I believe it was Will Rogers who said, "No man is safe while the legislature is in session."
There’s more truth than humor to that statement.
When it comes to the actions of our legislature, the well-being of the public and the collision repair industry in particular, not a lot has changed since Roger’s days as an observer of the political scene.
As a collision repair facility owner for the past 27 years, I’ve found that it pays to stay awake politically — especially regarding what’s going on in the legislature, both state and federal. Why? Because Rogers wasn’t just being facetious when he pointed out inherent danger in the actions of the legislature; he was also being realistic.
We can help direct our destiny, or we can become a victim of what goes on around us. It just depends on what we know — or don’t know. For example, several years ago here in Washington State, we were all very leery of pending environmental regulations. What was going on in California could surely happen to us. And legislation there had outstripped technology: Repairers were being forced to spray paint with equipment that, in our opinion, truly wasn’t ready for field testing, let alone release to the collision repair industry.
Many repairers at that time favored the old "ostrich method" of sticking their heads in the sand and hoping it would all blow over. You know the philosophy. Keep a low profile, don’t say anything that attracts attention and maybe "they" will forget about you.
Some of us, however, preferred to make a concentrated effort and to have a say in our own destiny. We got involved and stayed involved. We helped the regulators understand the issues we were faced with and then assisted them with the drafting of regulations we could all live with.
Guess what happened? It worked. And it’s still working. In fact, it’s getting better instead of worse because we formed alliances and got involved.
But it doesn’t always happen that way. Many repairers are still practicing the ostrich method today, which is why I’m writing this article.
Probably the best way to get involved is through your local trade association. Most trade associations are active on a legislative basis for the very simplest of reasons: the need to survive. Trade associations exist to provide services to their members at a much more reasonable cost than individual members can possibly provide for themselves.
These associations come in many forms: the Automotive Service Association (ASA), the coalition of Automotive Service Professionals (ASP), the Autobody Craftsman Associations, etc. And different associations approach legislation differently, depending on their member base, economic viability and basic mission.
Some associations are national in scope and member base, such as ASA, and focus on both national and individual state issues. For example, ASA’s Washington D.C. representative, Bob Redding — an attorney, lobbyist and legislative watch dog — maintains an office in Washington D.C. staffed with aides and analysts to assist him in keeping the nation’s pulse regarding the automotive repair industry. Some individual state chapters of national associations and stand-alone state associations also have strong legislative programs affecting state issues and retain their own lobbyists.
National or state in scope, associations uniformly agree the best method to affect legislation is through a strong grass-roots program.
But just becoming a member in one or more associations won’t affect legislative action — not unless you take an interest in the issues. It doesn’t take a lot of time, just enough to ask your association what the current issues are, how they affect you and what you can do to make your position understood. And if you’ve got more time to give, get involved with your association’s legislative committee and help set up a "grass roots advocacy" program throughout your state — linking shop owners and their customers with their legislators in the various legislative districts throughout your state. When that happens to a broad enough extent, that’s power. That’s your business’ and your industry’s voice being heard; that’s being proactive and effective.
So what’s going on legislatively across our nation?
• Crash parts — In the area of aftermarket, imitation or whatever else you want to call non-OEM crash parts, there’s a lot of ongoing legislative activity, and most of it is focusing on regulating the use of imitation crash parts by the insurance industry. Currently, 33 states have laws on the books mandating the disclosure of the use of these parts on a consumer’s car, either by the insurance industry or the repairer.
But disclosure can happen in different ways. "What do you mean?" you ask. I mean that, in some states, the insurance industry is responsible for informing the consumer prior to repairs that imitation crash parts will be used on the car while in other states, such as Washington, the law requires the repairer to inform the consumer at the time of billing. Yeah, that’s right, after the parts are already on the consumer’s car! Big difference, eh? In six states, however, laws are on the books that require a consumer’s consent prior to installation of imitation crash parts.
Redding says that more and more activity regarding imitation crash parts is apparent every year and that the issue is really heating up in the states. He suggests that state legislative groups try to work constructively with insurers to proactively affect change, rather than the traditional adversarial approach. In fact, Redding says he sees some insurers voluntarily acknowledging — and being more responsive to — their insured’s concerns regarding imitation crash parts.
