Collision repair association leaders from around the country met in Secaucus, N.J., in mid-March to share ideas and discuss state legislative or regulatory successes and efforts. The “2015 East Coast Resolution Forum,” an event sponsored by the Society of Collision Repair Specialists (SCRS) and the Alliance of Automotive Service Providers (AASP) of New Jersey, was held in conjunction with AASP-New Jersey’s NORTHEAST 2015 trade show.
Ed Kizenberger, executive director of the New York State Auto Collision Technicians’ Association (NYSACTA), moderated the meeting and told attendees about the legislation his association is supporting that would prohibit insurers from requiring repair shops to use specific vendors or processes for the procurement of parts or other necessary materials. The bill (SB 1207) is similar to one introduced in New York in 2013, and to bills introduced this year in Illinois and Minnesota as well.
Kizenberger also shared a letter he wrote to New York Attorney General Eric Schneiderman, asking him to view the February 11 “Anderson Cooper 360” segment on CNN examining insurer involvement in the collision repair industry. He urged Schneiderman to join other state attorneys general in either filing a lawsuit against insurers regarding some of their practices, or to join Sen. Richard Blumenthal (D-Conn.) in urging U.S. Attorney General Eric Holder to examine consumer steering and other insurer practices.
Such efforts can pay off, Oklahoma shop owner Gary Wano said at the meeting. He said he was among a handful of repairers who met with representatives of his state’s Attorney General’s office last fall to discuss several issues, including “steering.” The timing, he said, was fortuitous.
“The Assistant Attorney General looked at us and said, ‘Wow, that just happened to me,’” Wano said. “Her son had just been involved in an accident, and Geico Insurance told her to go to a shop 20 miles away from her home, after she already said she had a particular repair facility she liked to use in her neighborhood.”
The information from the shops led Oklahoma Attorney General Scott Pruitt to issue a warning to consumers about steering, and to a subsequent public service announcement on the topic produced by the state insurance department. The phone number listed in the public service announcement connects consumers with a taskforce that can take verbal as well as written complaints from consumers.
“This is the most action we’ve seen in Oklahoma since the early 1990s,” Wano said.
SCRS’ Aaron Schulenburg said such efforts help those in other states as well; the Oklahoma public service announcement, for example, helped prompt a nearly identically-worded one in Montana.
Legislation is a big focus of the Alliance of Automotive Service Providers (AASP) of Massachusetts. House Bill 857 would change two currently-required consumer disclosures. Under the bill, the current disclosure on any estimate that includes non-OEM parts would have to be in at least 12-point type rather than at least 10-point type; it would also be extended to say that use of such parts may void existing warranties, and would have to include notice of the consumer’s right to use the shop of their choice. The second change would require any insurer recommending shops to also tell the consumer verbally or in writing that, “Under Massachusetts law, you have the right to choose a registered repair shop of your choice. All registered repair shops must guarantee their repairs.”
Another Massachusetts bill (HB 883), similar to one introduced two years ago, would require the state’s insurance commissioner to establish a minimum labor rate insurers must pay to shops based on the average of the hourly rates paid by insurers in five surrounding states (where labor rates are as much as $10 higher). The commissioner would have to review the minimum hourly rate once every three years.
AASP-Massachusetts is also backing two other bills that will make changes to the state’s Auto Damage Appraiser Licensing Board (ADALB). One bill would shift oversight of the board from the Division of Insurance to the Division of Professional Licensure. Jillian Zywien, executive director of AASP-Massachusetts, said all other state licensing boards are under that division, and the association believes the ADALB should be as well.
The second bill (H 816) would add two additional members to the 5-member ADALB. The board currently includes two representatives affiliated with the body shop industry, two affiliated with insurance companies, and a chairman (appointed by the commissioner of insurance) who is not affiliated with either industry. Under the proposed legislation, the state attorney general would appoint two additional board members, one representing the attorney general’s office and one representing consumers.
“The ADALB oversees all licensed appraisers in Massachusetts and is a place where repairers and consumers can seek remedy for improper repair appraisal negotiations,” Molly Brodeur, president of AASP-Massachusetts, said. “The Board's current configuration has eroded its mission. There is also undue influence from the Division of Insurance, which further complicates the ADALB's ability to act. Our legislative and regulatory agenda is focused on bringing order and functionality back to the ADALB."
Representatives from Connecticut at the meeting discussed the awaited decision in The Hartford’s appeal of the $34 million dollar judgment against the insurer in a class action lawsuit brought by the Auto Body Association of Connecticut (ABAC) and several shops in the state. The two sides in the case squared off before the Connecticut Supreme Court in January, with The Hartford appealing the 2013 judgment that awarded repairers millions in compensatory and punitive damages after a jury agreed The Hartford suppressed labor rates through unfair trade practices.
“There’s no specific timeframe, but my sense is probably within the next three to six months we’ll have a decision,” said attorney John Parese, though he is not personally involved in the case.
With interest, a ruling in the shops’ favor would probably result in a net award of close to $40 million. Tony Ferraiolo, the president of ABAC, was asked at the meeting if he feels that’s enough to change the insurer’s behavior.
“It’s taken 14 years since we filed the case to get to the final decision on this thing,” Ferraiolo said. “Even if they do have to pay that amount, can you imagine what they made by not having to change the way they do business for the 14 years?”
Ferraiolo said the association also is supporting legislation (5655), introduced on behalf of a jobber in the state, that calls for clarification of state sales tax regulations on automotive paint. Ferraiolo said his state is one of five with a “double-taxation issue, where we are paying tax to the jobber on paint-related materials, and then charging customers a tax on it on the other end.”
Tony Passwater of the Indiana Auto Body Association said he has created a website (www.iHaveBeenSteered.com) and a toll-free phone number (855-No-2-STEERing) to allow consumers to decribe their interactions with an insurer related to shop choice. Passwater said consumers who may be hesitant to fill out a “complaint form” may be more apt to “share what their experience has been.”
He said sharing the CNN story as well as others on social media is helping build consumer awareness.
“I think we’re making some inroads with consumers, which is what we’ve never been able to do very well in the past because it’s hard to reach consumers,” Passwater said. “I really believe that social media is our equalizer.”
John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@SpiritOne.com.
John Yoswick