Should body shops be allowed to pay referral fees to towing firms?

A recent Aviva Canada auto repair fraud investigation raises the question of whether body shops should be allowed pay referral fees to tow truck operators.

CSN, which has more than 335 collision repair centres in Canada, does not give referral fees to tow truck drivers, CSN chief operating officer Flavio Battilana told Canadian Underwriter Tuesday.

“It’s wrong,” Battilana said in an interview, adding it would be “unaffordable” for CSN repair centres to pay such a fee.

If a customer’s vehicle is towed to a CSN centre, but the customer does not wish to have their vehicle repaired by CSN, the vehicle “is released as per customer and/or insurance company direction,” Battilana said.

Ontario law requires tow truck operators to tell motorists whether or not they are getting a “financial incentive for towing a vehicle to a particular vehicle storage facility or repair shop.” But there is no prohibition on such a fee right now.

A ban on such fees “merits discussion,” Elliott Silverstein, manager of government relations at CAA South Central Ontario (which provides roadside service and writes auto insurance) said Wednesday in an interview with Canadian Underwriter. Silverstein did not go so far as to say there should actually be a ban in place.

One “has to understand what the implications are” of such a ban, Silverstein said. “I think it’s one of those things where we have to understand the entire landscape. So how does that work? Who would be prohibited from referrals? In what sense? Would there be exemptions? So, for example, I know there are insurers who have preferred body shops, preferred groups they work with. So how expansive would (a referral ban) be? It merits a conversation.”

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