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States continue to consider legislation related to collision repair, claims processes

Monday, September 25, 2017 - 06:00
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Lawmakers in state capitols around the country this year have been busy proposing, considering and – in a few cases – enacting legislation that could have an impact on collision repairers. Even if your shop’s state legislature isn’t working on any such bills, keeping up with what’s happening in other states may give you or your state association ideas on what type of laws to work on – or watch out for – while your elected representatives meet.

Parts take center stage

Bills related to the use of non-OEM parts are common every year, and 2017 has been no exception.

A bill introduced in Massachusetts, for example, would prohibit insurers from dictating the use of any part that “compromises the operational safety or structural integrity of the vehicle,” and would prohibit insurers from mandating the use of non-OEM parts “on any vehicle still under manufacturer warranty or lease agreement.”

Proponents of aftermarket parts, on the other hand, introduced legislation in several states that would have loosened limits on the use of such parts.

An Arkansas bill, for example, would have repealed that state’s existing law requiring insurers to use OEM crash parts on any vehicle still under the manufacturer’s warranty (unless the vehicle owner gives written consent to the use of other parts). The bill was introduced by Republican lawmaker Greg Standridge, president of an independent insurance agency in Arkansas.

It passed the Senate on a 21-9 vote. But as the bill moved to the Arkansas House, the Automotive Service Association (ASA) was among those encouraging Arkansas shops to voice opposition to the bill. ASA’s lobbyist, Bob Redding, wrote a letter to the House committee chairman, noting that “Arkansas is one of a few states that assures vehicle owners have notice as to what types of replacement crash parts are used in the repair of their vehicle and consent to the use of these parts.”

That committee eventually gave a thumbs-down to the bill by a voice vote.

“In essence, the Committee upheld written consent as an important tool for consumers,” the ASA said in a statement.

“It’s concerning that there are lobbying efforts to repeal transparency to the consumer,” Aaron Schulenburg of the Society of Collision Repair Specialists (SCRS) said of the Arkansas bill. “Anything that reduces [consumer disclosure] should be concerning to all of us in the industry, no matter what segment you’re in.”

How's that working in Montana?

Mark Brodie of Ron's Auto Refinishers in Missoula, Mont., likes a 2011 law in his state that prohibits an insurer from "unilaterally disregard(ing) a repair operation or cost identified by an estimating system" that the insurer and shop have agreed to use to determine the cost of repair.

“It has been beneficial to us,” Brodie said.

Travis Johnston of The Wreck Room in Helena, Mont., agrees.

“For the most part, 70 or 80 percent of repairs, we get paid for all procedures required and billed for,” Johnston said. “We still, unfortunately, have to deal with [some] cut-rate insurers that utilize unethical business practices. In these cases, we typically still get paid for most billed procedures; it just takes longer and sometimes has to be moved up the food chain to upper management.”

But he also said that even with such legislation, “it still comes back to education,” making sure his employees understand the estimating systems and “do in-house audits.”

He said he’d like the current law to be amended to also prohibit insurers from “unilaterally disregarding a repair operation recommended or required by an OEM,” such as scanning and calibrations.

“It seems like we are getting a lot of kick-back from insurers on OEM-required procedures,” he said. “But I think that’s a fight that will continue on. If we could get all shops to start performing repairs as per OEM guidelines, we would be golden. Then again, that’s probably like planning on winning the lottery.”

But backers of the legislation see it differently. Ray Colas of LKQ Corporation’s government affairs department said the Arkansas law was targeted because it makes no sense to limit the use of non-OEM parts on vehicles still under the manufacturer’s warranty given that the insurance policy, not the vehicle warranty, determines what crash parts will be used to repair the vehicle.

Colas said the proposed change won’t happen this year, but isn’t dead. Supporters are asking the Arkansas Attorney General to conduct a one-year survey into any consumer complaints related to parts over the last three years.

“We know there aren’t any, as it applies to accident, injury or death,” Colas said.

The study results are to be reported to the legislature and Governor, he said, “so that a decision can be made then by a governing body as to whether or not these parts should continue to be restricted.”

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