Wednesday, 05 May 2010 18:01

Department of Insurance responds to CRA Letters, Industry asks CRA to Explain its Position

The California Department of Insurance (CDI) has sent a notice (see also related stories) to all California insurers reminding them of their requirement to warrant all non-original equipment manufacture replacement crash parts to be at least equal to original equipment in terms of kind, quality, safety, fit, and performance. This reinforces their liability in the process. The CDI also warned insurers as to the use of non-compliant parts in settlement offers.

CRA President Lee Amaradio Stated "This official notice was the culmination of numerous meetings with CDI, numerous letters written that required a response from the Commissioner and a press conference that was held by Assembly Member Dave Jones in which Toby Chess was a participant. We have received numerous calls from the Industry asking, why our position is so drastically different than CAA, and why are they claiming that the notice is a result of their efforts.   First and foremost they are entitled to their position. Their position was limited to tracking and identification of parts. The only entity that voiced similar views is the Aftermarket parts industry. Our Position is based on the law and before you make a decision you should take time to review the regulations and statutes that relate to this issue."

Amaradio added, "When Non-compliant parts are used to establish settlement the claim is paid short.  CRA's position is to protect the consumer and have CDI enforce the laws and regulations that require insurers to warrant non-original equipment replacement crash parts are at least equal.  Determinations of parts being equal is manifested in the claims process, prior to repair.

We feel that, to categorize tracking as the most important issue, is to divert attention from the real issue.  Insurers requiring and specifying usage of parts that are non-compliant. It is important to note how the CDI notice tracks with our letters to the Commissioner. If there is a small scale issue it is tracking . Currently  systems exist to track parts. It is not done because insurers chose not to comply. The real issue is vehicle and occupant safety ."

 

Executive Director Allen Wood stated CDI also asked why our position was so different from CAA.  CRA Director Allen Wood advised " I don't know specifically, but possibly it is due to their close affiliation with the A/M industry".

CRA board member John Tyczki  stated "These issues are about the business of insurance not auto repair and we will do all we can to keep it that way .We can only hope others identify this important fact."

CRA Executive Director Allen Wood added "I want to extend my thanks to our members and our Board. Many  have stood up and , been the lightening rod while bringing these issues  to the light of day . Some have felt the brunt of insurers and in one case a threat from a supplier. This group has put the benefit of the industry above a threat of  personal consequences.  This is representative of how an association should work for the good of all."

CRA advises Repair facilities to keep the attached notice on hand for reference.  If insurers attempt to specify  usage of  a part that is not equal to OEM or utilize such parts in settlement offers, you may wish to provide them a copy, then file a complaint.  It will be of interest to see how insurers respond. But even more  interesting how CDI responds to insurers continued specification of non- compliant non-original equipment manufacture replacement crash parts . The collision repair industry now has an opportunity to gain significant ground on this issue. The collision repair professional should be wary of knowingly installing a substandard part. The burden of determination of the compliance is that of the insurer , keep it there. We plan to continue to push the CDI to fulfill their regulatory mandate.

CRA continues: "Preparation of this notice was delayed in order to initiate moving this issue to the next level , watch for the next press release. We are taking action not just a position! Our response to Commissioner Poizner will be in second document . I do not think the Commissioner will get a sense that we applaud his recent in-action."

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