• Directing traffic/Capping prices — Several states have bills on their dockets regarding the direction of traffic by the insurance industry. These come in many forms and have various effects on the repair industry. New Jersey, with possibly the highest auto insurance premiums in the nation, not so long ago passed the "Automobile Insurance Cost Reduction Act." It provides that if a consumer elects to have repairs performed outside the insurer’s network, the repair facility must perform the work at the same price as the network (direct-repair program) repairer. Think the insurance industry didn’t have a strong lobby in New Jersey? This is a classic example of what can happen to you when the legislature is in session.
The New Jersey issue was buried inside a large bill and only a short period of time was allotted to address it. In addition, the proponents were touting a 6 percent reduction across the board in auto insurance premiums — a powerful and persuasive incentive. And the governor was instrumental and solidly behind the bill.
In most states — such as New Jersey — where the legislatures have reacted to spiraling auto insurance costs, bills that have resulted in mandated rollbacks have put repairers in difficult circumstances. Often, reasons such as auto theft are what drive premium hikes, but since it’s difficult for insurers to control auto theft in any meaningful way — as compared to collision repair costs — the repair industry often becomes the real victim of this premium-reduction legislation.
Recently, Congress has been considering Senate Bill 837 — "auto choice" legislation, sponsored by U.S. House Majority Leader Richard Armey and Senator Mitch McConnel — that would allow motorists a choice between purchasing an auto insurance policy presently available or the option of choosing no-pain-and-suffering remedies in the case of an accident and relying strictly on compensation for economic losses — the goal being to reduce insurance premiums on a national scale. Says Redding: "Auto repairers should note that New Jersey legislation that began as a premium-reduction initiative led to price caps and limits on repairers and consumers. S.B. 837 doesn’t contain similar language at this time."
Naturally, this bill is being watched closely by our industry’s analysts because of its potential for negative ramifications.
• Titling — Congress has been considering national titling legislation — two bills had been introduced, one by U.S. Senate Majority Leader Trent Lott of Mississippi and the other by Senator Dianne Feinstein of California. See box on page 61 for more information.
Get With the Program
Three components are present in every good collision repair-supporting legislative program: monitoring, reacting and being proactive.
Strict monitoring of the bills being introduced and carefully reading about them to determine their effects are essential; this can be done by a lobbyist, a legislative aid or a committee. Appropriate reaction to introduced legislation is also critical.
But reacting isn’t enough. Take charge. Help to proactively introduce bills that have a positive effect on the industry and that are backed by a strong "grass roots advocacy" program. These types of bills provide great value to the supporters of the issues — the supporters being you and other members of the collision repair industry.
Legislative issues can — and do — affect how you do business, the profitability of your business and the quality of your life. If you aren’t already, get involved and become informed — and start determining your destiny for yourself instead of letting others determine it for you.
Writer Mike West, a contributing editor to BodyShop Business, has been a shop owner for the past 25 years and a technician for 34 years. His shop in Seattle, Wash., has attained the I-CAR Gold Class distinction and the ASE Blue Seal of Excellence.
National Uniform Titling Moves into Senate
The U.S. Senate has become the theater for the national uniform titling debate. What began in the Anti-Car Theft Act of 1992 and followed with the establishment of the Motor Vehicle Titling, Registration and Salvage Advisory Committee has now passed the Senate Commerce Committee and awaits Senate approval on the floor.
A glance at the legislative history of the titling bill will highlight several important issues that clearly reveal the dilemma faced by policymakers since the Federal Advisory Committee forwarded their proposals to the President.
Paramount to any other issue during the Federal Advisory Committee decision-making process was the definition of a salvage vehicle. In the end — without the support of insurers or collision repairers — the Committee accepted a 75 percent definition of a salvage vehicle. If the vehicle has sustained a collision requiring repairs at 75 percent of its fair market value prior to the collision, the title would be branded as a salvage vehicle.
How did the Committee come to a 75 percent definition for a salvage vehicle? Used car dealers proposed a 25 percent definition, auction houses offered a 50 percent definition, and ASA and insurers encouraged the Committee to use definitions already in the Anti-Car Theft Act, which avoided the seduction of the unscientific percentage process. Unfortunately, the Committee opted for a 75 percent definition.
