ASA Addresses Insurance Issues
by Robert L. Redding, Jr.* For many years the focus of the collision industry’s efforts regarding insurance relationships dealt primarily with the repeal or reform of the McCarran-Ferguson Act. In 1945, the United States Congress enacted the McCarran-Ferguson Act, which provides essentially that federal laws not specifically directed at the business of insurance shall not supersede state laws that regulate insurance. The most significant feature of the act is its exemption of the business of insurance from most federal antitrust law. Since the bill became law, the industry is regulated at the state level. Much of the legislative and regulatory policy for the collision industry has revolved around this act and its product at the state level.
The Automotive Service Association (ASA) has been very concerned about substantive reform of the insurer-repairer relationship, as well as the heightening of the consumer’s input in policy impacting all three entities: repairers, consumers and insurers. ASA has focused on a two-part strategy. First, meet with the major insurers to discuss the future of the collision industry and how we might better work together in developing public policy. Second, strive to assure that new legislative and regulatory policy at the state and federal level are developed with input from repairers, insurers and consumers.
A very real example of key participants being left out of the process occurred in New Jersey early last year. As part of an effort to create a managed care program in New Jersey, regulators proposed a rule without consulting the repair industry. The rule was not part of advocacy efforts from the consumer community. After months of discussion, hearings and legislative activity, the rule was abandoned by the new insurance commissioner. What was made clear in the beginning by New Jersey Gov. Christine Todd Whitman, and, in the end, by the insurance commissioner, was that such a rule should benefit the consumer. The proposed rule was determined not to sufficiently benefit the New Jersey consumer. This exemplifies the need to include consumer groups in policy making.
Unfortunately, the New Jersey managed care debate sparked a series of articles, mass mailings and seminars relating to the insurance industry that were not always accurate. In an effort to better equip shop owners in dealing with the volumes of law, cases and regulatory policies, ASA set up policy discussions at its annual meeting and at Northern Autobody. Panelists at the annual meeting in Washington, D.C., included a senior official from the U.S. Justice Department, a consumer lawyer, an insurance industry lawyer and a top official from the insurance commissioners trade association. The panel at Northern Autobody included an insurance industry lawyer, a consumer lawyer and a specialist in antitrust law. Both panels discussed case law including, but not limited to, the 1963 Consent Decree involving the Association of Casualty and Surety Companies, American Mutual Insurance Alliance and the National Association of Mutual Casualty Companies, U.S. vs. South-Eastern Underwriters, the Royal Drug Company case, Proctor vs. State Farm, the McCready case and the Lakes Body Shop case.
The panels took a hard look at preferred provider organizations, direct repair programs, anti-steering laws, labor rates, parts discounts and caps, as well as other collision issues. Both programs allowed the audience to participate. Prior to and after both panels, participants agreed that this is the best way to get accurate information in the hands of the industry. ASA believes that we have to confront these issues, whether it be the 1963 Consent Decree or the value of repealing McCarran-Ferguson, in a way that is factual and productive. Our industry is far too complex to make statements without a thought process that includes wide participation.
In a review of the trade press information in the last year, one trade article about the 1963 Consent Decree put in bold this statement, "... no more capping, no more DRPs, no more imposed labor rates, no more imitation parts, and no more adjusters prying into the relationship between car owners and the shop owners." In a direct mail campaign about the decree, the focus was similar. These are just two examples of why these issues need to be discussed by experts in a public forum.
It is critical that we deal with our industry’s problems as efficiently as possible. The most effective way at this point in time is at the state level. Whether it be anti-steering legislation, legislation involving aftermarket crash parts or preventing a new managed care program, shop owners must spend their time wisely and be well-informed.
This state or federal activity must occur with a parallel effort in communicating with other entities, specifically consumers and insurers. Public policy regarding collision repair does not exist in a vacuum. Insurers have to recognize that repairers are impacted by their policy efforts and consumer advocacy groups must join with us in the development of policy.
* Robert L. Redding, Jr., is ASA’s Washington representative. He holds a law degree from George Washington University School of Law.
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AutoInc. Magazine ®, Vol. XLIV No. 7, July 1996