Usually the mere thought that insurers hate something leads shop owners to embrace whatever that "something" is. And vice versa — "if they're in favor we must oppose it." I have an aunt who feels the same way about any shareholder votes for publicly traded companies — if the board of company XYZ wants a vote passed, she's determined to vote against it, regardless of whether or not the board is right about the particular issue. "It has to favor them and not the shareholders, otherwise they wouldn't be in favor of it," is her normal argument. Most of the time, though, she has no real clear understanding of the issue on which to base her stance. Her vote is usually just a knee-jerk reaction to the "opposition."
There are complicated discussions taking place in Washington D.C. these days that make me wonder what the best outcome would be for collision repair shops. In short, there's an argument over whether or not to repeal the McCarran-Ferguson Act (see "In Brief" ). Originally, the McCarran-Ferguson Act was enacted in 1945 to permit the states to continue regulating the insurance business. Under the Act, the business of insurance is exempt from some federal antitrust statutes to the extent that it is regulated by the states. McCarran-Ferguson has enabled insurers to engage in certain joint data collection, price trending and form and policy development activities. The law makes possible rating organizations such as Insurance Services Office, the National Council on Compensation Insurance and the American Association of Insurance Services.
If you're looking for a clear path to the pros and cons of this proposed change as it relates to your business, I'm not sure such finite outcomes can be predicted. I'm not even sure how much it will impact your lives if such a change took place. Instinct, though, tells me there's something here worth watching.
Let's think about the ramifications of an insurance industry facing national oversight rather than state-level rulemaking. There's a belief that premiums would drop for businesses as well as consumers if such a repeal took place. The Automotive Service Association supports repeal of the Act as does the Consumer Federation of America (CFA). CFA's Insurance Director Robert Hunter testified before the U.S. Senate Judiciary Committee that elimination of the exemption would save consumers at least 10 percent of the current premiums, or about $45 billion a year. The National Association of Insurance Commissioners, meanwhile, contends the opposite is true, rates will rise should such an appeal take place. NAIC also believes a repeal would aid large insurers and hurt smaller players within the insurance sector.
So on the premiums' front, support for or against a repeal appears to be a matter of who you believe.
The bigger issue for me (and you) is how it might impact development of national rules regulating insurers. Having federal authority to determine insurance company ownership of shops, for instance, could simplify drawn-out, state-level rulemaking. Would national oversight impact alleged steering and the penalties for such cases? You would think federal involvement would add some teeth to enforcement efforts.
Paying attention to who favors and opposes this change could help you decide what's best for your shop. But it's going to take some long-range vision to figure this one out.
Michael Willins
