A bill introduced in the Nevada Assembly is designed to prevent insurance companies from acquiring or opening collision repair facilities and would place restrictions on pre-existing relationships between insurance companies and shops they own interest in, referred to as “tied shops.”
The bill, A.B. 297, would make the relationship between an insurer and tied shop like that of an insurer and a DRP shop and would prohibit insurers from providing a competitive edge to tied shops.
Finally, the bill would require a notice posted in all tied shops that reads:
“This body shop is owned in whole or in part by (Name of Insurer). You are hereby notified that you are entitled to seek repairs at any body shop of your choice.”
The bill would be effective July 1, 2009, and is supported by the Nevada Collision Industry Association (NCIA).
“By repairing property it also insures at an insurer-owned body shop, an insurer can profit greatly by performing inexpensive, substandard repairs, thus creating a conflict of interest,” Michael Spears, a founding member of the NCIA, said. “In this process, the consumer misses the benefit of the unbiased expertise and opinion of an independent repair facility. Insurer-owned body shops may eliminate checks and balances, compromising consumer protections.”
Allstate Insurance, owner of Sterling Autobody Centers, challenged a similar Texas law in court, and the court upheld the state’s restriction on insurer-owned shops. Sterling has one location in Nevada.
Last year, the Michigan House of Representatives passed a bill banning insurer-owned shops, but it didn’t pass the Senate before the end of the legislative session (click HERE to read more).
For more information, visit www.ncia.us.
