Saturday, 31 January 2004 09:00

Arizona collision repair groups unite to stop tied shops

Written by Janet Chaney

An Arizona group has announced plans to support legislation in that state to stop insurance companies from acquiring body shops.

The Fairness for Automotive Consumers (FAC), a political action association formed "to address consumer safety issues concerning vehicle repair in the state of Arizona," hosted over 140 people at a January 21 meeting to discuss the legislation.

Founded in 2003, the coalition is comprised of six Arizona collision repair associations - the Arizona Collision Repair Facilities (ACRF), Arizona Collision Craftsman Association (ACCA), Automotive Service Association (ASA), Arizona Auto Glass Associations, (AAGA), Arizona Auto Recycling Association (AARA) and Arizona Professional Towing and Recovery Association (APTRA).

The stated goals of FAC are to ensure safe vehicle repair and guarantee consumer protection. Arizona by law to purchase and maintain insurance policies in order to operate motor vehicles on public roads.

According to a FAC spokesman, a major problem now facing the Arizona collision repair industry is that of "tied repair facilities" - those in which insurance companies own an interest. FAC is trying to head off the introduction of these tied facilities into the state as such facilities present a conflict of interest and potential for monopoly abuses as fairness to the automotive consumer evaporates.

Prohibits new "tied" facilities

The proposed legislation, HB 2298, was introduced in the Arizona House of Representatives with 22 sponsors, both Republicans and Democrats. It would prohibit insurance companies from owning or operating new tied auto repair facilities after July 1, 2004. The bill will require insurers who currently own or operate "tied" repair facilities to guarantee that the relationship protects consumer safety, assures consumer protection and maintains healthy competition in the industry.

If HB 2298 becomes law, an insurance company will not be able to own or acquire an interest in a repair facility or employ any individual who conducts an automobile repair operation. However an insurer with an interest in a tied repair facility before July 2004 may maintain that ownership interest and operate that facility.