Monday, 23 September 2013 16:43

NY Assembly and Senate Hear Bills to Make Insurance Co. Parts Mandates Illegal

Two bills before the New York legislature seek to make insurance company requirements to use specific vendors or process for parts or materials procurement illegal.

Assembly Bill 7234 (A7234), Introduced by Sen. John DeFrancisco and titled ‘An act to amend the insurance law, in relation to collision and comprehensive coverage on motor vehicles’ and Senate Bill 5786 (S5786), also sponsored by Sen. DeFrancisco, propose to amend Section 1, Subsection (a) of Section 2610 of the New York insurance law generally known as the anti-steering section that currently makes it illegal for an insurer to require a specific repair shop.

The bills seek  to ban insurance company requirements for collision repair parts and materials procurement programs, clearly aimed to block PartsTrader.

AB 7234

AB 7234 amends the insurance law directing that no insurer providing collision or comprehensive loss shall require a repair facility to use a specific vendor or process for the procurement of parts or other materials necessary for the repair of a motor vehicle. The proposed language below for the subsection adds a prohibition against specifying vendors or processes. The text in all capitals includes the proposed amendment.

(a)  Whenever a motor vehicle collision or comprehensive loss shall have been suffered by an insured, no  insurer providing collision or comprehensive coverage therefor shall require that repairs be made to such vehicle in a particular place or shop or by a particular concern, NOR REQUIRE A REPAIR FACILITY TO USE A SPECIFIC VENDOR OR PROCESS FOR THE PROCUREMENT OF PARTS OR OTHER MATERIALS NECESSARY FOR THE REPAIR OF A MOTOR VEHICLE.

SB 5786, introduced on June 14, prohibits insurers, providing collision or comprehensive coverage of motor vehicles, from requiring repair shops to use specific vendors or processes for acquisition of vehicle repair parts and materials.

“These bills seek to clearly address within the insurance laws of New York State that insurance company requirements to use specific-vendors should be illegal,” said Ed Kizenberger, executive director of the New York State Automotive Collision Technicians (NYSACT).

“Requiring repair facilities to use an online marketplace to purchase parts or materials basedupon the lowest price could force millions of dollars of business to move outside New York State. Repairers should continue to source parts and materials from vendors they know and trust to best serve the interest of the consumers.”

Kizenberger said that his association supports efforts around the country to eliminate insurer mandates. However, while insurers should understand the potential impact mandating specific vendors or processes would have on a collision repairer’s efficiency when faced with multiple mandates, crafting legislation that would seek to make the mandates illegal is the only way to assure an efficient market.

“Historically, when it comes to mandated products and processes, insurance companies don’t see the impact these requirements have on the industry as a whole,” stated Kizenberger. “When multiple insurers implement multiple requirements, everyone loses, and ultimately the consumer is left footing the added cost created by the insurance companies that engage in this practice.”

The bills add a prohibition against specifying materials purchases, going beyond making the specification of parts procurement processes illegal.

“We wanted to make sure that the bill would address future concerns for the industry,” Kizenberger added. “There are already examples of insurance companies requiring repair facilities to use specific brands of paint in other parts of the world.”

The bills have been referred to the Assembly and Senate’s respective insurance committees.

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