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Montana estimating law to help repairers

Law prevents insurers from ignoring procedures recommended by estimating systems
Wednesday, August 31, 2011 - 00:00
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Repairers in Montana may have more leverage when negotiating with insurers on repair procedures. Gov. Brian Schweitzer recently signed House Bill 265 into law, making it more difficult for insurers to avoid compensating shops for operations and costs identified by estimating systems.

The bill amends Section 33-18-224 of Montana law, which covers collision insurance coverage issues (such as steering and DRP programs). It was passed despite opposition from insurance providers in Montana.

Under the new law, insurance companies may not "unilaterally disregard a repair operation or cost identified by an estimating system that the insurer and an automobile body repair business or location have agreed to utilize in determining the cost of repair."

The Montana Collision Repair Specialists (MCRS) sponsored the bill. The group had previously backed the legislation in the 2009 session, but it never made its way out of the legislature at that time.

The difference this time around, according to MCRS president Bruce Halcro, was that the data providers were on board. "This time we communicated with the data providers from day one, and they were very good and worked with us," says Halcro, who owns Capital Collision Center in Helena.

The American Insurance Association (AIA), State Farm Insurance, and Farmers Insurance Group testified in opposition of the bill during committee hearings.

The Montana bill was modeled on Minnesota Senate Bill 3508, which was passed in 2008. That bill contained almost exactly the same language except for the use of the word "arbitrarily" along with "unilaterally" in the first line. "There were some attorneys on the Senate committee that heard the bill, and they just felt that the word 'arbitrary' weakened the bill," Halcro says. "It has more teeth with that word taken out."

 

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Halcro says his group worked with the Alliance of Automotive Service Providers, Minnesota (AASP-MN) in developing the bill. Rhode Island also previously passed a similar law in 2007, requiring insurers to use estimating systems in their entirety. That bill was passed by overturning the governor's veto.

In Minnesota, use of the 2008 bill that was passed has varied by repairer, said Judell Anderson, executive director of the AASP-MN. "Some shops try to use every line item and fight every battle with the insurance company, but most shops typically pick the things that they feel are the most justified, and the most black- and-white in terms of what they should be getting paid for."

According to Anderson, there was not significant insurance industry opposition in Minnesota when the bill was up for debate. "There were some questions raised, but it would have been a very hard argument for them," Anderson says. "If you are going to make me buy a system to write an estimate, then you should abide by what the system calls for in the repair."

According to Halcro, the MCRS worked diligently to lobby legislators, and made sure they had adequate documentation for the hearing phase of the legislative process. "We made sure we had documentation to prove there was a need for this, and that it was starting to affect consumers with short pays and so on," Halcro says. "We just really had to do our due diligence."

The lobbying effort by the association's 80 member shops was helped, in part, because of the state's relatively small population (just under 1 million people spread out over 150,000 square miles). "It's different here because when there's a legislator out there, usually one of the shop owners has a tie to them," Halcro says. "If there's a legislator in Bozeman, Montana, we have shops in Bozeman that can get a hold of them and talk to them about things like this."

Both Republicans and Democrats in the legislature voted in favor of the bill.

 

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The goal of the legislation was that repairers would be in a better position to be compensated for all of the procedures detailed in the commonly used estimating systems.

"What we're hoping that it does is that it opens some flexibility where we're able to at least bring some procedures to the table, get them acknowledged and get paid for what we need to do to properly repair a car," Halcro says.

"There's been some data manipulation going on," he continues. "There are some good insurance companies out there, and they won't see much of an effect. But there are people out that that, if they like to manipulate the system, they will see some real effects."

Halcro hopes shops in the state will be able to benefit equally. "There are going to be a certain amount of shops that pay attention and that use it as it's intended, and certain shops that are going to ignore it because they haven't trained themselves," Halcro says. "The intent was to be able to use the whole data system and not cherry pick the procedures. This really just levels the playing field."

Repairers in Montana may have more leverage when negotiating with insurers on repair procedures. Gov. Brian Schweitzer recently signed House Bill 265 into law, making it more difficult for insurers to avoid compensating shops for operations and costs identified by estimating systems.

The bill amends Section 33-18-224 of Montana law, which covers collision insurance coverage issues (such as steering and DRP programs). It was passed despite opposition from insurance providers in Montana.

Under the new law, insurance companies may not "unilaterally disregard a repair operation or cost identified by an estimating system that the insurer and an automobile body repair business or location have agreed to utilize in determining the cost of repair."

The Montana Collision Repair Specialists (MCRS) sponsored the bill. The group had previously backed the legislation in the 2009 session, but it never made its way out of the legislature at that time.

The difference this time around, according to MCRS president Bruce Halcro, was that the data providers were on board. "This time we communicated with the data providers from day one, and they were very good and worked with us," says Halcro, who owns Capital Collision Center in Helena.

The American Insurance Association (AIA), State Farm Insurance, and Farmers Insurance Group testified in opposition of the bill during committee hearings.

The Montana bill was modeled on Minnesota Senate Bill 3508, which was passed in 2008. That bill contained almost exactly the same language except for the use of the word "arbitrarily" along with "unilaterally" in the first line. "There were some attorneys on the Senate committee that heard the bill, and they just felt that the word 'arbitrary' weakened the bill," Halcro says. "It has more teeth with that word taken out."

 

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