Tuesday, 31 January 2006 17:00

Concierge law no longer being pushed in California

Activity has been heating up around proposed Assembly Bill 303, known in the industry as the "Concierge" bill because it is backed by Progressive Insurance. Progressive has a repair program known as "Concierge" because of its drop off and delivery services. 

The proposed bill would, in part, allow an insurance company instead of the vehicle owner to make all critical vehicle repair decisions including where and how the vehicle is repaired, and what parts are to be used. The bill allows an insurance company to essentially step into the consumer's shoes and cuts out the repair shop from working directly with the customer.

The bill, authored by Assemblyman Ron Calderon, has been lying dormant in the Senate Banking, Finance and Insurance committee since July 2005. There have been no further hearings scheduled and if none take place before April 28, 2006, the bill will simply die.

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Calderon

Legislative director for Calderon, Adam Smith, explained that while Calderon believes that the citizens of California are entitled to programs such as Progressive's Concierge, he agrees in principle that insurance companies can still perform concierge-type services without this bill.

Smith continued, "Although the bill is technically still active, as of now, we do not plan to move the bill out of committee. The committee staff has advised us that insurance companies can offer this service to the clients without passage of this bill. We are satisfied that this bill is not necessary and it remains active only for emergency purposes. Furthermore, we have had no contact with sponsor Progressive since last year."

Smith stated categorically that Cal-deron's office has no plans at this time to move the bill forward before the April 28 deadline.

The danger in the lurking bill

The California Autobody Association (CAA) is adamantly opposed to AB 303 and continues to operate as if the bill is not only active, but passage is likely.

CAA lobbyist attorney Jack Molodanof stated that he has no reason to believe that the bill is on life support. Strategy meetings continue to take place to defeat AB 303 and on January 10 CAA sent a "legislative alert" to its membership which included a sample letter to be sent to Senator Jackie Speier and members of the Senate Banking, Finance and Insurance Committee expressing opposition to the legislation.

Molodanof explained the dangers of this bill to the consumer. "There is nothing in current law that prevents any insurance company from doing a concierge-type program as long as they register with the Bureau of Automotive Repair (BAR) [as an automotive repair service]. This [new] bill carves out a huge exception to current law that would allow any insurance company to engage in the automotive repair business without registering with the BAR."

This exception effectively removes consumer protections that fall under the BAR's jurisdiction which require the collision repairer to provide estimates and other documents which explain the customer's rights under the law.

If AB 303 were to pass, any insurance company could open a repair facility, take in damaged cars (presumably its own insureds'), do a tear down, prepare a repair estimate, and then sublet the actual repairs. When the repaired vehicle is returned to the insurer-owned shop by the body shop that actually did the work, the insurance company shop could inspect the repair job and then issue warranties.

In the scenario proposed by AB 303, once the vehicle owner signs the authorization to repair - which is basically a power of attorney - the insurer-operated shop becomes the "customer" and can proceed to sublet the repairs without further input from the vehicle owner. Since the shop sublets the actual repairs, it skirts the issue of oversight by the BAR and is not subject to regulations which apply to collision repair shops.

Molodanof continued that "nothing would govern these facilities. Once the insurance company shop has the authorization to repair, it takes total control of the vehicle and can repair it in the insurance company's own best interests - even repairing a car that should be totaled if fixing it is cheaper. It is a huge conflict of interest."

But if it's dead?

If AB 303 is essentially though not officially DOA, why is CAA continuing its campaign with such fury? Because, says Molodanof, absent the official withdrawal of the bill by Assemblyman Calderon, the association must continue preparations to fight off the bill in case there is a last minute attempt by Progressive to amend or change the language in such a fashion that Calderon decides to revive the legislation and urge its passage.

Progressive spokesman William Perry said that the company stood by Calderon's statement. Phone calls to Progressive lobbyist John Norwood were not immediately returned.

 

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