Legislative Lowdown - BodyShop Business

Legislative Lowdown

California – The Collision Repair Association of California’s
(CRA) two sponsored bills, Senate Bills 1059 and 1167, were heard by
the Senate Committee on Banking, Finance and Insurance on April 2,
coinciding with CRA’s Legislative Day.

The CRA says insurers successfully convinced the California Chamber of
Commerce to oppose S.B. 1167, which mandates that once a vehicle owner
has chosen a repair facility, the insurer cannot attempt to influence
that decision. The Personal Insurance Federation of California (PIFC),
the American Insurance Association (AIA) and the Association of
California Insurance Companies (ACIC) have voiced their opposition to
the legislation sponsored by Sen. Patricia Wiggins (D-Santa Rosa). The
three organizations represent more than 90 percent of auto insurers
doing business in California. The associations say that the current
law, S.B. 551, which passed in 2003, guarantees California consumers
the right to decide where their car is fixed after an accident.

The Chamber’s letter of opposition to Wiggins stated, “The California
Chamber of Commerce OPPOSES your S.B. 1167, which inappropriately
limits informed consumer choice by restricting the information that
insurers can provide to policyholders in regards to their auto repair

The letter also said that the bill “seeks to restrict informed consumer
choice by prohibiting insurers from even discussing additional repair
options with the consumer if the consumer has already selected a body

S.B. 1059, sponsored by state Sen. Carole Migden (D-San Francisco),
states that an insurer may not require use of aftermarket parts, nor
may it limit payment to aftermarket parts when factory parts are used,
in the repair of a vehicle under factory warranty. The CRA was informed
that CAPA will be opposing the bill but its reasoning has yet to be

In other legislation, state Sen. Lou Correa (D-Santa Ana) has
introduced Senate Bill 1371, which would prohibit an insurer from
recommending, applying or including an arbitrary cap when adjusting
labor, parts or materials, including paint, on a repair estimate.

The California Department of Insurance (DOI) has told insurers that
they cannot cap paint and materials costs, according to the California
Autobody Association (CAA). The DOI communicated this in workshops held
in August 2007 and August 2006. While the DOI is considering
regulations to prevent capping costs, S.B. 1371 offers a legislative
solution should the DOI not implement regulations.

The state assembly has again introduced a bill that would require body
shops to certify in writing that the crash parts listed on the final
repair bill are those that were actually installed on the vehicle.

Assembly Bill 2825 is similar to a bill that Gov. Arnold Schwarzenegger
vetoed in October 2007. The CAA successfully argued that automotive
repair dealers are required to identify crash parts in the estimate to
the customer before vehicle repairs begin, as well as in the final
invoice to the customer after repairs are completed. The CAA also noted
that a shop making a false written statement on the estimate or invoice
is committing fraud and can face criminal prosecution and severe

“While I am generally supportive of consumer protection laws,”
Schwarzenegger said in October of A.B. 1483, “the provisions of this
bill are duplicative of existing law and therefore unnecessary. In
fact, these provisions may lead to increased expenses and decreased
efficiency at automotive repair dealers, which could result in reduced
customer service and higher costs passed onto the consumer. For this
reason, I am unable to sign this bill.”

The CAA is urging all repairers to voice opposition to A.B. 2825 by
contacting the governor and Assembly Business and Professions Committee

Connecticut – The state Senate’s Joint Committee on
Transportation recommended last month passage of a bill that would
strengthen Connecticut’s existing steering law.

Senate Bill 288 states, “No insurance company doing business in this
state, or agent or adjuster for such company shall recommend, request
or require any insured to use a specific person for the provision of
automobile physical damage repairs, automobile glass replacement, glass
repair service or glass products.”

The Property Casualty Insurers Association of America (PCI) submitted
written testimony in opposition to the bill to the Joint Committee on
Transportation. Under current law, insurers and appraisers are
prohibited from requiring that auto repairs be made at a specified
repair facility. S.B. 288 would extend this prohibition to include
requesting or recommending a particular repair shop to consumers. The
bill defines the terms “recommend, request or require” as “any act to
influence a consumer’s decision” to choose a repair facility.

“The bill expressly prohibits an insurer from even mentioning the
benefits a consumer may receive through its direct-repair program,”
says Paul Magaril, regional manager and counsel for PCI. “The type of
price fixing permitted under this bill would benefit repair shops at
the detriment of consumers.”

Florida – Insurance Commissioner Kevin McCarty announced on Feb.
19 that the Office of Insurance Regulation (OIR) has filed an
administrative complaint on a non-emergency basis seeking to suspend
the certificates of authority of the Allstate Companies to write new
insurance policies in Florida.

The complaint is based in part on Allstate’s failure to provide
witnesses and documents as subpoenaed by the OIR, falsely labeling
subpoenaed documents as trade secret and falsely certifying its rate

Allstate was to have provided all appropriate company documents related
to the OIR’s investigation at or before a Jan. 15 hearing. The insurer
has not delivered all documents requested by the subpoenas and is
maintaining claims of privilege to some of the documents.

The OIR has been asking for documents about Allstate’s reinsurance
program, its relationships with risk modeling companies, insurance
rating organizations and insurance trade associations. The subpoenas
also required appropriate witnesses to appear at the January hearing to
be able to discuss issues that were subjects of the subpoenas.

Filing the complaint is required under Florida law as part of the
process that began on Jan. 17 when McCarty suspended Allstate from
writing any new business in the state. Allstate is expected to request
an administrative hearing on the OIR’s complaint. If requested, a
hearing would be held at the Division of Administrative Hearings (DOAH).

An administrative law judge will hear the evidence and then make
findings of fact. McCarty could then issue a Final Order, which may
include a suspension of Allstate’s certificates of authority. The
insurer could then appeal to the First District Court of Appeal.

