The consumer protection measure, introduced in the Senate by Sen. Jackie Speier (Democrat - San Francisco) where it passed easily, needed 41 "yes" votes in the Assembly to pass, and the tally on August 29 was 34 yes and 17 no. Thirty Assembly members were either absent or abstained from voting, but observers noted that because of the on-going State budget debate most members were in fact present for the vote and chose to abstain, which then became the de facto equivalent of a no vote.
Johnson said that those legislators who took a position against the bill relied largely on the position that government shouldn't be regulating investment in private industry. "Philosophically, I agree with them, but that's if there is equal competition. There isn't. This is why we have antitrust laws. Look at the problems we've had in oil, telephones and software industries where the playing field isn't level. It's the same thing here. Suddenly, I'm looking for my money (an insurance check) to come from a company that owns my direct competitor."
Summary of bill
The Assembly analyst's summary of the bill, which is all many of the Assembly members read before voting on a measure, read as follows: "Prohibits an insurer from acquiring any ownership interest in an auto body repair shop. Specifically, this bill :
1)Requires an insurer that has an ownership interest in an auto body repair shop to divest itself of its ownership interest within eight years of this bill's effective date.
2) Requires an insurer that has an ownership interest in an auto body repair shop to do the following: a) Inform policyholders that they have a right to select an auto body repair shop of their choice at the time the policy is issued and following an accident that is reported to the insurer; and, b) Disclose the insurer's financial interest in an auto body repair shop to the policyholder or claimant if the policyholder or claimant selects that auto body repair shop.
3) Provides that it is unlawful for an insurer to offer an incentive or provide compensation to any person for the purpose of rewarding that person for referring an insured to an auto body repair shop in which the insurer has an ownership interest."
After its passage in the Senate, the bill became subject to an intense lobbying effort by Allstate to defeat it in the Assembly. "They hired a top lobbying firm and are throwing everything they have at defeating this bill," said CAA's lobbyist Jack Molodanof, prior to the vote.
"There is a large disparity between fact and perception. In fact, the Customer Satisfaction Index in this industry for both repairers and insurers consistently indicates that well over 90% of the people actually involved in a repair and claims experiences are very satisfied and would refer family and friends because of the level of service and professionalism they received. If the consumer felt cheated by the repair facility, I do not think they would recommend them."
Those voting against the bill included Bates, Briggs, Calderon, Bill, Campbell, Daucher, Dickerson, Frommer, Harman, Hollingsworth, Kelley, Leach, Leonard, Robert, Pacheco, Papan, Richman, Strickland and Zettel.
If not listed above, the member abstained or was absent.