Monday, 30 June 2003 17:00

Texas bill to block tied shops passes House and Senate

The Texas Senate on May 27 passed House Resolution 1131, the insurer-owned repair shop legislation, by a unanimous vote of 31 to 0. On April 8, the Texas House of Representatives passed the bill by a voice vote. 

The bill, HB1131, now moves to Texas Governor Rick Perry's desk for his signature. According to the Jay Propes, a lobbyist working on behalf of bill supporters, there is no indication from the Governor's office that Perry has taken any position on the bill. "What we need right now is for every shop owner to write a letter to the Governor, asking him to support the bill," said Propes.

The compromise version of the bill as passed by both houses prohibits insurance companies from owning repair facilities in Texas. It differs from the original version in that insurer-owned shops already in place or under construction as of April 15, such as Allstate's Sterling Collision, will be allowed to remain in business so long as they meet certain criteria detailed in the legislation; the original legislation would have forced divestiture of those shops.

The compromise came about when Lt. Governor David Dewhurst indicated that he would block the legislation from a vote on the Senate floor. Dewhurst, a conservative Republican who as lieutenant governor controls the flow of legislation in the Senate, was said to have a problem primarily with the forced divestiture provisions. The Associated Press quoted Dewhurst as saying that "This to me is a forced divestiture and it is not fair."

The legislation on the Governor's desk would go a long way toward leveling the playing field between shops owned by an insurer and other "favored" ( DRP) shops of that insurer. The insurer-owned shops could not receive referrals from the insurer, use the insurer's name, engage in joint-marketing or enjoy other advantages that are not also available to non-owned DRP shops affiliated with the insurer such as Allstate's Circle of Dependability shops.

The bill would also prohibit the insurer from subsidizing the operations of its owned shops. It provides civil court penalties of $1,000 - $5,000 per day for violation of the law and independent shop owners could bring suit to enforce the law; if the shop bringing the suit wins, the insurer must pay attorneys fees.

The Automotive Service Association (ASA), based in Bedford, Texas, has from the first taken the lead in organizing support for this bill, working with a coalition of repairers and auto dealership owners. "We are very pleased the Senate has passed this important piece of legislation. Collision repairers across Texas have worked for a number of months to achieve this historical legislation. ASA commends the Texas legislature for drawing a clear line in defense of the Texas motoring public and the small business community," said Bob Redding, ASA's Washington, D.C., representative.

To write Gov. Perry, the address is:

Gov. Rick Perry
P.O. Box 12428
Austin, Texas 78711-2428
Fax: (512) 463-1849


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