Letter to the Editor: Insurers Choosing Cost Control Over Indemnification

Letter to the Editor:

Andrew Batenhorst’s recent piece Are Subrogation Recovery Trends Driving Antitrust Behavior Among Insurers? highlights a shift many of us on the legal side of the claims world have been watching closely for years. As an attorney whose practice focuses on diminished value claims — the often-overlooked loss in market value a vehicle suffers after a crash even when “properly repaired” — I see striking parallels between the subrogation-driven behavior he describes and the systemic undervaluation of post-repair losses faced by consumers every day. 

At its core, both issues stem from the same economic pressure inside the insurance system: internal metrics driving external outcomes. In subrogation, carriers aim to maximize recovery from other insurers. In diminished value, carriers aim to minimize payouts on residual loss. In both contexts, the mechanism is familiar: tightened adjuster oversight, standardized payment practices, and increasing reliance on algorithmic or policy-driven decision making rather than claim-specific facts. 

What Mr. Batenhorst describes, adjusters being told not to approve certain procedures because “another carrier doesn’t pay for it” and it could hurt recovery rates, is particularly significant. That logic mirrors what diminished value claimants hear every day: “We don’t pay that,” “It’s not customary,” or “The market doesn’t recognize it,” despite clear economic evidence that accident history measurably reduces resale value. When payment decisions are guided less by the actual loss and more by how other carriers behave, the result is predictable: systemic downward pressure on claim payments across the industry. 

From a legal and economic standpoint, diminished value and subrogation are two sides of the same coin. Subrogation focuses on how insurers allocate costs between themselves; diminished value focuses on how those costs ultimately reach — or are withheld from — the consumer. When insurers tighten payments to improve subrogation metrics, the immediate effect is increased out-of-pocket expense for policyholders and vehicle owners. When insurers refuse to recognize diminished value, the effect is hidden but just as real: consumers absorb a loss that exists in the marketplace even if it never appears on a repair invoice. 

The growing use of AI auditing and performance metrics adds another layer. Technology can improve consistency, but when tied directly to cost-containment targets, it risks converting individualized claims handling into standardized loss suppression. Whether in repair approvals or valuation of post-repair loss, the danger is the same - decisions drift away from restoring the insured to pre-loss condition and toward protecting internal financial benchmarks. 

Consumers should understand a simple principle: insurance is meant to make you whole, not merely repair what is visible. If repair procedures are denied to improve recovery ratios — or if diminished value is ignored because it is inconvenient to quantify — the financial burden does not disappear; it shifts to the vehicle owner. 

Mr. Batenhorst is correct that transparency and education are essential. From where I sit, the broader issue is not just subrogation or repair policy, but a structural alignment of incentives that consistently favors cost control over full indemnification. When industry-wide practices begin to converge around what carriers prefer to pay rather than what the loss actually is, both consumers and the integrity of the claims process are affected. 

Perhaps the most important point made by Mr. Batenhorst is in his closing: “Now is not the time to stand on the sidelines and watch this continually happen….Shops need to educate their consumers…”! 

Chris Johnston

Johnston | Martineau, PLLC

Chris Johnston is a practicing attorney with over 25 years of experience. He is the senior partner at Johnston | Martineau, PLLC, handling cases nationwide. Learn more at JMLegal.com or DiminishedValueAttorneys.com.