Friday, 07 February 2014 00:00

Shops Can Put News and Trends Related To Auto Insurers To Good Use

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It’s easy as a shop owner to get so caught up in day-to-day operations that it can be a challenge to follow just the news directly affecting collision repairers.

But there’s plenty of insurance-related news that shops also should know about, because it can help them educate their customers, market their business, and maybe even alter how they vote or shop for insurance themselves.

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Insurer pushes for more alternative parts

As of this year, The Hartford is now requiring its direct repair shops to use “any appropriate alternative part when it is available” regardless of the age or mileage of the vehicle being repaired.

A memo from Bethany Siddall, director of auto claims for The Hartford, tells shops the new policy is subject to state law, and that any salvage parts still must be of the same model year or newer than the vehicle being repaired. But unless prohibited by state law, the new mandate means available non-OEM parts must be used even on current model year vehicles.

“Keep in mind that each claim should be handled on an individual basis and any variance from this standard should be clearly documented in the claim file,” Siddall’s memo states.

State Farm encouraging welding training, certification. When I-CAR announced a new lower pricing structure for its welding qualification testing (now called Welding Training and Certification) early this year, it also announced that State Farm negotiated a discount for its Select Service shops as well. The announced continues State Farm’s track record of encouraging but not mandating certain training requirements on its direct repair shops.

“We believe welding proficiency benefits State Farm policyholders by providing quality repairs to policyholder vehicles,” Russ Hoffbauer, director of property and casualty claims for State Farm, said. “While participating in the I-CAR Welding Training and Certification is not mandatory for Select Service repairers, we anticipate that repairers will be eager to take advantage of this unique opportunity.”

Tardy insurance regulation report issued by the feds. Nearly two years after it was due, a new report released by the Federal Insurance Office in December concludes more federal regulation of some aspects of insurance is needed. Rather than debating federal- vs. state-oversight of insurance, the report suggests a hybrid approach, with federal involvement where beneficial in an otherwise state-based system.

Most of the federal regulation suggested in the report deals with mortgage insurance and international insurance issues, but it also calls for oversight of personal lines in terms of practices related to risk-profiling groups and individuals based on personal information.

Insurer groups were generally pleased with the report’s support for more consistent state-based regulation of the industry but were more skeptical of its call for more federal involvement.

State insurance regulator group in upheaval

At the same time when increased federal oversight of the insurance industry is being proposed, the association of state insurance regulators appears to be having internal conflicts. Connecticut Insurance Commissioner Tom Leonardi is calling for an outside firm to conduct a corporate-governance review of the National Association of Insurance Commissioners (NAIC), questioning what he sees as poor decisions by the group’s executive committee and what he called NAIC’s “imperial presidency.”

Leonardi cited as one example the decision by last year’s president, Kevin McCarty of Florida, “to give the Federal Insurance Office one of the NAIC’s three seats on the International Association of Insurance Supervisors Executive Committee.” He was also critical of some insurance commissioners’ decision to turn down an invitation to meet with President Obama.

“This could be so bad that it might be the pivotal point we later recognize that doomed state-based regulation. Talk about a self-inflicted wound,” Washington Commissioner Mike Kreidler is quoted in the letter.

Leonardi said “cronyism” and the “undue influence of two former [unnamed] commissioners,” is undermining the NAIC and gives fodder to those who question “whether we are up to the task of regulating the largest insurance market in the world.” Other state insurance commissioners have raised similar concerns but believe the NAIC needs to attempt to address the issues internally before seeking the outside review that Leonardi wants.

State enacts new deductible rules. Pennsylvania Gov. Tom Corbett in December signed a new law that allows insurers to offer zero-deductible auto policies? Previous state law required a deductible of at least $100. The legislation also drops the current mandate that policyholders selecting a deductible below $500 acknowledge in writing that they recognize that “a lower deductible means a higher premium.”

Insurer offers telematics as a way for parents to track teen drivers

Esurance says parents in 39 states who have installed its DriveSafe telematics device on their vehicle can now pair the device with their teenage driver’s cell phone to limit (on some phone brands) texting or other use of the phone while the car is in motion. The system also allows parents to monitor a teen’s driving behaviors including routes taken, speeding, hard braking or driving past curfew.

Esurance says the information is not shared with the insurer nor is it used to determine premiums.

Insurance exec a big, big winner

Ira Curry, a 56-year-old vice president for property-casualty in the Atlanta office of Aspen Insurance, was one of two winners in December’s Mega Millions $636 million jackpot. An Aspen spokesman said Curry had taken a leave from the company “to disappear with family for a while.” Curry took the lump-sum cash option, walking away with about $120 million after taxes.

Insurer to offer policies in another state

Pennsylvania-based Erie Insurance Group will expand into Kentucky, its 13th state, by early next year. Erie is the 15th largest personal auto insurer in the country, although nearly half of its premiums are from insureds in its home state.

Idea of city-owned insurer debated

An editorial in the Detroit News urged Mayor-elect Michael Duggan to drop his idea of starting a city-owned auto insurance company.

Duggan first raised the idea last fall while campaigning to become Detroit’s next mayor. Detroit residents by some estimates have the highest auto insurance rates of any city in the country, leading some residents to use suburban addresses when buying auto insurance. Duggan said his own auto insurance rates doubled when he moved from nearby Livonia to within the city limits of Detroit.

The newspaper says Duggan should not take on such a risky endeavor but should instead focus on efforts to curtail auto thefts and to lobby the state for reform of the no-fault system. One claim in the editorial surely caught the eye of collision repairers.

“If Duggan believes he can lower premiums by taking the profit out of insurance, he’s in for an awakening,” the editorial states. “There is no profit in auto insurance, (Peter) Kuhnmuench (executive director of the Insurance Institute of Michigan), says.”

John Yoswick 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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