California Insurance Commissioner Steve Poizner’s legal counsel, Bill Gausewitz, told representatives of insurers and collision repair associations that the commissioner is looking at adopting new rules for the application of insurer labor rate surveys in rate disputes between insurers and repairers, the Collision Repair Association of California (CRA) announced. A group of insurers and repairers have been working to find rules both sides consider fair. The group’s next meeting is Aug. 26.
Gausewitz has asked the group to propose rules that would serve as prohibitions. If an insurer conducted a survey that involved a prohibited action, it might be subject to an unfair claims practice violation under Section 790 of the Insurance Code. CRA lobbyist Richard Steffen said an obstacle to rulemaking is that the insurance commissioner does not regulate the collision repair industry.
"The rules have to apply to insurers, and that limits how we craft the prohibitions," he said. "The CRA doesn’t want surveys used in a way that will create average rates that fail to reflect the ingredients of quality repair work. We think the commissioner understands that not all shops are equal and that averages are not standards."
Steffen noted that agreement between the two industries could be difficult to reach. The three repair associations contend that discounted rates, including DRPs, should not be included in an insurer-conducted survey. The insurers state the following in a memo to the department and repairers: "The survey should not contain shop labor rates that have not somehow been verified and justified as being reasonable." The CRA said in its newsletter the statement is vague and difficult to grasp.