Tuesday, 31 March 2009 09:51

Steering (HB 6446) and Supplements (SB 896) Bills Dropped by Connecticut Assembly

The Connecticut Assembly has voted down two closely watched bills to regulate steering and supplements.
SB 896 would have required shops to give advanced notice to insurers when supplemental repairs were required. The bill proposed to block shops from proceding with a repair unless the shop gave “reasonable notice” (3 days to follow up) to insurance companies if supplements were required. Insurers would be able to deny payment to the repair shop if those requirements weren’t met.

SB 896 also would have required shops to provide invoices to insurance companies upon request. The repair shop would have had to certify under penalty of false statement that insureds had paid their deductibles, that all repairs were made “pursuant to the estimate,” and that repairs included all items authorized by the insurer.
Insurers rationalized this bill as a fraud-control measure. Nationwide Insurance said in a statement: “These are important steps toward adding transparency and effective anti-fraud measures to the repair process.”
“Often insurers are forced to pay for unnecessary additional repair work that was neither authorized nor subject to an inspection,” said a statement from the Insurance Association of Connecticut. “Unwarranted charges can add substantially to the final cost of repairs, increasing claims costs, which result in higher premiums for insureds.”
The Auto Body Association of Connecticut considered the bill an attempt by insurers to gain more control of the repair process, appropriating the role of the customer (the owner).
“[SB 896] would have taken the customer out of the equation and turned the insurance company into the customer,” said Bob Skrip, owner of Skrip’s Auto Body in Prospect and president of ABAC. “If this had passed in Connecticut, it would have had an enormous ripple effect across the country.” Connecticut’s Attorney General also opposed the bill.
The Steering bill, HB 6446, was opposed by both insurers and repairers.
HB 6446 would have prohibited insurers from favoring their own preferred repairers by reducing deductibles or offering additional warranties. This bill also would have established premium discounts for motor vehicles with VINs clearly marked on the outside of the vehicle.
Bill Romaniello, owner of All-Pro Collision Repair in Southington, CT, is  of  Board of Directors Member for the Auto Body Association of Connecticut and their legislative director. He said insurance companies would have been able to write HMO-style policies that would have set up incentives for consumers to use network shops in much the same way they are required to use network hospitals under some health insurance plans.
“They would no longer have had to steer you,” Romaniello says. “Every policy written would have said that these are the repair shops you get to choose from, and there are no out-of-network repairs without cost.” Romaniello expects new legislation to be introduced through the transportation committee in March.
Insurers opposed HB 6446, calling it anticompetitive. Paul Magaril, regional manager and counsel for PCI, said in a written statement “Through HB 6446 some auto body repair shop are attempting to limit an insurer’s ability to offer an important and very popular benefit to consumers—a lifetime warranty on the repair work. While an auto repair shop may guarantee their work, this is of little benefit to a consumer who has moved or is traveling. The warranty offered by insurers extends beyond the particular direct repair facility used by the consumer and can be used at any such facility in the country. How can a prohibition or limitation on an insurer’s ability to reduce premiums, lower deductibles, or offer a lifetime warranty be considered to be in the best interests of the consumers? Only one group would benefit from this bill—auto repair shops that would be protected from competition. One group would be harmed—consumers would be denied important cost-saving benefits for exercising their choice of repair facilities. No other state in the country has enacted a law that limits the benefits that an insurer can offer to consumers in this way”.
“We also oppose HB 6446, which would place additional limitations on insurers who offer guarantees on auto body repairs completed in shops recommended by insurers. These bills would have significant anticonsumer consequences and harm the state’s automobile insurance market.”
“We fail to see how consumers are helped by denying insurers the ability to provide tangible service and financial benefits,” said David Snyder, the American Insurance Association’s vice president and general counsel.
The Insurance Association of Connecticut faulted the bill as “an attempt to protect some auto body shops from the competitive marketplace, to the direct detriment of the consumers of this state.”

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