Federal – Reps. David Scott (D-Ga.) and Geoff Davis (R-Ky.) have
introduced H.R. 5611, the National Association of Registered Agents
& Brokers Reform Act (NARAB II). The bill aims to modernize the
current system of insurance agent licensing as it applies to those who
are registered in multiple states. If passed, H.R. 5611 will establish
the National Association of Registered Agents and Brokers (NARAB), a
nonprofit organization to regulate licensing standards on a nationwide
scale.
This bill would not replace the current state-based regulatory
system or reduce the requirements for agent licensure. Instead, H.R.
5611 allows producers who are licensed and operate in multiple states
to comply with a standard set of licensing and continuing education
rules. This concept was originally proposed in the Gramm-Leach-Bliley
Act of 1999.
The National Association of Insurance and Financial Advisors and the
Independent Insurance Agents and Brokers of America both support the
legislation, while the American Insurance Association opposes the bill.
To view H.R. 5611, visit ASA’s legislative Web site,
www.takingthehill.com. The bill can be found by clicking “Track Current
Legislation” on the home page. The legislation is listed under “Key
Bills in Congress.”
Federal – The U.S. House of Representatives has introduced new
legislation aimed to create an exemption in the U.S. patent law to
enable the production of aftermarket automobile parts. H.R. 5638,
introduced by Rep. Zoe Lofgren (D-Calif.), creates an exception from
infringement for certain component parts used to repair another article
of manufacture. The bill has been referred to the House Judiciary
Committee.
The bill states, “It shall not be an act of infringement to make, use,
offer to sell, or sell within the United States or import into the
United States any article of manufacture that itself constitutes a
component part of another article of manufacture, if the sole purpose
of the component part is for the repair of the article of manufacture
of which it is a part so as to restore its original appearance.”
To view H.R. 5638, visit ASA’s legislative Web site,
www.takingthehill.com. Click on “Track Legislation.” The text can be
found under “Key Bills in Congress.”
California – The California Senate Judiciary Committee approved
the Collision Repair Association of California (CRA)-sponsored Senate
Bill 1059 by a 3-2 vote and agreed to add the following provision to
the bill: “At the time of sale, the insurer shall specifically notify
the insured whether the insurance contract allows for the use of
aftermarket parts, and that such use may affect the insured’s vehicle
manufacturer’s warranty. The required use of aftermarket parts must
also be clearly and conspicuously disclosed in bold type in the front
declaration page of
the policy.”
Lee Amaradio, CRA board member and owner of Faith Quality Auto Body in
Murrieta, Calif., testified that consumers are often unaware of how
their insurance policy limits repairs on a new car. He also said that a
factory warranty would be honored across America while an aftermarket
warranty would force the consumer to return to the body shop where the
part was installed. The shop, he then said, would have to hunt down the
aftermarket producer of the part.
“Is this the kind of protection that you want for your new car?” Amaradio asked.
Senator Carole Migden, author of S.B. 1059, stated that insurers are
“snookering” consumers by hiding coverage provisions for factory and
aftermarket parts. She and Amaradio pointed to a Mercury Insurance
policy disclosure in eight-point type in a terms and conditions
pamphlet where the insurer said the decision on whether or not to use
factory or aftermarket parts would be based on which cost less. The
policyholder who provided the pamphlet to the CRA said he was unhappy
to learn that his new $45,000 car would be fixed with non-factory
parts.
The CRA’s bill was also supported by the consumer group, Consumers
For Auto Reliability and Safety, the California New Motor Car Dealers
Association and the California Autobody Association.
In addition to the new insurance policy disclosure mandate, SB 1059
would make it unlawful for an insurer to require the installation of an
aftermarket part affecting the engine, the heating and cooling system,
the air condition system and corrosion protection if the part to be
replaced is under a manufacturer’s original warranty and the
replacement occurs within three years from the date from which the
vehicle was first sold as new. The bill would allow use of aftermarket
parts if the claimant’s insurance policy required the use of
aftermarket parts, or if the repairer and the consumer agreed to use
aftermarket parts. Insurers would be barred from paying aftermarket
prices for the installation of OEM parts under the bill’s mandates.
“With the leadership of Senator Ellen Corbett, the committee chair,
SB 1059 has become a very serious piece of legislation,” said CRA
lobbyist Richard Steffen. “I find it troubling that insurers would
oppose a bill to increase a consumer’s understanding of collision
coverage for a new car. This issue isn’t going away.”
Allen Wood, CRA Executive Director, noted that during the weekend
prior to the hearing, the CRA ran 30-second television ads supporting
S.B. 1059 on selected Northern California cable channels.
“The CRA wants consumers to read their insurance policies,” Wood
said. “We don’t want them to be surprised that their new car may be
outfitted with non-factory parts after an accident. Consumers have a
right to make informed choices about the most appropriate insurance
product to protect their transportation investments.”
The bill now goes to the Senate Appropriations Committee, which will
assess its fiscal impact on the state. The next hurdle will be a vote
by the full Senate on the bill sometime in May.
On the day S.B. 1059 passed, the Senate Banking, Finance &
Insurance Committee also heard S.B. 1371, which requires insurers to
pay the reasonable cost of paint and material charges associated with
automobile damage insurance claims. The bill prohibits insurers from
capping or limiting paint and related material charges.
The Senate Banking, Finance & Insurance Committee also heard S.B.
1167 on April 16. The bill requires the insurer to ask the consumer if
he or she has selected a repair shop. If the consumer has, the insurer
would be prohibited from engaging in any discussions regarding a
program or facility that performs repairs.
Minnesota – The House Commerce and Labor Committee approved
legislation in March that would require an insurer to use an estimating
system in its entirety when appraising a damaged vehicle. The Senate
Commerce and Consumer Protection Committee considered a companion to
House File 3822, Senate File 3508, in March as well, but the committee
took no action.
In April, a motion prevailed to substitute House File 3822 with
Senate File 3508. The House legislation will be indefinitely postponed.
House File 3822 states that an insurer cannot “modify any published
manual including, but not limited to, CCC Information Services, Inc.,
Mitchell International, Audatex, or any other industry recognized
automated appraisal system relating to auto body repair unless agreed
upon by the insurer and the collision repair facility; fail to use a
manual or system in its entirety in the appraisal of a motor vehicle
unless agreed upon by the insurer and the collision repair facility; or
refuse to compensate an auto body shop for documented charges as
identified through industry recognized software programs or systems for
paint and refinishing materials in auto body repair claims.”
