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An Arkansas bill, for example, would have repealed that state’s existing law requiring insurers to use OEM crash parts on any vehicle still under the manufacturer’s warranty (unless the vehicle owner gives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? |
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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.”
He said a similar approach will be used in West Virginia and perhaps other states after bills related to the use of non-OEM parts either have failed or aren’t expected to move forward.
The Indiana Auto Body Association, meanwhile, hopes to take another run next year to enact a bill – similar to one that died in committee earlier this year – to give third-party claimants the same right “to approve the type of body parts used to repair a motor vehicle” currently spelled out in state law for first-party insureds.
Efforts to curb steering
Regulations designed to ensure a consumer’s choice in terms of where to have a vehicle repaired – like one passed last year in New York (see sidebar) – have also been on the table in a number of states this year.
A Massachusetts bill (H 2168) would add a provision to state law to require insurers to notify insureds reporting a claim that state law gives them “the right to choose a registered repair shop of your choice,” and that “all registered repair shops must guarantee their repairs.”
But most anti-steering bills introduced this year didn’t make it through the legislative process. A short-lived bill in Iowa, for example, would have prohibited insurers from recommending a repair shop without also informing the insured or claimant that they are not required to use the recommended shop. That bill also would have prohibited insurers from requiring a shop to use a specific parts vendor or procurement process, and placed news limits on the use of non-OEM parts.
Maine’s Republican Gov. Paul LePage this past summer vetoed a bill passed by lawmakers there that would have required insurers to inform consumers of their right to choose a collision repair facility. The Democrat-controlled Maine House of Representatives voted to overturn the Governor’s veto, but there were too few votes to do likewise in the Republican-controlled state Senate.
Texas shops were also unsuccessful this year in getting lawmakers there to pass a bill that would have strengthen anti-steering regulations.
| How’s that law working in Pennsylvania and Virginia? |
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Regulation changes in Pennsylvania and Virginia last year now allow initial appraisals of damage vehicles to be based on photographs or video rather than requiring a physical inspection of the vehicle. Bob Noaker of Noaker’s Auto Body in Duncannon, Pa., said he hasn’t seen much of an impact from the law in his shop, perhaps because his business does a fair amount of direct repair work. That said, customer who get photos estimates sometimes “are confused why our estimate is so much higher,” Noaker said, perhaps because “insurance companies write the minimum,” hoping the customer just cashes out without repairing the vehicle. Other shops in Pennsylvania and Virginia say the deficiencies they see in photo estimates are making the change in state regulations bad for their business. “The new legislation has a negative impact on our cycle time,” Charlie Bourne of B&W Auto Body in Charlottesville, Va., said. “We had one vehicle towed in here June 28 with an insurance estimate of $1,210. We sent a supplement in for $2,128, for a total repair of $3,338. We only received a supplement check (for $1,699) three weeks later.” “Estimates written by photos are usually missing two-thirds of the damage,” agreed Steve Kaminstein of Quality Collision in Dallas, Pa. “In my opinion, it should not be legal to write appraisals from photos or video.” Sandy Buerk of St. Marys Auto Body in St. Marys, Pa., called the regulation change a “disaster.” “We have not seen any of those estimates that were anywhere close to being accurate,” she said. “It's causing delays in our shop while we wait for supplemental approvals. Customers are angry and confused, and rental days are being affected. Insurance companies have complained for years that shops aren't taking good enough photos to substantiate the damage listed, but now all of the sudden, an amateur can pull out their phone, snap a couple of pictures, in whatever of lighting, and it's all good?” |
Rates, materials and more
A number of bills tackling other shop-related issues are still pending in other state legislatures.
A bill in Massachusetts, for example, would allow shops to demand arbitration in the event an agreement cannot be reached as to the amount of a loss; current law requires that such a request come from the insured.
Other proposed legislation in Massachusetts, similar to bills introduced in previous years, would require that a minimum labor rate be established by the Massachusetts Insurance Commissioner based on the average rates paid by insurers in surrounding states (Connecticut, New York, New Hampshire, Rhode Island and Vermont).
A bill in New York would limit the sale of automotive refinish materials labeled “for professional use only” to only those with a valid state tax and federal EPA identification number, and who meet all local ordinances for the application of such materials.
And insurers in California are backing legislation there to overhaul new Department of Insurance regulations related to shop labor rate surveys that went into effect earlier this year. The new regulation doesn’t mandate that insurers use a particular survey method, but does lay out one method that regulators will consider as “fair and equitable.” That method requires, for example, that only labor rate data collected within the past 16 months be included (older data must be adjusted upward based on inflation). All registered shops must be included in the survey, and surveys are to be based on non-discounted, posted rates. And prevailing rate for a particular shop should be based primarily on the six closest shops geographically.
| How's that working in New York? |
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A New York law that went into effect earlier this year requires insurance companies to disclose on estimates that the state prohibits insurers from requiring that repairs be made by a particular shop, and that consumers have the right to use the shop of their choice. Jim Byron of Patterson Auto Body in Patterson, N.Y., isn’t seeing much change based on the new required disclosure. “That law did absolutely nothing to help with the rampant steering happening every day here in my area of New York,” Patterson said. “More laws are useless. Let’s try enforcing those laws already on the books.” But Bill Chromczak of Whitesboro Frame & Body in Utica, N.Y., said it may be too early to have seen much impact from the new law. “But it is a tool to use to explain to a possible customer that they are not required to use the insurance company’s shop,” Chromczak said. |
But California lawmakers are considering a bill that would instead only require that insurers using a survey report the findings to state regulators every 24 months. The bill would allow an insurer to include labor rates from its direct repair shops in determining prevailing labor rates. The bill would water-down newly-enacted anti-steering regulations as well.
Making it happen
If there’s legislation you’d like to see enacted in your state, Scott Weiser says, there’s one way your can increase the odds that it becomes a reality: Consider a run for a seat in your state’s legislature.
“Having a person inside is the best thing you can possibly do,” Weiser, the lobbyist for the Iowa Collision Repair Association, said. “If there’s someone in there that really knows what you do and how you’re challenged, it matters. The other legislators count on that person for advice on legislation.”
He said aside from that, it’s important for shop owners to answer the call if a state association asks them to meet with lawmakers in the state capitol.
“Those guys see me every day, as part of my job,” Weiser told Iowa shops. “They don’t see you. When you put a face on the effort, it really matters.”