The DOAH hearing is separate from the ongoing matter that Allstate
initiated in the First District Court of Appeal (DCA) by filing its
Jan. 17 notice of appeal of the commissioner’s suspension. That matter
is still proceeding in the DCA.

The Allstate suspension was the first time the OIR had suspended a
company for failure to “freely” provide documents as required by
Florida law.

Iowa – The state Senate is considering a bill that would bar
insurers from requiring repairers to buy parts and supplies from
specified sellers. Sen. Steve Warnstadt (D-Sioux City) introduced
Senate File 2326, which addresses shops that perform repairs on behalf
of the insurer to the property of an insured. The bill defines such
requirements of insurers or their agents as prohibited unfair methods
of competition and unfair or deceptive acts or practices in the
business of insurance.

Violations of the bill would be punishable by civil penalties and may
result in the suspension or revocation of the violator’s license.

The Iowa Collision Repair Association (ICRA) is sponsoring Senate Study
Bill 3261 and asking for the Iowa law to be changed so collision
repairers can be reimbursed for sales tax on paint and material.

The bill amends the definition of “retail sale” to include paint and
vehicle body materials that are applied to or consumed during a motor
vehicle collision repair if the charge for each of these items is
separately stated. A repairer purchasing these items would then be
exempt from the sales tax because they are considered purchased for

Kansas – The state House of Representatives is considering an
anti-steering bill that would require insurers to notify claimants that
they have the right to choose a repairer of their choice. Bob Smith,
president of Storm Appraisal & Management Service, has lobbied for
the bill.

House Bill 2653 bill states that once a vehicle owner has chosen a
repair facility, the insurer cannot attempt to influence that decision.
It also says that insurers cannot limit or discount the amount that it
pays for a repair on the basis that the repair would have cost less if
it had been made at an insurer-specified shop.

Another requirement of the bill is that all damage appraisals must
notify consumers of their rights in boldfaced type: “NOTICE UNDER
evidence of proof of financial responsibility or security concerning
any insurance policy of insurance issued in Kansas must also include
the notification.

The bill is under consideration in the Transportation Committee, which
referred the bill to its subcommittee for Insurance and Financial

New Jersey – The state Senate and Assembly reintroduced the
“Right to Repair Act” on Feb. 21. State Sen. Paul Sarlo (D-Woodridge)
reintroduced Senate Bill 1334, and Assemblyman Reed Gusciora
(D-Trenton) is sponsoring Assembly Bill 803.

New Jersey’s Right to Repair Act ran out of the legislative clock to have it passed in the legislature’s last session.

AAA, the Alliance of Automotive Service Providers of New Jersey,
RetireSafe and National Grange are among the organizations supporting
the act. The Coalition for Auto Repair Equality (CARE), which
represents NAPA, Midas, CARQUEST, AutoZone, Advance Auto, O’Reilly’s
and other aftermarket companies, also supports the act.

New York – Last month, legislators introduced Senate Bill 7001,
a companion to a right to repair bill under consideration in the
Assembly (House Bill 5817). Similar to the federal legislation, the
state bill would mandate that car companies share with independent
repair shops the same service information, software and tools that they
provide their new car dealer franchises. Failure to do so could mean
fines and/or provide the ability of a car owner or repair shop to take
legal action.

State Sens. Carl Marcellino (R-Syosset), John DeFrancisco (R-Syracuse),
Michael Nozzolio (R-Fayette), Caesar Trunzo (R-Hauppauge,) and Dale
Volker (R-Depew,) sponsored S.B. 7001.

Oklahoma –
An Oklahoma House subcommittee voted against
House Bill 2820 by a vote of 7-0. The bill, heard by the House Economic
Development and Financial Services’ Subcommittee on Industry and Labor
on Feb. 19, would have created the Motor Vehicle Owners Right to Repair

The Automotive Service Association (ASA) believes Right to Repair
legislation in Oklahoma would interfere with the voluntary,
industry-supported service information process in place since the
ASA-Automaker Agreement, which protects independent repairers and
consumers. The National Automotive Service Task Force (NASTF) already
accommodates identification and correction of gaps involved in the
access of automotive service information, diagnostic tools and
equipment, and training.

Ron Pyle, president and chief staff executive of the ASA, presented
testimony Oct. 26, 2007, as part of an opposition panel to last
session’s Right to Repair Bill.

To view the legislation, visit ASA’s legislative Web site, www.takingthehill.com. The bill can be found under “Track Legislation” by clicking on “Oklahoma.”

Rhode Island – The state House is considering a bill that would
prevent shops from rebating or offering to rebate a customer’s
deductible to entice the customer to choose a particular shop. State
Rep. Timothy A. Williamson (D-West Warwick) introduced House Bill 7994
on Feb. 28.

If enacted, violations would be grounds for denial, suspension or revocation of licenses.

Virginia –
Gov. Timothy M. Kaine approved a law last month
that aims to prohibit insurers from arbitrarily capping paint and
materials reimbursements. The state House and Senate had both
unanimously passed bills in February, Senate Bill 697 and House Bill
1176, that defined capping as “the setting of arbitrary and
unreasonable limits on what an insurer will allow as reimbursement for
paint and materials.”

The law will go into effect on July 1.

Washington –
Anti-steering legislation aimed at the auto
glass industry died in the state Senate last month. The Washington
House had approved House Bill 3053, which attempted to end insurer
steering in auto glass claims, but the legislation did not make it past
the Senate’s Financial Institutions & Insurance Committee.
Insurers, driven by the National Association of Mutual Insurance
Companies, rallied against the bill, which would have prohibited an
insurer from recommending a repairer if the vehicle owner had already
chosen one.

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