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California Insurance Department Hears Testimony on Proposed Anti-Steering Regulations

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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).

Click Here to Read More
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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.

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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.

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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.

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