The California Autobody Association (CAA) testified at a public hearing Feb. 25 on the California Department of Insurance’s (DOI) proposed additions to the state’s anti-steering regulations (click HERE to read the full text of the proposal).
The proposed rules would prevent an insurer from discussing DRPs or an alternative facility if the claimant informs the insurer that he or she has selected a specific repair facility. The rules would also prevent an insurer from raising questions about the quality of the repair facility selected by the claimant.
Jack Molodanof, CAA attorney, and David McClune, CAA executive director, testified at the hearing and suggested revisions to the regulations. Specifically, the CAA wants to delete Section 2698.93 (e) of the proposed Anti-Steering Regulation that states, “to the claimant, including the insurer’s obligation to pay only costs that are reasonably necessary to restore the damaged vehicle to its pre-accident condition.” The CAA thinks this line could be provide a loophole for insurers.
For example, an insurer could communicate to claimants that they will have to “pay the difference of costs to repair” if the vehicle is repaired at claimant’s choice of shop. This could be communicated even if the insurer hasn’t inspected the vehicle or communicated with the repair shop to determine the actual damage.
“Steering is still the number one issue with CAA members, and even though we have made some progress with this issue, we have an opportunity here to make this regulation fair for the consumer,” McClune said. “Not only do we need to get this regulation right, but there has to be aggressive enforcement in order to be successful and complaints must be thoroughly investigated.”
The insurance industry’s main argument on the proposed regulation was that the regulation goes beyond the department’s authority and that it is not consistent with federal law on commercial free speech and First Amendment rights. Insurers believe they have the right to explain their program and benefits at any time to the consumer.
The DOI will consider the testimony at the hearing and written comments submitted to decide whether to adopt the proposed regulation. The final statement of reasons from the department will go to the Office of Administrative Law to determine its legality.
The proposed changes to steering law were the result of several workshops involving representatives from collision repair organizations, insurers and the DOI. Click HERE to read more about the proposed rules.
