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Auto Choice Could Impact Collision IndustryPosted 6/7/1999By Robert L. Redding, Jr.
U.S. Sen. Mitch McConnell (R-Ky.) and U.S. House of Representatives Majority Leader Dick Armey (R-Texas) have introduced companion Auto Choice Reform Acts of 1999 in the Senate and House, respectively. The bills have a goal of lowering insurance premiums through a system of choice for consumers. Senator McConnell referred to the bill as a "massive across-the-board tax cut to every American motorist." He went on to say, "This common sense auto insurance reform can be summed up in two words, choice and savings." These bills were introduced in the last Congress but no action was taken. They have been referred to the Senate and House commerce committees. Several years ago, House and Senate leaders hosted a joint hearing to discuss insurance reform, specifically how premiums might be reduced for consumers. Testifying at the hearing was New Jersey Governor Christine Todd Whitman. Governor Whitman made insurance reform a top priority in her re-election campaign. She went on to sign into law a sweeping insurance reform package that included a provision that could potentially place price caps on collision repairs. The bill would prevent non-direct repair facilities from billing more to a consumer whose insurer has a DRP program, than a DRP facility would charge. ASA has opposed this provision and met with New Jersey regulators to try to dilute some of the problems the new law could cause collision repairers. The bills in their present form focus on tort reform. They allow a choice for consumers between two types of protection systems. The insurance industry is divided in their support for the legislation. In the findings of the bill, it states that "auto insurance premiums are too high, largely because the current auto liability insurance system encourages costly fraudulent claims and unnecessarily contentious behavior by both claimants and defendants, and often requires expensive lawyers on both sides to settle claims." Unfortunately, the bills do not address insurer steering practices or replacement crash parts. What is interesting is the emphasis on the federal government encouraging consumer choice "but not exercising regulatory authority over the business of auto insurance, including rates and insurer solvency, as that authority is appropriately exercised by the states." Although reform or repeal of state authority over the insurance industry has been a goal of the collision industry for many years, repairers have shifted their insurance concerns to the state policymakers out of necessity. The Automotive Service Association (ASA), in a coalition of other industries, worked with House Judiciary Committee members several years ago to get some McCarran-Ferguson reforms included in the managed health care debate. As the debate over auto choice progresses in the House and Senate commerce committees, several concerns to the industry evolve. First, it is imperative that federal policymakers avoid the pitfalls found when the New Jersey legislature debated their auto insurance reform package. Inhibiting competition by allowing price caps is not the American system of commerce. Second, true auto choice should also apply to what types of replacement crash parts are used to repair the vehicle. Consumers should be notified as to the types of parts to be used in a collision repair and authorize the use of those parts. Finally, a closer view of the consumer's right to choose a repair facility after an accident is certainly in line with the overall policy of the legislation. As the commerce committees review this legislation, many of these issues will be debated. Surely trial lawyer organizations will adamantly oppose Auto Choice. Attempts in recent years to reform liability laws have met with a fury of opposition. One item to note in the current legislation has to do with "election by electronic means" or "electronic signature." It is defined in the bill as meaning "any letters, characters or symbols executed or adopted by a party with an intent to authenticate a writing, that are manifested by electronic means, or any other similar means, and logically associated with that writing." This is pertinent to the crash parts debate in that insurer arguments around the country have been that notice to the consumer is quite appropriate as to the types of crash parts to be used in a repair, but that authorization in writing is quite burdensome to the process and insurers have historically opposed written authorization. Is it possible that insurers might support authorization by an electronic means? The Auto Choice bill is supported by some major insurance companies so this might be an option to consider around the country. Since McCarran-Ferguson, the "business of insurance" has been almost entirely regulated by the states. Insurers have opposed changing this system. Auto Choice raises several interesting issues that repairers should follow and discuss as these bills are considered in the coming months. Repairers have boldly taken key concerns to state policymakers in large numbers during the last few years. There should be nothing offensive about a parallel federal strategy for collision issues. Although Auto Choice has not been scheduled for committee consideration, it is a top priority for the House Majority Leader and the collision industry should look for more on these bills in the coming months. Policymakers see this as a potential "tax cut" for the American motorist.
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Copyright (c) 1996-2008. Automotive Service Association. All rights reserved.
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