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Consumer Education Could Impact Insurer SteeringPosted 5/12/1998By Robert L. Redding, Jr.
A recent public service announcement televised across Montana has State Auditor Mark O'Keefe, who regulates the insurance industry in that state, strolling through an auto body repair facility. O'Keefe discusses the rights of consumers in choosing an auto body shop to repair their vehicles. Specifically, O'Keefe tells consumers that shops included on lists given to them by insurers at the time of an accident are mere recommendations; consumers are not required to use one of these suggested repair facilities. O'Keefe's commercial is part of an effort by collision repairers in Montana to provide consumers a choice in repairing their vehicles. First, repairers acquired the legislative language needed to protect competition and the rights of consumers. Next came the critical part of any insurance regulation at the state level, enforcement. With an adequate law on the books, Montana repairers had to ensure that the law was enforced and, in this case, the first step necessitated consumer education. Why do repairers have to resort to the enforcement area of insurance law? It could be for any one of several reasons. Many state agencies do not have the resources to adequately police and enforce strong anti-steering measures already in the law. Second, the politics of a particular insurance regulator may be so pro-insurer that any hope of tough regulatory enforcement is virtually impossible. But after reviewing O'Keefe's initiative, any insurance regulator would have to consider the politics of informing consumers of a key right so often ignored.
The Automotive Service Association (ASA) recently completed a study of state laws and regulations that address collision repair shop steering by insurers. ASA found that 22 states have good anti-steering laws on the books. Six states have a foundation for anti-steering in place. Unfortunately, 22 states don't address the problem. For approximately half the states in this country, repairers have the opportunity to move forward on consumer awareness initiatives and enforcement priorities in the coming year. Although many of these laws are not perfect, as though repairers were drafting the original legislation without discussion, they do provide a base for implementing substantive consumer choice. Our focus in the auto body business should be more on consumer education about their rights under current law and less about tightening up current language. This does not eliminate the problem in the 22 states that don't have language at all. But we have to start somewhere. We have not used all of the tools at our disposal. Most insurance regulators are not educated about our industry, and we need to do a better job in communicating to them how our industry works and the laws currently in place. One of the top litigators at the U.S. Justice Department's Anti-trust Division told ASA that the consumer was our best weapon. We need to put this to use. As ASA works with state leaders to set up meetings with insurance regulators and educate the public about steering statutes, we have to also look at other possible initiatives. For example, replacement crash parts are a very serious issue in the industry. Public policy has not resolved the problem of the quality of parts being made available from every sector to the auto body repairer. Yet, 11 states have tough replacement crash parts laws already in place. These laws mandate disclosure and consent when dealing with consumers. It is up to repairers to communicate the need for regulators to enforce these statutes and inform consumers of their rights. Although ASA is working in states without adequate steering and crash parts statutes to get some laws in place, we must also do a much better job of educating consumers and regulators as to laws already at our disposal.
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Copyright (c) 1996-2008. Automotive Service Association. All rights reserved.
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As insurance rates increase, consumers are scrutinizing policies more. The recent initiatives by House Majority Leader Dick Armey of Texas and Sen. Mitch McConnell of Kentucky demonstrate the public interest in auto insurance reform. Their auto insurance choice bills do not go so far as to correct the problems of collision repairers, but they address several consumer issues in the field of automotive insurance.
