Monday, 31 May 2004 10:00

AZ gov Napolitano signs anti-steering bill into law

Optimism was in the air at the Arizona Collision Craftsmen's Association (ACCA) May meeting as they celebrated the signing of HB 2468 into law by Arizona Governor Janet Napolitano. 

Fairness for Automotive Consumers (FAC) lobbyist Barry Aarons, who helped guide the legislative process, spoke from his heart. "This has been a wonderful experience for all of us, especially for me. It is unique to have clients commit to the process like this group did."

Aarons introduced Representatives Clancy Jayne (R-District 6) and Gary Pierce (R-District 19), sponsors of this successful legislation, as "heroes." Representative Jayne congratulated the group, stating that "legislation like this doesn't pass the first time in a hundred years!" Jayne attributes this success to the grassroots effort put forth by the team. "Nobody worried about who got the credit to get the job done - they just did it," stated Jayne. "The insurance industry is the strongest lobby in the world, which makes the passing of this legislation even more significant. Over 700 letters were written to the Arizona legislature in support of HB 2468. That is a phenomenal event. Small business has few friends; the grassroots contact really worked."

Pierce joins the team

Representative Jayne was responsible for introducing the bill in its original form - prohibiting insurer-owned body shops. When the bill shifted to anti-steering legislation, Representative Pierce became a sponsor as well. Aarons, Jayne and Pierce rewrote the legislation, working in conjunction with the insurance lobby, to achieve preliminary goals this first year. "We couldn't be too heavy handed, " explained Pierce. "We would have lost too many votes." Eventually, HB 2468 was passed with virtually unanimous support.

HB 2468 includes anti-steering provisions that protect consumer choice and place limitations on the claims adjuster making repair decisions, thereby protecting the competitive market. The bill has mandatory reporting requirements with stiff penalties for violations of the bill.

Lobbyist Aarons wrote in his legislative review, "This is a significant step towards addressing the steering that occurs daily in our industry, but we believe we still have a long road ahead of us in addressing this problem. Currently, adjusters are sent into our shops to negotiate costs and repairs for damaged vehicles. While the relationship the adjuster has with an insurance company hasn't been a concern - adjusters that work for insurance company that have tied-repair facilities now raise significant concerns. Those adjusters could report back competitive, sensitive, store-specific information.

Substance of the bill

"The bill now states '... If an insurer or claimant selects a repair facility to repair the insured's or claimant's motor vehicle in which the insurer owns an interest in that repair facility, the adjuster for the motor vehicle shall not be employed by the repair facility or have any direct authority over that facility's recommendations or decisions relating to the repair of the insured's or claimant's motor vehicle.'"

He continued, "Reporting is critical if we are to have the evidence necessary to pursue prohibition in the future. The reporting language states an insurance company that owns an interest in a tied repair facility has to file with the director of the department of insurance a statement delineating the number of motor vehicles repaired and the dollar values of those repairs in absolute numbers as a percentage of the total number of motor vehicles repaired.

"While these reports are confidential, the department is required to make the information available to the President of the Senate and the Speaker of the House of Representatives upon request. That means the legislators will have access enabling us to get the proper questions asked and answered at the legislative level.


"Also of importance were stiff penalties that are enforceable by the Department of Insurance. The penalties are drawn from the Fair Claims Practices Act which allows for fines for violations of up to $50,000. It will be up to us (FAC) to educate our members as to the circumstances under which they can file complaints. It is understandable that the repair industry is concerned that the insurance companies' talk track will seek ways to get around this provision. The insurance companies are very effective in engaging their talk track where they cajole, spin, sweet-talk, persuade and coax customers to go to the repair facility of the insurance companies' choice. But this bill gives us a powerful opportunity to poll our customers to find out if in fact the insurance companies are complying with both the letter or/and intent of this law or whether they are just thumbing their noses at it."

More work to be done

Aarons, Jayne and Pierce urged the industry to keep moving forward. "Verifiable" stories about non-compliance are needed to pursue further legislation - a mantra that was repeated several times. Gather information from your customers by asking: "Did the insurance company tell you to take your car to a particular shop?" Document findings of non-compliance.

In conclusion, Aarons reminded the group that "we are evolutionary, not revolutionary. Every year we can move forward on the chess board."

FAC plans to continue their legislative efforts by monitoring the compliance of the anti-steering bill and addressing issues such as aftermarket parts and paint capping in future legislative sessions.

HB 2468 is scheduled to go into effect in September 2004.

Janet Chaney has served in many facets of the collision repair industry. She is now looking after the best interests of her clients from Cave Creek, Arizona. Her e-mail is janet_chaney@earthlink.net.