A bill that would restrict automobile insurers from owning or investing in collision repair businesses has been introduced in the California legislature. The bill was prompted by an investment by The Interinsurance Exchange of the Automobile Club in consolidator Caliber Collision. 

Introduced by State Sen. Jackie Speier (D-San Mateo), the chairman of the Senate Insurance Committee, SB 1648 would make it unlawful for an insurer to acquire any ownership interest in auto body repair shops and would make it illegal for an insurer to offer an incentive or provide compensation to a person as a reward for referring an insured to an auto body repair shop.

Sen. Speier was lobbied by the California Autobody Association (CAA) to introduce a bill that would protect consumers from the likely results of insurers owning the body shops that repair their insureds vehicles. "The CAA recently surveyed its member shops and an overwhelming number felt this was a conflict of interest for insurance companies to own auto body repair shops," stated CAA Executive Director David McClune. "Everyone we discuss this issue with, including consumers, manufacturers and suppliers, says the same thing: shouldn't that be illegal? It's similar to having insurance companies owning the doctors in the medical profession."

Speier's chief of staff in Sacramento, Richard Steffen, said that the Senator is "pretty firm on this, she doesn't like the conflict of interest." Steffen noted that Speier authored the California law that prohibits a physician from referring patients to medical labs in which the doctor has a financial interest. "We see another dilemma here, as well. If an insurer does DRP business with an independently owned shop and the shop messes up a lot, they (the insurer) drop the relationship. If it owns the shop and the work quality is poor, what do they do?" Steffen asked.