Tuesday, 18 July 2017 16:43

State Insurance Regulator Expresses Openness to Ideas Implemented in Other States

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Collision repair shops and associations often express frustration when trying to work with their state insurance regulators on issues related to steering, use of non-OEM parts or other insurance claims practices they consider unfair or illegal. But presentations and discussions at a recent Collision Industry Conference (CIC) on state or federal regulation of the insurance industry may offer an example of how to approach encouraging regulators to act.

The CIC “Governmental Committee” began its presentation with a look at the prospect of repealing the 1945 McCarran-Ferguson Act, the federal antitrust exemption granted to insurers. Bob Redding, the Automotive Service Association lobbyist who serves as Vice Chairman of the CIC committee, said the U.S. House has approved legislation overturning the antitrust exemption for health insurance companies. But, he said, it was too early at the time to know if the Senate would also include that in its healthcare legislation, or if lawmakers would have interest in also ending the antitrust exemption for property-casualty insurers.

He also said the Republican-controlled Congress has also expressed plans to roll back some financial industry regulations (known as the Dodd-Frank legislation) passed in response to the 2007-08 financial crisis. Among other things, that legislation created the Federal Insurance Office (FIO), which some viewed as a step toward increasing federal regulation of insurance, something that has previously been left almost entirely to the states to handle.

Redding said the FIO was given limited authority, and “unfortunately it failed its first series of tests, which we were all very hopeful about, dealing with just studies” of the need for additional federal regulation of insurance.

“They were late, and not as strong as they should have been,” Redding said of the FIO reports.

He said that has added fuel to Congressional arguments to scale back or eliminate the FIO as part of Dodd-Frank reforms.

State insurance regulators also agree the FIO should be on the chopping block, Brooke Stinger of the National Association of Insurance Commissioners (NAIC) told CIC attendees at the meeting.

“We believe FIO is an unnecessary federal entity,” Stringer said.

She said state regulators sufficiently oversee insurers, including “resolving more than 2 million consumer inquiries and complaints in the past year.”

One such regulatory agency, the Pennsylvania Insurance Department, also had a speaker at the meeting who seemed open to the idea of pursuing several suggestions made by CIC attendees. David Buono, a consumer liaison for the Pennsylvania Insurance Department, noted that his agency oversees the fifth-largest insurance market in the country, and the 14th-largest in the world---larger than the insurance markets in India, Australia and Spain. His agency keeps an eye on more than 1,700 insurance companies, and licenses more than 200,000 insurance agents.

“Last year we handled 12,329 complaints, and took 46,993 phone calls,” Buono said. “We recovered almost $3 million for Pennsylvania consumers.”

He said steering of consumers to insurers’ preferred shops is “one of the things we do hear about,” and he said the Department offers a guide on consumer shop choice. It recommends that a consumer’s choice be based on the shop’s longevity and reputation in the community, the availability of a lifetime warranty and a history of working with the insurer involved in the claim.

Buono said he think it’s unlikely that insurers are directly forcing someone to take their car to a particular shop.

“What I worry about is…when a person says, ‘You know Bob’s Body Shop just takes a long time. But we can get you in this shop right away,’” Buono said. “That’s steering. So we want to make sure those types of conversations aren’t happening. The choice is up to the owner.”

He was asked whether complaints to his Department about steering have to come from the consumer or if they could be filed by a shop.

“We’ve had shops file the complaint on behalf of the consumer,” he acknowledged. “But what would really help us is if the consumer would file it, because we get a little more information about what was said and how it was said. We can work through that with the consumer.”

Aaron Schulenburg of the Society of Collision Repair Specialists suggested that Buono’s Department might want to review a video public service announcement put out by the Montana Department of Insurance several years ago that addressed the more subtle forms of steering.

“That’s actually a really great idea,” Buono said of such a video, saying it could be something the Department could include on its Facebook page. “That’s something you could almost role play to help consumers…understand what steering actually is.”

Another CIC attendee suggested Buono’s Department review two Illinois Department of Insurance consumer guides on what to do if filing a claim with one’s own insurance company, and what to do if another party’s insurance company is handling the claim.

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