It was the association's intent not just to discuss issues but to offer solutions. To that end the association asked the Commissioner to consider the following:
There exists a double standard in the preparation of estimates. The repair facility must follow OEM service specifications in repair of vehicles, while insurers have no requirement. This leads to insurers under writing estimates and consumer confusion. Insurers should be required to estimate a repair to same standard as California's collision repair facilities. Section 2695.8 of the C.C.R. states that estimates prepared by or for insurers must allow for repairs to be made in a 'workman like manner.' We proposed that the term 'workman like manner' be defined and 2695.8 C.C.R. be amended as follows:
2695.8. Additional Standards Applicable to Automobile Insurance
(f) If partial losses are settled on the basis of a written estimate prepared by or for the insurer, the insurer shall supply the claimant with a copy of the estimate upon which the settlement is based. The estimate prepared by or for the insurer shall be of an amount which will allow for repairs to be made in a workman like manner. 'Workman like' for the purposes of this section shall be defined as being done in accordance with the vehicle manufacturers specifications and procedures, or, if manufacture specifications and procedures are not available, to the industry, nationally distributed and periodically updated service specifications. If the claimant subsequently contends, based upon a written estimate which he or she obtains, that the necessary repairs will exceed the written estimate prepared by or for the insurer the insurer shall:
(g) No insurer shall willfully depart from or disregard accepted trade standards for workman like repair in the preparation of claim settlement offers or estimates prepared for or by the insurer.
"Everyone involved in the claims process needs to identify the importance of repairing today's high tech vehicles in accordance with manufacturers procedures to insure that the vehicle will provide occupant protection in any subsequent accident. This will protect the consumers investment and well being," said Lee Amaradio, President of the Collision Repair Association of California.
This proposed language would conform insurer requirements with those contained within section 3356 C.C.R. that apply to auto repair. The adoption of this or similar language would also effect the practice of low-ball estimating. Since the industry has not demonstrated a willingness to self regulate we feel that Department of Insurance intervention is required.
Additionally the association asked the Commissioner to consider the practice of insurers attempting to fix collision repair labor rates via a survey process. Our association not opposed to a reasonable adjustment process but feel that price fixing in the collision industry is beyond the authority of the insurance code. The D.O.I. previously had stated that claims must be addressed individually. During the discussion the Commissioner stated he would consider issuing notification to the insurance industry of their position regarding labor rate surveys, that the surveys can be used as a foundation to start negotiation not a process to fix prices. We feel that the formalization of this policy will be a positive step toward leveling the collision repair playing field.
We asked the Commissioner to clarify the Department's position as to the requirement for insurers to warrant aftermarket collision parts when specified by them during the repair process.
The Commissioner advised this could be included as part of a possible policy statement listed above about labor rates.
The association was pleased with their response, attention to the issues and overall tone of the meeting. We anticipate that a more definitive answer will be in the offering in the next few weeks. "Working with the new Commissioner Dave Jones is markedly different than dealing with his predecessors, he understands the issues," said Allen Wood, Executive Director of the Collision Repair Association of California.
In a follow-up conversation, Deputy Commissioner Margolis indicated that staff has been working on the issues and as yet had been unable to finalize their proposal due to other emergent problems. He indicated that the Commissioner was very interested in these issues and hoped to have his response developed soon.