Friday, 27 January 2012 10:13

Insurers: “It appears these regulations would merely benefit vendors, like auto body repair shops"

Insurer representatives' reaction to the California Department of Insurance (CDI) Jan 25 meeting to discuss proposed labor rate survey and steering regulations has been critical of pro-shop benefits, saying "these regulations would merely benefit vendors, like auto repair shops."

The Association of California Insurance Companies (ACIC) says proposed labor rate survey regulations create new standards on how insurers conduct surveys, which could increase costs for auto repairs.

CDI’s proposed steering regulations could also inhibit insurers from informing policyholders where they can obtain repair estimates.  ACIC testified in opposition to these proposed regulations during the workshop in Sacramento, California.  In its testimony, ACIC requested that CDI provide information on its rationale for considering this regulation.  ACIC specifically requested how many and the types of consumer complaints CDI has received related to this regulation.

“Absent this consumer data from CDI, we don’t understand how the regulations benefit consumers,” said Armand Feliciano, ACIC vice president.  “It appears these regulations would merely benefit vendors, like auto body repair shops.  Given California’s shaky economy, now is not the time to propose laws that could increase the cost of auto repairs.”

“CDI is attempting to legislate through the regulatory process with these proposed labor rate survey and steering regulations,” said Feliciano.  “Regulations must have statutory authority granted by the Legislature for them to be valid; CDI does not have legislative authority to make these policy changes.”

Under current law, labor rate surveys are voluntary in California.  Some insurers conduct these surveys to determine how much auto body shops are charging for labor in a certain area.  This helps insurers to predict repair costs and establish premium levels.  Current law also prohibits insurers from telling policyholders to go to specific repair shops.  Policyholders have the choice to take their car to any shop they choose.

“Any major policy changes like what CDI is contemplating should be considered through the legislative process,” said Feliciano.

About the ACIC:

The Association of California Insurance Companies (ACIC) is an affiliate of the Property Casualty Insurers Association of America (PCI) and represents more than 300 property/casualty insurance companies doing business in California. ACIC member companies write 41.8 percent of the property/casualty insurance in California, including 57.3 percent of personal auto insurance, 45.7 percent of commercial automobile insurance, 40 percent of homeowners insurance, 32.5 percent of business insurance and 43.4 percent of the private workers compensation insurance.  PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.