Thursday, 20 October 2011 17:52

SCRS Affiliate Groups Help Members Address Legislative and Regulatory Issues

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State and regional associations—that together represent more than 2,000 body shops—participated in the sixth annual “Affiliate Leadership Conference” organized by the Society of Collision Repair Specialists (SCRS) and held near Chicago in mid-September.

SCRS Chairman Aaron Clark said the event is designed to help the national association gather input from its state affiliates on its direction and efforts, as well as to help those groups work with one another and with the national organization.

The affiliate groups reported on their recent and upcoming legislative efforts, their interactions with shop and insurer regulators, and other activities and issues in which they have recently been involved.

In Montana this past spring, for example, Governor Brian Schweitzer signed into law a bill, sponsored by the Montana Collision Repair Specialists, that prohibits a insurer from “unilaterally disregard(ing) a repair operation or cost identified by an estimating system” that the insurer and shop have agreed to use to determine the cost of repair.

Bruce Halcro, a Montana shop owner and president of the association, said getting the state auto dealers’ association involved in backing the legislation was part of what helped push it through the legislature, where it narrowly failed just two years earlier.

The Montana association this year had also backed a bill that would have allowed body shops and others – rather than only consumers—to file complaints with the state insurance commissioner’s office. That bill was overwhelmingly approved 97-3 by the Montana House, but died in a Senate committee.

Jordan Hendler, executive director of the Washington Metropolitan Auto Body Association (WMABA), said that this was the second year the association battled efforts in Virginia to raise the threshold of damage requiring a flood-damaged vehicle to receive a branded title from $1,000 to $5,000. Proponents—including a state legislator whose vehicle was totaled after the sunroof of his vehicle was left open in a rainstorm—argued that the threshold had been set decades ago, and was unrealistic given inflation and the increased value of vehicles. Hendler said her group tried to point out that today’s vehicles have far more electronics than cars had decades ago, and that no consumer should unknowingly buy a vehicle that has had thousands of dollars in water damage. In the end, she said, the threshold was raised to $2,500.

Hendler said the association is also working with the Virginia Department of Environmental Quality on a possible shop registration program that could prohibit the large-quantity sale of automotive paint to anyone other than registered shops.

A sales tax issue has recently arisen in Indiana, according to Tony Passwater, executive director of the Indiana Auto Body Association. A shop in that state contacted the association after a sales tax audit resulted in a $13,000 assessment plus penalties for failure to collect and remit sales tax on items such as sandpaper and tape consumed in the repair of vehicles. Passwater said the auditor relied on a document that refers only to dealers of new cars and trailers.

“There’s no possible way you would infer it had anything to do with a collision repair facility,” Passwater said. “The very last section says a dealer must pay sales tax on shop rags and towels and consumables that are not billed to the customer.”

He said he is discussing the matter with the state revenue department in a effort to clarify and resolve the issue.

Ron Stamm of the Automotive Service Council of Kentucky said his group expects to make a third attempt next year to push for consumer notification legislation in that state. The association-backed bill, which has narrowly missed making it through the legislative process this year and last, would require insurers to include notification of a consumer’s right to select a repair shop on the bottom of printed estimates, and to tell the consumer of that right prior to explaining any direct repair program.

The Texas Senate this past March approved a bill to establish an advisory board of shop, insurer, and public representatives to provide recommendations on the regulation of auto insurance in that state, But tthe bill never gained traction in the Texas House, according to James Brown of the Houston Auto Body Association.

Likewise the Senate passed (but the House did not) a bill that would have required insurance companies to provide written notice to both shops and consumers explaining how their payment policies and claims procedures differ between direct repair facilities and non-direct repair facilities. The bill also would have required insurers to provide to shops, upon request, a written explanation of the requirements to become a DRP facility with that insurer. It also would have made county mutual insurers— which account for about 45 percent of the Texas market—subject to state anti-steering and consumer choice laws (from which they remain exempt).

More recently and even closer to home for the Houston association, Brown said his group is opposing (in its current form) new shop and auto recycler licensing requirements being considered by the Houston City Council. The proposal sets out new disclosure and documentation requirements, and establishes an 11-member “automotive board” appointed by the mayor (and not necessarily including a collision repair shop representative). While the proposal includes no minimum requirements for equipment or training, it has detailed rules regarding fencing around the business property, and makes it unlawful for “grass or vegetation to grow to a height of more than nine inches above the ground.”

Brown said there is a lot to like in the 28-page proposal, and he applauds the council’s effort to deal with the businesses—including shops connected with towing storage lots—that “hold vehicles hostage” and charge exorbitant fees to release a vehicle that a consumer wishes to move to another repair facility.

But, he said, some of the mandates—such as requiring customer signature on any supplement over $100, and storing (at customer request) old part sfor up to three days to return to the customer—are just too cumbersome. His group is also concerned that the proposal essentially gives insurers, as the “authorized agent” of the consumer, the same rights as the owner of the vehicle.

In an unrelated effort, Brown said the Houston association recently had a shop labor rate survey conducted by an independent third-party. Shops are being urged to notify state insurance regulators if an insurer is unwilling to pay the shop’s posted labor rate by taking a photo of the posted rate and emailing it along with the estimate at the lower rate (with customer and claim information omitted) to the Texas Department of Insurance.

“Right now they’re just collecting those and we’re laying the groundwork,” Brown said.

In addition to discussing ways to address issues that many of the state groups are facing, the affiliates also discussed some of the issues SCRS is pursuing,  including a survey to insurers about their policies on parts usage, and interaction with the Environmental Protection Agency regarding interpretation and enforcement of its new refinishing regulation.

John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com). He can be contacted by email at jyoswick@SpiritOne.com.

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