Former Congressman Rick White of Washington began the process by introducing a bill very similar to the Federal Advisory Committee proposal. In the Senate, Majority Leader Trent Lott championed a like version. The bill, after public hearings, sailed through the U.S. House of Representatives. The Senate Commerce Committee approved a slightly different version with an 80 percent salvage definition. But attempts to place the bill in the omnibus-spending package at the end of 1998 failed.
Earlier this year, Senator Lott re-introduced his bill, S. 655, the National Motor Vehicle Consumer Protection Act of 1999. Key provisions of S. 655: adopts a 75 percent salvage vehicle definition; applies to a vehicle class defined as having a retail value of more than $7,500 or a manufacturer’s model-year designation of or later than the year in which the vehicle was wrecked, destroyed or damaged, or any of the six preceding years; defines a non-repairable vehicle as any vehicle, other than a flood vehicle, that’s incapable of safe operation for use on roads or highways and that has no re-sale value except as a source of parts or scrap only or that is irreversibly designated by the owner as a source of parts or scrap; has no post-repair inspection provision. A state’s adherence to the bill’s provisions is voluntary but required in order to obtain implementation funding.
Less than one week after the introduction of S. 655, U.S. Senator Diane Feinstein of California, along with senators Carl Levin of Michigan and Richard Bryan of California, introduced S. 678, the Salvaged and Damaged Motor Vehicle Information Disclosure Act. S. 678 took a much broader interpretation of potential salvage-branded vehicles than previous legislation, and the bill is supported by consumer organizations, attorneys general and recyclers. Key provisions of S. 678: has 65 percent salvage vehicle definition applicable to all vehicles, has a 90 percent non-repairable definition, has a post-repair inspection program and establishes a federal minimum standard for salvage vehicles while allowing states to offer stronger protections.
"This bill is supported by numerous state attorneys general and consumer advocates because it offers far more comprehensive protections than other bills being offered on this subject," said Feinstein. "It is also the only legislation that allows consumers the right to recover damages in cases of fraud."
The National Association of Consumer Advocates endorsed the Feinstein bill in March, commenting that each year, more than 1 million totaled cars are rebuilt and sold to unsuspecting consumers and that these consumers need protection.
Recently, the Senate Commerce Committee conducted a mark up of S. 655 and passed it without amendment — but agreed to work toward a common solution prior to floor consideration of the legislation. The Senate hasn’t scheduled a vote on the bill yet.
Saluting the Committee passage of his legislation, Senator Lott says: "Consumers are not adequately protected by current law. My goal is to correct this problem by fostering disclosure so used car buyers do not unknowingly purchase a previously totaled vehicle. S. 655 would achieve that end."
Most of the insurance industry trade associations signed a letter to Senate Commerce Committee Chairman John McCain of Arizona on June 22 supporting S. 655 but urged the Committee to "oppose any amendments based on the Feinstein damage-disclosure bill." Regarding the definition of a salvage vehicle, the letter stated: "The Feinstein damage disclosure bill proposes a 65 percent salvage ‘trigger.’ This is wholly out of touch with state titling laws and existing insurance claims-settlement practices. Insurance claims data demonstrate that 75 percent is the minimum appropriate salvage standard. If a 65 percent salvage trigger was adopted, insurers would be required to ‘total’ cars that are clearly repairable, driving up claim costs and increasing insurance premiums. Plainly, this would undermine any benefit of uniformity for vehicle owners." (The National Association of Independent Insurers (NAII) didn’t sign the letter.)
Soon after the Committee passed S.655, NBC’s Dateline ran a "Rebuilt Wrecks" program, which spurred national media again on the issue of salvage vehicles. Dateline highlighted the variance in state laws, specifically citing states that might brand a vehicle "junk," making it illegal to be sold, licensed and driven. These same cars can then be shipped to a state without a "junk" classification, potentially allowing the other state’s warning to drop and a new "clean" title to be issued.
The Senate is expected to act on the bill this year, and senators are expected to offer varying amendments. If the salvage definition becomes too broad, however, repairers and insurers may find themselves opposing the legislation. It’s anticipated the House will view legislation approved by the Senate as compromise legislation and pass it with some haste. And if the Committee-passed legislation becomes law, there’s much interest in how many states will work to change their current titling policies.
Whatever the final outcome, national titling legislation has moved to center stage in the U.S. Congress.