The New Hampshire House of Representatives' Committee on Commerce and Consumer Affairs recently held a hearing on House Bill 664, which is designed to address OEM repair procedures.
While ASA has indicated support for the bill, other parties are concerned about it. The Auto Body Association of Connecticut (ABAC) released a position statement detailing its concerns and proposing alternative language in certain places.
ABAC President Bob Amendola said, "We applaud anyone who is trying to improve the industry through legislation, and we appreciate that this bill was set forth with good intentions. However, we believe it is important to remember that there is no contract between independent repair shops and insurers.
“Legislating direct payment to the repair shop misses the role of insurance, which is to indemnify their customer, the insured. We fear that this kind of direct obligation has the potential to give insurers greater involvement in the repair process. This is something we’ve always fought against. We don’t need insurers telling us how to fix cars. So, while we certainly stand behind the notion that following OEM repair procedures wherever applicable should be the standard, we believe a few adjustments to the framework of this bill are necessary."
The position statement elaborates, “Insurance companies are legally obligated to indemnify their insureds or the victims of their insureds. Creating language that would make an insurer directly obligated to pay an auto body repairer misunderstands the dynamics of the relationship and each party’s respective obligations. This is problematic because it suggests that insurers should have a greater degree of control in the repair process, something we have fought for many years.”
ABAC proposed the following verbiage: “An auto body repairer shall, whenever feasible, follow original equipment manufacturer-recommended collision repair procedures, recommendations, or service bulletins when repairing a motor vehicle.”
The position statement goes on to explain that insurers are legally obligated to reimburse shops for identified services as part of the duty owed to their insured or the insured’s victim. ABAC clarifies, “It makes no sense to legislate a duty to make direct payment from an insurer to an auto repair facility, which is the primary basis for our objection.”
ABAC has also identified concerns with NH House Bill 432, which “gratuitously draws a distinction between ‘mechanical’ and ‘auto body’ repair work and the reimbursement for the same. This distinction is misleading and would only serve to further distort the cost of auto body repairs. Why would NH seek to legislate that mechanical repairs be worthy of being paid that amount which is ‘normally and reasonably charged … to retail consumers who are not using insurance coverage,’ but that same standard would not apply to auto body repair? That’s like saying, ‘We support efforts by insurers to illegally conspire to suppress fair market rates for auto body repair, but not for mechanical repairs.’”
Additionally, ABAC objects to the final section of the bill, which references paint and material reimbursements, for the same reasons.
The group explains, “We support efforts by repairers to be paid on a [fairer] basis, but legislating a direct reimbursement from an insurer to a repairer contradicts the dynamics of the relationship and puts insurers in a greater position to influence how vehicles are repaired---something that is harmful to consumer safety and to quality repairs.”
For more information on the ABAC, visit abaconn.com.