The Pennsylvania Insurance Department recently proposed a regulation revision that takes a step back in automotive insurance reform. The changes were made to Pennsylvania Code Title 31 Chapter 62, the Motor Vehicle Physical Damage Appraisers regulation.

The period of time allocated for comments to the insurance department has closed, but under Pennsylvania law there is an opportunity to still participate in the process. The Pennsylvania legislature has 20 days to review the regulation through its authorizing committees after the insurance department's comment period has closed. The Automotive Service Association (ASA) has submitted written comments and begun a grassroots campaign in Pennsylvania with collision repair facilities.

The proposed regulation sends an anti-consumer message. It also disrupts a collision industry system that has worked for a very long time. These changes include opening the state's anti-steering protections, denying information to the consumer, a weak replacement crash parts provision, limiting the regulatory authority of the insurance department on appraisers, discriminating against original equipment manufactured (OEM) parts and confusing a supplement process that has protected the consumer.

In its proposal, the Pennsylvania Insurance Department removed the requirement to include the following information on the actual appraisal: the insurance company name, the insurance file number, the number of the appraiser's license and identification number. Pennsylvania also mandated that industry abbreviations and symbols could not be used in the appraisal. This provision has been deleted. The deletion allows for confusion for the consumer and creates somewhat of a dilemma in case there is a need for a supplement. Who is responsible for the supplement? Where is the grassroots movement to allow industry symbols and abbreviations in the appraisal? This will confuse the consumer in an already complicated process.

One of the most difficult revisions being considered has to do with steering. The revised regulation clearly states that "there is no requirement to use any specific repair shop," the proposal goes on to allow two collision shops to be suggested for the repair. The current appraisal statute does not provide this. Unlike proposals in other states over the years that have attempted to invoke new steering mechanisms, there are no geographic parameters to protect unscrupulous recommendations.

In an issue that is certain to draw much discussion, the old regulation contained language for "items necessary to return the vehicle to its condition prior to the damage in question." The new language states "a description of repairs necessary to return the vehicle to its pre-damaged condition." Section (3) continues with new replacement crash parts policy. The relationship of these provisions is important to fully understand how OEM parts are now discriminated against. As you will see momentarily, the baseline for parts has lowered. Although the provision seeks to establish a parts notice requirement, it fails to provide any mechanism for consumers to consent to the use of these parts. If the use of these parts voids an OEM warranty, the aftermarket crash parts shall have a warranty equal to or better than the warranty of the original part. Who is responsible for the aftermarket parts warranty? Aftermarket parts are virtually unregulated by state and federal entities. Is the distributor required to provide the warranty? What about imported products?

In section (3)(d), the department expands its bias against OEM parts by outlining its "pre-damaged condition" position. The implication is that parts other than recycled, used or aftermarket improves the vehicle.

One of the most anti-consumer pieces of the revision is the deletion of language encouraging the "operational safety of the motor vehicle." Many of the collision parts used on a vehicle involved in an accident directly impact the safety of the consumer, i.e. hoods, headlights, structural reinforcement components. As members of the U.S. Department of Transportation's Motor Vehicle Titling and Salvage Federal Advisory Committee, one of the most debated issues was the safety of a newly repaired vehicle. Some states have begun post-repair inspection programs. Canada also has such a program.

No longer would the personal inspection of a vehicle be necessary under the changes. Telephone, fax and photo communications will be sufficient for a review of the damaged property. ASA is concerned about the loss of consumer confidence without someone actually seeing the vehicle.

The current statute has a lengthy provision for the ethical standards for appraisers. It also contains language allowing the department to revoke or suspend licenses of appraisers. This has been deleted. The department still has the power to renew a license. Can the department intervene during the life of the license?

The policy implications for this proposed rule are extreme for the collision repair industry. The department must take into consideration the thousands of small businesses in Pennsylvania that this rule will impact. Clearly consumers are demanding more choice in relation to managed care systems. This proposal limits choice by allowing repair facility lists. In what appears to be an attempt at replacement crash parts reform, it discriminates against OEM parts. It also fails to allow consumers to consent to the type parts on the vehicle being repaired.

To lower safety and ethics standards is not the trend for the rest of the country. ASA is hopeful that policymakers will continue to review the proposal and do what is right for consumers and the small business community.

Bob Redding is the Automotive Service Association's Washington, D.C., representative. He is a member of several federal and state advisory committees involved in the automotive industry. For more information about the legislative activities of ASA, visit www.TakingTheHill.com.

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