Sunday, 02 March 2008 11:26

American Insurance Association hits back on CT anti steering bill

The American Insurance Association (AIA) submitted testimony this month strongly opposing Connecticut Senate Bill 288, legislation that would require insurers to pay only the “usual and customary” labor rates and prohibit insurers from recommending the use of certain auto repair facilities.

“Senate Bill 288 will ultimately harm Connecticut auto consumers by eliminating an insurer’s ability to negotiate favorable repair rates and thus control costs,” said AIA Northeast Assistant Vice President Laura Kersey. “Automobile insurers are the greatest payers of automobile repair services.  Given the volume of business they support, automobile insurers can and do negotiate favorable repair rates that have a positive impact on repair costs.  This, in turn, results in a substantial benefit to insurance consumers by containing or even reducing a large component of auto insurance costs.”

 

According to Kersey, prohibiting insurers from negotiating favorable repair rates will adversely affect Connecticut consumers by increasing costs and eliminating the benefits associated with a competitive market. Additionally, the bill’s prohibition on “recommending or requesting” alternative facilities harms the consumer by preventing knowledge of options, alternatives and choices.  “Such a prohibition benefits repair shops at the expense of consumers. Consumers should be able to make their own choices to reduce their costs or inconvenience,” said Kersey.

“The proponents of Senate Bill 288 purport that the legislation will enhance an insured’s right to choose; however, the opposite is true. Senate Bill 288 will drastically limit an insured’s right to choose by prohibiting optional consumer-friendly programs.”
AIA’s testimony was presented at a hearing before the Transportation Committee.

See related story on CA 1167 opposition.

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