NCOIL Property and Casualty Insurance Committee to Meet Next Week on Crash Parts Model Legislation - BodyShop Business
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NCOIL Property and Casualty Insurance Committee to Meet Next Week on Crash Parts Model Legislation

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The National Conference of Insurance Legislators (NCOIL) Property and Casualty Insurance Committee meetings commence next Thursday, Nov. 18, at the annual NCOIL meeting to be held in Austin, Texas. Included in the meeting will be the discussion of the proposed Model Act Regarding Motor Vehicle Crash Parts and Repair. The model requires disclosure and consent prior to crash part repair or replacement; establishes conditions whereby insurers may specify the use of aftermarket crash parts; and mandates permanent identification of crash parts.

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The model legislation lays out situations in which insurers may specify the use of aftermarket crash parts in repairs. Per the legislation, to specify the use of aftermarket parts, insurers would have to:

• Disclose in writing, in the issuance or renewal of a comprehensive or collision insurance policy, that the insurer may specify the use of aftermarket, certified, recycled or remanufactured crash parts.

• Ensure that the specified aftermarket crash parts are warranted by the manufacturer or distributor to equal or exceed the car company’s warranty for the crash part in terms of kind, quality, safety, fit and performance. Replacement crash parts certified to meet the standards set by an American National Standards Institute (ANSI)-recognized entity would be deemed "equivalent" to corresponding OEM crash parts.

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• Pay the cost of any modifications to parts that may become necessary to effect the repair.

• Identify to the consumer, in a written estimate prior to the repair, any aftermarket crash part that will be used and that the manufacturer and/or distributor of the aftermarket part warrants it, rather than the OEM.

The Society of Collision Repair Specialists (SCRS) intends to oppose both the crash parts model and steering model.

"In regard to the crash parts model, we’ve communicated our overarching objections to it consistently both over the last decade when it was introduced and over the last couple of years when it was reintroduced to the committee," says SCRS Executive Director Aaron Schulenburg. "The objections we have provided over the last several hearings have remained unaddressed and we continue to be concerned about them."

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Regarding the crash parts model, SCRS believes:

•It doesn’t place greater responsibility on parts manufacturers and/or distributors to improve the overall quality or limit the market to only receiving high quality parts but instead shifts the burden to the repair facility and increases its liability in the process. For example, in Section 5, the language requires repairers to affix a permanent, non-removeable identification on the parts instead of stating that only parts where the manufacturer has permanently stamped the part with an ID can be sold.

• Parts in general are sold interstate, and therefore this model has the potential to be adopted or ignored on a state-by-state basis, thus negating its effectiveness even in states which pass it.

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• Just because an aftermarket part is certified doesn’t mean it can or should be defined as equivalent to the OEM part. Not all certification programs require that the part meets every equivalence, just that it met the criteria established by the certifying body.

• There is no requirement in the language for the testing of the parts or mention of traceability. Most importantly, that there is no responsibility resting with the insurer if it chooses to involve itself in the repair decision by requiring that certain parts be used. The model allows for insurers to specify parts, and if the insurer steps outside the business of insurance and into the business of auto repair by making those specifications, SCRS believes it should assume some of the responsibility for those choices.

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The Automotive Service Association (ASA) also finds several key
provisions of the crash parts bill problematic and potentially harmful to the
automotive repair industry, including:

• Lack of a formal consumer written consent process for the use of replacement crash parts.

• Provisions equating certified aftermarket crash parts to OEM parts. 

Examing the steering model, SCRS opposes it for a variety of reasons:

• It provides little outline of enforceability. For example, in Section 6b, the model indicates that violations to the model would be considered under unfair claims practices and subject to applicable state fines and penalties. But in most cases, unfair claims practices in each state are specifically only upheld when there is an established pattern of practice of violation. SCRS believes if a steering law is going to be effective, it must be enforceable on a per instance basis rather than as a pattern of practice.

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• The current proposal lacks language that addresses the nuances within the claims settlement process and provides minimal prohibitions which are easily navigated through carefully crafted word tracks. For example, Section 4a indicates an insurer shall not require an insured or claimant to utilize a preferred facility as a prerequisite to settling a claim. But the language fails to recognize that steering is often not conducted through requirements or mandates that say "You must go here to be paid for your claim" but rather through suggestion or insinuation.

• With the current language, it doesn’t have a lot of foreseeable impact and the restrictions are mild. SCRS believes there are more states today that have more strenuous anti-steering laws already in place, and that introducing a new model that’s accepted by this body that fails to meet or exceed those existing statutes could open the door for those states to regress to a lesser standard of diligence on the issue of steering.

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"We’re hoping the legislators see the fact that, with the absolute divide of interested parties’ support, maybe it’s time to start looking at other more possible arenas and stop continuing to come back to this issue," Schulenburg says.

The SCRS encourages every repair facility and collision repair association to actively contact the legislators prior to the upcoming NCOIL meeting to urge them to vote in opposition to both models, and further to vote that both be removed from the committee’s agenda. If a repairer doesn’t have a representative from his or her state on the committee, the SCRS encourages him or her to contact Chairwoman Ruth Teichman directly. 

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