place.
This exemption set the stage for insurers to centralize power and coordinate practices with limited federal oversight. It created an environment where insurers could systematically shape the industry’s operations, often prioritizing cost efficiency at the expense of repairer autonomy and consumer protection. This historical pivot underscores the collision repair industry’s struggle to maintain independence against a backdrop of insurer consolidation.
“The Plan” of 1947: Operationalizing Influence
Just two years after McCarran-Ferguson, insurers devised “The Plan,” an initiative designed to align repair standards, control labor rates and streamline costs.
This wasn’t just a roadmap – it was a strategic play to lock in insurer dominance. Through standardized processes and repair mandates, “The Plan” planted the seeds for today’s direct repair programs (DRPs), embedding insurer-driven protocols into every corner of the repair industry. For independent repairers, this marked the start of a systematic suppression of labor rates and a weakening of their ability to dictate repair practices. Insurers gained a powerful lever to control costs, while repairers faced shrinking margins and reduced autonomy.
The 1963 Consent Decree: A Missed Opportunity
The federal government’s investigation into collusion among insurers culminated in the 1963 Consent Decree, which sought to curb insurers’ influence by prohibiting price fixing and certain mandated repair processes. On paper, this should have rebalanced the scales. In reality, enforcement was weak.
Insurers adapted swiftly, finding indirect ways to maintain control over repair processes. By leveraging their relationships with DRP shops and creating financial incentives, they effectively sidestepped the decree’s intentions. For independent repairers, the decree’s failure to dismantle entrenched practices meant a continued erosion of independence and influence, further entrenching insurer dominance.
The Current Landscape: A Collision of Forces
Today, the collision repair industry faces unprecedented challenges that threaten its very fabric.
• Fragmentation vs. Consolidation: While independent shops remain fragmented and struggle to unify, multi-shop operators (MSOs) and private equity-backed networks have surged in prominence. Yet, instead of counterbalancing insurer dominance, many MSOs align their goals with insurers’ cost-saving imperatives. This alignment often exacerbates the pressures faced by truly independent repairers.
• Consumer Disempowerment: Vehicle owners – the ultimate stakeholders – are often unaware of their rights. Insurers steer consumers toward preferred shops, emphasizing cost efficiency over safety and quality. This leaves drivers at risk of subpar repairs and compromises their long-term safety.
A Call to Action: Reclaiming Our Industry
For independent collision repairers, the path forward is clear but not easy. It requires a multifaceted approach that combines advocacy, education and solidarity.
1. Legislative Reform:
• Advocate for revisiting McCarran-Ferguson’s antitrust exemptions to restore fairness.
• Push for federal oversight that ensures repairers and consumers are not at the mercy of unchecked insurer practices.
2. Consumer Awareness:
• Educate vehicle owners about their rights to choose repair shops and demand high-quality, safe repairs.
• Emphasize the risks of insurer-driven practices that prioritize cost over safety.
3. Industry Solidarity:
• Support fair labor rates and resist pressures to compromise on quality or safety standards.
• Forge alliances within the industry to amplify the independent repairer’s voice and demand change.
The Stakes Have Never Been Higher
This isn’t just about business – it’s about safety, fairness and the integrity of our craft. Insurers have spent decades leveraging the regulatory framework established by McCarran-Ferguson, “The Plan” and their ability to sidestep the 1963 Consent Decree.
For independent repairers, the choice is clear: stand united, educate the public and demand reform. This fight is not just for our shops but for the driving public and the future of collision repair. Together, we can ensure quality, safety and fairness become the industry’s cornerstones once again.
Want more? Check out the March 2025 issue of New Jersey Automotive!